Hedge Funds
Hedge funds including Paulson & Co. Inc. have been pushing Congress to abandon plans to wind down Fannie Mae and Freddie Mac as investors buy up preferred stock that has been soaring after being considered probably worthless, people with knowledge of the discussions have said. Employees are also pondering the firms’ futures.
“We have been looking past conservatorship,” Paul E. Mullings, a Freddie Mac senior vice president who heads its single-family business, said May 6 during a panel discussion at an industry conference in New York. “Freddie Mac is getting ready for a post-conservatorship world, whenever that time comes.”
The company, which last month hired former JPMorgan Chase & Co. mortgage chief David Lowman to take over Mullings’ post as it builds for the future, will have sent the Treasury a total of $36 billion with its latest remittance, after drawing $72 billion in aid, Layton said.
“While we expect that the housing recovery will continue to bolster our financial performance, we are also taking further steps to improve the business fundamentals,” Layton said. At the same time, “we’re very clear here inside the company that our future is in the hands of policy makers and the government.”
Still, many ideas on how to reform the mortgage-finance system “would have our company continuing, if not in its current form,” and any transition will probably take years, so “we’re encouraged to invest in our systems and processes, to do things on a long-term basis,” he said.