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- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
Republican members of the House Financial Services Committee introduced Friday seven bills as the second round of legislation to reform government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.
Rep. Scott Garrett (left), R-N.J., Chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, said in a statement the same day that “Republicans and Democrats in Congress, as well as the Obama administration, all agree that the current trajectory of Fannie Mae and Freddie Mac is unsustainable. We can no longer afford to sit back and allow the ongoing bailout of these failed institutions to continue.” Garrett added that while “special interest groups and the guardians of the status quo may not want to admit it, Fannie and Freddie’s days are numbered. It’s not a matter of if, but when--the quicker we begin the process of dismantling them the better off we’ll be.”
Garrett went on to say that the second round of bills build “on the momentum and success of the first round of bills.” The seven bills, he said, “were carefully designed to tie the hands of Fannie and Freddie so that they are no longer a drag on the American taxpayers, a threat to our economic security, and an impediment to private market growth and development.”
The seven bills are as follows:
Prevent Dividend Payment Decrease
Rep. Don Manzullo (R-Ill.) is the lead sponsor of this bill which seeks to prevent the Treasury Department from lowering the 10% dividend payment Fannie Mae and Freddie Mac pay to American taxpayers. This will ensure that the two entities continue to repay their debt to the taxpayers and that their ongoing bailout moves towards conclusion.
Subject Fannie and Freddie to FOIA
Rep. Jason Chaffetz (R-Utah) introduced H.R. 463, the Fannie Mae and Freddie Mac Transparency Act of 2011, which would apply the Freedom of Information Act (FOIA) to Fannie Mae and Freddie Mac while the entities are in conservatorship or receivership. Because Fannie and Freddie were originally charted by the federal government, and therefore not actually part of the federal government, they have been exempt from FOIA
Require Disposition of Non-Mission Critical Assets
Rep. Robert Hurt (R-Va.) is the lead sponsor of this bill to require Fannie Mae and Freddie Mac to dispose of all non-mission critical assets.
Hurt’s bill directs the Federal Housing Finance Agency (FHFA) Director to require Fannie Mae and Freddie Mac to dispose of all non-mission critical assets, including, but not limited
to, patents and data, which he says would go a long way in helping to provide additional transparency and generate increased flow of private capital in our mortgage market.
Set a Bailout Cap for the GSEs
Rep. Michael Fitzpatrick (R-Pa.) is the lead sponsor of this bill to set a total dollar cap for the amount of money to be used for the bailout of Fannie Mae and Freddie Mac. Fitzpatrick’s bill sets a cap for the amount of money that the American taxpayers will be charged for the bailout of Fannie Mae and Freddie Mac.
Ensure Exact GSE Replica Is Not Created
Rep. Steve Stivers (R-Ohio) is the lead sponsor of this bill to ensure that new quasi-governmental replicas are not crated to replace Fannie Mae and Freddie Mac, by amending the Housing and Economic Recovery Act (HERA) to ensure that if either Fannie Mae or Freddie Mac is placed in federal government receivership, a new quasi-governmental replica is not created in its wake.
Prohibit Taxpayer Funding of GSE Employee Legal Fees
Rep. Randy Neugebauer (R-Texas), Chairman of the Financial Services Subcommittee on Oversight and Investigations, is the lead sponsor of legislation to prohibit taxpayer funding of Fannie Mae and Freddie Mac employee legal fees. Since 2008, Neugebauer said in a statement, the American taxpayers have spent more than $162 million defending Fannie, Freddie and their former top executives in civil lawsuits accusing them of fraud.
Abolish Affordable Housing Trust Fund
Rep. Ed Royce (R-Calif.) is the lead sponsor of legislation to abolish the Affordable Housing Trust Fund. “As long as the housing activists are lobbying Congress, there will be a push to finance the Housing Trust Fund,” said Royce, in a statement. “Eliminating this fund is a necessary step in moving beyond the era of crony capitalism that kept the GSEs alive despite their reckless risk-taking.”