In 2008, Fannie (FNMA) and Freddie’s boards of directors agreed to federal conservatorship and U.S. Treasury investments earning 10% of principal, $2 billion in fees, and 80% ownership stakes. Since then, Fannie and Freddie have earned and paid $300 billion to our U.S. Treasury, which is $24 billion more than promised. It is now time for Fannie and Freddie, like all others forced to take U.S. Treasury money during the last financial crisis, to keep what is rightly earned, recapitalize, and exit conservatorship. Such a course would follow established laws, maximize taxpayer safety and returns, and allow a reasonable, risk-adjusted return on the Fund’s Fannie and Freddie junior preferred shares.
From Bruce Berkowitz (Trades, Portfolio)'s second-quarter 2019 Fairholme Fund (Trades, Portfolio) shareholder letter.
