In addition to these rescues, the Treasury and the Federal Reserve purchased more than $3 trillion of MBS and GSE bonds to fend off further losses that would have required more bailouts. From September 2008 to December 2009, the Treasury purchased more than $220 billion from GSE MBSS. REF In November 2008, the Federal Reserve announced its intention to purchase billions of dollars of GSE and MBSs bonds over an extended period of time. REF The Fed then purchased $134.5 billion of GSE bonds and more than $1 trillion from GSE-MBS between December 2008 and March 2010, and an additional $2.2 trillion to MBS from October 2011 to June 2019. Department of Finance and the Federal Housing Finance Agency for amending the share purchase contracts and profits of Fannie Mae and Freddie Mac at the Treasury. As announced by federal Housing Finance Agency Director James Lockhart on September 7, 2008, all future dividends of common and preferred shares would be eliminated, with dividends other than priority shares issued to the U.S. Treasury. In September 2008, the GSEs were saved by a series of massive capital injections. Once again, the original preferred shareholders or their successors were not entitled to this bailout. Second, the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 warned all Freddie securities investors, including preferred equity investors, that they would “not be interpreted” if they felt that the GSEs would “honour, repay or otherwise guarantee their obligations or liabilities.” Given the above, the true value of the shares held by the former preferred shareholders at Freddie`s conservatory would probably have been nil. In this context, it is difficult to have earned anything “rightly” after conservation.
These agreements can be described as unconditional, irrevocable lines of credit, supported by the taxpayer. Only this ongoing taxpayer support allows GSEs to continue working, sell billions of dollars of mortgage-backed securities at attractive interest rates and be able to make a profit. Once again, the original preferred shareholders or their successors have little ambition or interest in these “profits”. On December 21, 2017, correspondence agreements between the Ministry of Finance and each company changed the terms of senior stock certificates issued under the SPSPs to allow each company to maintain a quarterly capital reserve of $3 billion. As part of the 2017 correspondence agreements, each company paid a dividend to the Treasury, up to more than $3 billion of its net assets at the end of each quarter. These conditions applied to the payment of dividends on December 31, 2017 and dividends paid for each quarter, until the implementation of the correspondence agreements of September 30, 2019. FHFA Director Mel Watt made a statement on the 2017 match agreements when they were announced. To meet the challenge of raising approximately $400 billion in capital ($200 billion to cover capital requirements and an additional $200 billion to meet existing PSP commitments), shareholders and industry interest associations are committed to two unilateral changes to the bailout agreement: (1) pardon, partially or totally hereditary , the $200 billion liquidation preference and (2) the revision of dividend formulas to give GSEs the opportunity to create capital. If the federal government adopts any of these amendments, existing common shareholders, junior preferred shareholders and purchasers of newly issued common shares would benefit taxpayers at the expense of another GSE rescue plan.