Then again, Standard & Poor's on Monday raised its outlook for its sovereign debt ratings for the United States to "stable" from "negative," in part because of the huge contribution of GSE dividends toward lowering the federal deficit. So President Obama and members of Congress will be weighing a potential loss of revenue against a potential loss of political support among investors holding shares in Fannie and Freddie.
When discussing prospects for investors in Fannie and Freddie in litigation against the government, George wrote "the companies are specifically chartered by the federal government and we think the courts will give the government far more deference in determining whether or not to pay a dividend to preferred shareholders even if the companies have paid back the taxpayers."
Senators Bob Corker (R., Tenn.) and Mark Warner (D., Va.) are drafting a bill to dissolve Fannie and Freddie over a five-year period, while offering some consideration to private shareholders, according to a Bloomberg report filed last week.
A likely series of class-action lawsuits will complicate negotiations in Washington for the reform of the U.S mortgage finance market.