NEW YORK--(BUSINESS WIRE)--
Annaly Capital Management, Inc. (NYSE: NLY) released a white paper, “Letter
From a Washington Conference Room,” in which Michael A.J. Farrell,
Annaly’s Chairman, CEO and President, relates his observations from the
August 17, 2010, housing finance conference hosted by Treasury Secretary
Geithner and HUD Secretary Donovan. Please visit our website, www.annaly.com,
to view the complete white
paper with charts. Through its monthly commentary, white papers and
blog, Annaly
Salvos, Annaly expresses its thoughts and opinions on issues and
events in the financial markets.
Mr. Farrell writes that the $11 trillion U.S. home mortgage market
cannot be supported solely by the banking system, which has less than $8
trillion in deposits, only a fraction of which are deployed in funding
mortgages. The shortfall between the demand for housing credit and the
supply of capital is mostly filled by investors in the secondary market
of mortgage-backed securities (MBS). The majority of this capital is
invested in government-guaranteed MBS issued by the government Agencies,
Fannie Mae, Freddie Mac and Ginnie Mae. It is unlikely that the smaller
number of buyers of credit-sensitive non-Agency MBS will be sufficient
to supplant the installed base of rates buyers in filling the gap
between the supply and demand for mortgage credit, at least not at
current prices. “Without the support of mortgage values and home prices
that is provided by the government guarantee,” he says, “that hole will
get smaller not by increasing demand from the traditional non-Agency
buyer but by shrinking the value of the collateral and the mortgages
needed to finance them.”
Mr. Farrell goes on to suggest that Secretary Geithner lay out
Treasury’s plan for housing finance reform as soon as possible in order
to quell the uncertainty that is already in the market. As Annaly stated
in its submission to Treasury’s request for public input on housing
finance reform, he recommends that Fannie and Freddie should continue to
operate in conservatorship with a goal of winding down their retained
portfolios over a set period of time. “At that point in time,” he says,
“they would be nationalized and perhaps merged into one entity. This
would enable them to continue to have their MBS guaranteed with a
government wrap, enforce underwriting standards, and enable the flow of
credit from the secondary mortgage market to the primary mortgage market
for conforming borrowers….”
*Please direct media inquiries to Jeremy Diamond at (212) 696-0100.
This news release and our public documents to which we refer contain or
incorporate by reference certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements which are based on various assumptions (some
of which are beyond our control) may be identified by reference to a
future period or periods or by the use of forward-looking terminology,
such as "may," "will," "believe," "expect," "anticipate," "continue," or
similar terms or variations on those terms or the negative of those
terms. Actual results could differ materially from those set forth in
forward-looking statements due to a variety of factors, including, but
not limited to, changes in interest rates, changes in the yield curve,
changes in prepayment rates, the availability of mortgage-backed
securities for purchase, the availability of financing and, if
available, the terms of any financing, changes in the market value of
our assets, changes in business conditions and the general economy,
changes in government regulations affecting our business, our ability to
maintain our qualification as a REIT for federal income tax purposes,
risks associated with the broker-dealer business of our subsidiary, and
risks associated with the investment advisory business of our
subsidiaries, including the removal by clients of assets they manage,
their regulatory requirements and competition in the investment advisory
business. For a discussion of the risks and uncertainties which could
cause actual results to differ from those contained in the
forward-looking statements, see "Risk Factors" in our most recent Annual
Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q.
We do not undertake, and specifically disclaim any obligation, to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
Source: Annaly Capital Management, Inc.