In a live interview with CNCBC, Senator Bob Corker urged investors to short Fannie and Freddie stock.
Rick Santelli:
“That rumor—that rumor, let me interrupt you, that rumor forced those share prices to spike up yesterday, did they—did it not?”
Sen. Corker:
“Yeah. I don’t know. But people should be shorting it because it’s major BS. It’s not—there’s no factual background to that. None. It’s just talking your own book. So let’s go back to what you’re talking about.”
Corker is a Republican from Tennessee.
The Stock Act prohibits manipulating markets or prices based on congressional information.
According to the current United States Senate Select Committee on Ethics:
“A member, officer, or employee of the Senate shall not receive any compensation, nor shall he permit any compensation to accrue to his beneficial interest from any source, the receipt or accrual of which would occur by virtue of influence improperly exerted from his position as a member, officer, or employee.”
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Read the full transcript of Corker on CNBC below:
Rick Santelli, CNBC, host, The Santelli Exchange:
Good morning and thank you. And I’d like to welcome my very special guest Senator Corker. And before I have you start to describe the issues on GSEs, I want do a little primer here. You know, 2008, full conservatorship: the GSEs, Freddie, Fannie, and of course 187 billion in the hole. Taxpayers backed basically a conservatorship. In 2012, of course, they started making more than 187 given the guarantees by the public. And hedge funds—and I’m not trying to name them, have taken a big presence in their preferred shares. The real issue here is twofold. Are we going to reform Freddie and Fannie and the GSEs after all these years? Or is the taxpayer on the back of the liabilities they accepted going to divvy profits to hedgies? Senator, that seems to be the lay of the land. Tell me your thoughts.
Senator Bob Corker (R-TN):
Well first of all, these hedge fund folks, which by the way, they’re just doing what wealthy, connected people do. They’re sitting around as Congress is inept in dealing with this and they’re going to at some point try to fleece the American people. They were talking their book yesterday. But there’s no — there’s no –there’s no factual background whatsoever to this rumor they’re putting out that the White house is considering re-IPO’ing. That’s absolutely not true.
Santelli:
Senator. And senator let me interrupt you.
Sen. Corker:
Major—major BS.
Rick Santelli:
That rumor—that rumor, let me interrupt you, that rumor forced those share prices to spike up yesterday, did they—did it not?
Sen. Corker:
Yeah. I don’t know. But people should be shorting it because it’s major BS. It’s not—there’s no factual background to that. None. It’s just talking your own book. So let’s go back to what you’re talking about.
Santelli:
For the public that’s watching. Why is re-IPO’ing versus reform the linchpin in understanding what’s going on with the government-sponsored enterprises?
Sen. Corker:
First of all, what’s going on is congress has been totally inept. Republicans are in the majority right now. I don’t know of a Republican senator during the crisis that didn’t believe that Fannie and Freddie needed to be wound down. The American people understand that they have $5 trillion in liabilities. The government is backing them. Now the government owns them. And we need to reform them. What’s the purpose, Rick, of having a Republican majority if you’re not going to deal with the basic issues that need to be dealt with? And I know the American people are angry. This to me is exhibit 1. I mean we talk about Exim Bank Rick, which is $130 Billion dollars and act like that is some big reform deal. And yet we’re not dealing — we’re not majoring in the majors. So we need to reform and —
Santelli:
But senator, let me interrupt you again.
Senator Corker:
Okay. Nice.
Santelli:
Indecision, indecision is a decision, okay? Congress, through their indecision and through the lobbying pressures you described by hedgies who have positions in this conservatorship relationship that is the decision. And from what I’m hearing, the lobbyists are winning over the reformers.
Sen. Corker:
Well, actually that is not true. But here’s what I would say to the American people. If congress considers—continues to be inept on an issue —by the way there’s a majority of people here that believe they should be wound down and replaced so that the taxpayers are not backing them up as they are today —over time these well-connected people that again —I don’t fault what they’re doing, you and I talked about this —they will eventually take advantage of the system. They will eventually re-IPO them. They will be back like they were before this began. They will continue to be way too big to fail. The government will back them up again when they fail. Private profits, public losses, we’ll return to that model. And so you’re exactly right. The fact that congress is so inept —and the American people should be irate about this — because we are so inept in dealing with the issues that really matter here, there are some people that over time, not any time soon because I don’t think they’re gaining that much ground, but they’re beginning to win over a few people and that is inappropriate. We should do what we were elected to do. And that is to wind them down and replace it with something that is much more dynamic and that the American people do not need to stand behind.
Santelli :
Well, thank you so much for your thoughts, senator. It just seems to me that many in government including the administration would rather tackle easier jobs like mother nature and climate change.
Senator Corker:
Yeah.
Santelli:
Thank you for taking the time today. Back to you, Squawk on the Street.
