Thanks for being patient.

For those that subscribe to my blog, I apologize for being away so long.  I am have finally finished my law degree and am now working on passing the bar.  Hopefully I’ll have a little time to post some new material after the Holidays.  Hope everyone has a happy and safe Holiday season.



Fannie Mae and Freddie Mac – An Overview

This article was my final paper for my Banking Law Seminar class in the Spring of 2008.  I thought about piecing it out in a series but decided it was better to post it in its entirety.  The way you view it today is exactly how I submitted it without modification aside from the title page.  The date was April 16th of 2008.  I earned the very highest grade possible with it.  I hope you enjoy it.


By:  Thomas L. Antoine 



        The housing industry has been the center of the recent financial crisis troubling the nation and dominates current financial news.  Government Sponsored Enterprises (GSEs) have been swept up in the turbulence and possibly a major contributor to these problems.  This paper will discuss the history of Fannie Mae and Freddie Mac as an example of the GSE.  An explanation of how GSEs are regulated will be outlined and the current business and economic climate will be discussed.  GSEs are integral in the packaging of Mortgage Backed Securities (MBS).  A discussion of how MBSs are valued is an important part of understanding the regulation of Fannie Mae and Freddie Mac and their roll in the economy.  Currently, there are pressing calls for new or different federal regulation on the front burner in Washington.  The impact of how proposed revisions may or may not impact GSEs will be reviewed. 


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US Bancorp Part V: Success of the Company and Conclusion

                Recent success of company has been attributed to a mixture of conservative banking and bold moves by their CEO Richard K. Davis.  Despite current widespread banking problems U.S. Bancorp raised dividends to 6%, in December 2007 which yields a new annual payout of $1.70 per share.  The company reports their lack of worry from a very conservative business model.  USB claims to be content to grow at a slower rate.  This may not be entirely their choice due in part to legal problems faced by the commercial lending side of their business.  Otherwise, USB has avoided aggressive lending practices unlike strategies used by other large banks in recent years.  USB’s press release points out that the company has raised its dividend for 36 straight years, and their charter has paid a dividend in the past 145 consecutive years.[i]  These solid numbers have attracted Warren Buffett’s attention.  Buffett increased his holdings in U.S. Bancorp by 76.59% last year.[ii] 



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Part IV: U.S. Bancorp Subsidiary Regulation

This part was written with the contribution of David Holtcamp 

               The banking industry has seen rapid growth and expansion over the past two decades.  This has occurred in two ways.  Banks have expanded their area coverage spreading across the nation in an effort to gobble up market share.  They have also expanded into new areas of business.  Historically regulators have been leery of both ways in which banks have recently broadened their power.  This Part of the series expands on the regulatory discussion from Part III and the historical background outlined in Part II of the series.  In all, U.S. Bancorp, the holding company, has twenty subsidiaries.  Of the twenty subsidiaries five are banks.  All of these banks are nationally chartered banks, including U.S. Bank N.A, U.S. Bancorp’s largest bank.[i]   Further, because all of these banks are nationally chartered they are under the supervision and may be examined by the Office of the Comptroller of Currency (“OCC”).[ii]  Additionally, all of the Banks are members of the Federal Insurance Deposit Corporation (FDIC).[iii]

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Part III: Regulation of U.S. Bancorp

This Part was written with the contribution of David Holtcamp 

The banking industry is heavily regulated.  Recently that regulation has come under critical review.  The Department of the Treasury has issued their Blueprint for a Modernized Financial Regulatory Structure.  To understand why bank regulation is a major topic of discussion is no great mystery.  However, understanding the current general regulatory structure is important in deciphering why there is a call for reform.  This part addresses how Financial Holding Companies are regulated using U.S. Bancorp as a model.

U.S. Bancorp is a Financial Holding Company (FHC) and thus it is subject to the regulation and examination of the Board of Governors of the Federal Reserve.[i]  To become a FHC, U.S. Bancorp had to take four steps.  First it had to be recognized as a Bank Holding Company (BHC).[ii]  A BHC, as defined by the Bank Holding Company Act, is any company that has control over any bank or control over any other company that controls a bank.[iii]  Second, all of U.S. Bancorp’s FDIC insured subsidiaries must be well-capitalized and well-managed.[iv]  Third, each of those subsidiaries must receive at least a satisfactory examination rating pursuant to the Community Reinvestment Act.[v]Finally, U.S. Bancorp must file with the Federal Reserve Board declaring that it elects to be a FHC.[vi]


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Content Theft Issues

I regret that my site has been the target of a rash of content theft.  Nearly half my material has been taken for use by others without my permission.  As a result, I have pulled some material and have suspended publishing several articles that are ready.  There is some recourse available that I will take to resolve the issue.  Currently, I am in the midst of preparing for my final exams for the semester.  I will return to resolve this problem as well as post new material once my exams are completed.

Part II : U.S. Bancorp Leadership Background

          USB’s business activities are governed by a board of directors which is comprised of fourteen members.  The current President and CEO is Richard Davis.  Other key executives include vice presidents Andrew Cerere the Chief Financial Officer, Lee Mitau General Counsel and Corporate Secretary.  Richard Davis is relatively young at the age of 50.  His current salary is $625,024 with long term compensation totaling $5,916,496.  In addition to these impressive numbers, his stock options total $18,777,212.[i]   Additionally, Davis was a key leader in the successful mergers of Firstar Corporation with U.S. Bancorp in 2001, Firstar with Mercantile Bancorporation in 1999, and Star Banc Corporation with Firstar in 1998.