Did Sen. Corker violate SEC rules, Senate ethics by telling investors to short GSEs?

Loose lips, sink ships…

Made questionable remarks on CNBC regarding stocks

[Update 12:25 p.m. ET: Response from Corker’s office]

Sen. Bob Corker, R-Tenn. appeared on CNBC Wednesday discussing the issue of conservatorship for the GSEs, and in dismissing a report suggesting the White House is open to ending conservatorship he said investors should shortFannie Mae and Freddie Mac.

Corker said “hedge funds” are spreading false rumors that the White House wants to “re-IPO” Fannie and Freddie.

“People should be short it, because it’s major BS,” Corker said. “It’s just talking your own book.”

He was referring to an Oct. 5 note from the research firmPolitical Alpha. This note made the rounds in both Washington and Wall Street causing GSE shares to trade-up. The note states:

Multiple sources have confirmed that the White House has reached out to the housing finance community to better understand its options on what to do with the GSEs after conservatorship.

The Administration is in the very early stages of looking at various options to end the GSEs conservatorship.  This is a major shift in thinking as it would entail ending the GSE profit sweep allowing Fannie and Freddie to begin to retain capital.  While we have been told the Administration is not close to deciding how to proceed, the initial announcement of the White House’s intent would clearly be beneficial to the entire capital structure of the GSEs.


This raises serious questions about whether Corker, who serves on the Banking, Housing and Urban Affairs and is author of a bill, “Jumpstart the GSEs” which is currentlylanguishing in the Senate, violated Senate ethics rules, Securities & Exchange Commission or both.

Corker is also co-author of Corker-Warner, a housing reform bill that failed in the Senate.

Read on.

Click here to see video of Sen. Corker’s interview with CNBC’s Rick Santelli. 

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