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Annaly Capital Management Releases aLetter from a Washington Conference Room,a a commentary by Michael Farrell on the Washingto

^{Published on 2010-08-23 13:40:28 - Market Wire}
 

NEW YORK--([ BUSINESS WIRE ])--Annaly Capital Management, Inc. (NYSE: NLY) released a white paper, a[ Letter From a Washington Conference Room ],a in which Michael A.J. Farrell, Annalya™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.

"Without the support of mortgage values and home prices that is provided by the government guarantee"

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. aWithout the support of mortgage values and home prices that is provided by the government guarantee,a he says, athat 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.a

Mr. Farrell goes on to suggest that Secretary Geithner lay out Treasurya™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 Treasurya™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. aAt that point in time,a he says, athey 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 borrowersa.a

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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.