Subject: File No. S7-34-11
From: Herb Sears

September 7, 2011

Dear Sir,
I am an individual investor in both of the above referenced entities. It has been announced that mortgage REITS are now subject to a some evaluation by the Agency. Obviously, with all of the uncertainly that small investors are burdened with in this economic cycle and global marketplace-including the mortgage and housing markets-- any further uncertainly can only lead to capital flight from what appears to be a very important supporting investment for the mortgage and housing markets. Some clarity and stability is the key to supporting markets that entail more risk.
The Agency's announcement has led to uncertainly which of course is exactly what is not needed for my portfolio and for others seeking to earn returns for retirement and other worthwhile capital creation. If there is something wrong with the way these investments are structured or some other reason why the agency needs to create uncertainly regarding these investments it would be helpful to explain and be more specific about Agency concern at the time of the announcement of the inquiry. You might note that Annaly stock dropped today in an "up" market and many innocent investors were hurt by this. I strongly suspect that the drop in the value of this investment was a result of the announcement made by the agency. My comment is that if there is something that the Agency knows is a problem for this investment or others in this class it should be clear what it knows as an unclear purpose for the announcements can create unnecessary instability and losses for innocent investors. If the Agency has found something that is amiss then it should say so and be clear about it. If the agency is simply on a "fishing trip" then the agency should be more careful about being clear what their intentions are so that investors are not harmed by the uncertainly that these types of announcements create.
I recognize that this comment applies to other situations as well, however, I believe that protecting investors as "rule maker" and "referee" for a fair "playing ground" should be a primary objective of the Agency. Forcing companies to "defend" an investment by public statements following an Agency announcement seems to create more uncertainly and instability-neither of which seems to be protecting the interest of investors.
Herb Sears