Fannie Mae-No Politics (FNMA)

[obiterdictum]

In order to infuse capital, obtain profits and obtain control of the central operations of the GSEs, the US Treasury in coordination with the FHFA established an investment structure to do this via the SPSPAs and the three amendments to the SPSPAs. There is the forced purchase of senior preferred stock and warrants with a demand for 10% in dividends in exchange for draws on the US Treasury up to 200 billion dollars per GSE. That is the superficial investment arrangement. There was never a loan and these financial arrangements could never be construed as a loan. So there is no news at all in the US Treasury saying that the arrangements were an investment.

However, the original purpose of the investment in accordance with the law (The Housing and Economic Recovery Act of 2008-HERA 2008) was to conserve the assets of the GSE and to eventually release them from the conservatorship while returning dividends to the US Treasury. This purpose was deliberately undermined and changed via the third amendment when it was seen in early 2012 that the GSEs were turning profitable and becoming ripe for release from the conservatorship. The third amendment to the SPSPAs radically altered the original purpose of the investment via the net worth sweep and provisions that do not allow the FHFA do carry out its functions as mandated by HERA 2008. Instead of complying with the law, The US Treasury drains the GSEs of all profits that are used to reduce the national deficit, is gradually reducing their capital base and refuses to amend or vacate the third amendment which is strangling the GSEs. In a few words the US Treasury is direct opposition to the mandates of HERA 2008.

To side step and divert attention away from taking of private property and violating US laws, the US Treasury is not inventing lies made of whole cloth. Instead, the US Treasury is presenting an extremely lopsided US government view of what has occurred. There is a mixing of little facts and a lot of pure fiction aimed to justify their taking and violation of HERA 2008.