Fannie Mae-No Politics (FNMA)

[big-yank]

Of course. I held Amazon stock through years of losses until it finally paid off, so Fannie is not unique in that regard. But there is a marked difference between generating losses and being unable to pay your obligations... such as the 10% SPD. During the liquidity squeeze during the financial crisis, no bank was going to step up with $ billions to bridge the loss cycle, even though I would agree that most people thought the pull back would eventually get corrected (a return to higher real estate valuations). There just wasn't the cash to structure some refinancing.

Then two unique elements must get consideration beyond just losing money for a few quarters. First, the GSEs derivative hedging created a financial environment where rising interest rates prime the pump for profitability. Unfortunately for the GSEs, the Fed kept dropping rates and has yet to actually return to any semblance of a free market economy. But more important for the GSEs, before the crisis and conservatorship, much of their capital that could be used to fund ops during periods of loss (which were almost non-existent through FnF's history) was raised via secondary offerings of preferred equity which was prohibited under FHFA rule.

In about a week we will get some confirmation of your assertion of "crazy amount(s) of profits" created by Fannie & Freddie. The recent trendline has not been a big confidence builder on results. Even Seeking Alpha agrees with me on this one.

JMHO.