Fannie Mae-No Politics (FNMA)

[Wise Man]

The Separate Account plan ticks all the boxes pointed out by Powell for the Federal Reserve's proposed capital requirements:
☑️Enough capital: after the redemption of the unwanted JPS, Fannie Mae and Freddie Mac would post 60% and 96% of their Prescribed Capital Buffers (25% necessary for the resumption of dividend payments). Amount in excess of the minimum capital requirement for the Leverage ratio.

☑️Enough Liquidity: also as of end of March 2024, amounts in their Retained Portfolios readily available to deploy (valued at fair value):
Fannie Mae: $142.5B, of which $120B in the Contingency Portfolio. The rest, Agency securities.
Freddie Mac: $154B ($129B in the Contingency Portfolio).
Full analysis, here.

☑️And a plan to take the losses that you're probably going to take.
This refers to the Retained Earnings accounts in their Balance Sheets, tasked with absorbing future losses. With the adjustment for the offset (reduction of Retained Earnings account) attached to the $132B SPS LP increased for free, FnF post -$216B combined.
Under the Separate Account plan (Charter Act-unauthorized CRT expenses, net, plus the PLMBS lawsuit settlement, included), it'd be $252B after the Treasury Stock (stock buybacks) is retired (it reduces RE too).
It coincides with the amount of Common Equity or Book Value required in a Takings.
CET1 (Some regulatory limits) estimated at $237B. It includes AOCI (though almost $0 in FnF nowadays), whereas the statutory Core Capital doesn't. Hence the adoption of Basel framework in FnF.
Top quality capital metric sought-after by Powell and the FHFA with the expulsion of the JPS holders (AT1 Capital).
Link to the article about the Powell's demands, here.
Mission accomplished.