Fannie Mae-No Politics (FNMA)

[MoneyRobot]

Net Worth is a value. The NWS sweeps all the value ($$) from the GSEs. That includes what gives equity its value. The equity structure does not change. It just means the equity have no value presently.

My backup is my knowledge. I am not going to look up references as I am at my lunch break. I did not expect this to be an argument. If you believe the NWS modifies the equity structure, then thats up to you. Good luck

[MoneyRobot]

The TBTF Banks wanted the GSE to fail because that will cover up the bad loans they made which triggered the Financial Crisis. Luckily, like Maiden Lane I, II, and III, the GSE MBS ended up not losing money. AIG had to sell/spinoff their MBS/CDOs but GSE could hold because of being GSEs and eventually benefited from the turn around.

The TBTF banks only wants the FnF book of business if the gov continues to implicitly guarantee them thus giving them GSE attributes. The gov can never do that directly without backlash.

[Guido2]

What does net worth mean? What does equity mean?

https://www.investopedia.com/terms/n/networth.asp

https://www.freshbooks.com/hub/accounting/equity-accounting

I repeat: "When the government Net Worth Swept, it also swept out it's own equity out of the corporations.

Treasury equity = $0.

SPS = $0."

What exactly are your arguments to back your position?

[MoneyRobot]

Chances are if Trump wants the GSEs released, they will be released. But, he does have advisors and some advisors may have a different viewpoint. My opinion is if Trump wants to be the man who ends the C-ship and the man who officially ends the Financial Crisis Era, he may do it. He can add that to his resume along with Space Force. Space Force has to be one of the most important entities established in modern history and the Dems mocked it when Trump first announced it. Lets see what happens.

[MoneyRobot]

The NWS only takes the dollar amount of the company up to its net worth. It does not modify the equity or debt structures.

[TightCoil]

What Fannie Mae and Freddie Mac insiders don't want you
to know - Both are on launch pad and ready for Lift-Off

[jog49]

I wouldn't trust Mnuchin as far as I could throw him . . .and I have no arms.

[jog49]

Same as Watt . . . filling a chair behind a desk. Of course, she needs a much wider chair than the narrow Watt.

[The Man With No Name]

"Never gonna happen."

There you go again trying to be some kind of a prophet! Never??
Every time I hear someone say what will or will not happen that's a red flag! I think you are a con artist pushing the theft.

With all these emotional responses, I assume you have no experience with capital reorganizations.

I own common stock in a company that has paid me dividends exceeding my original investment. They aren't 'paid off' and I won't be writing them off either.

The SPS will never be 'written off'. The prophet has spoken.

[EternalPatience]

You see what you want to see

Tough to argue or convince

That's fine. It's past history..

[EternalPatience]

I hope they don't make it temporary and ask her to lead both. In that case our brandfordamus hope of GSE reform in this term will be officially dead

[EternalPatience]

She can go. It's not like, she is doing anything useful here. We won't miss a beat

[jog49]

Mnuchin had no intentions of releasing the GSEs, in my opinion, because it was known that the TBTFs wanted the GSEs to fail so they could get the books of business. Trump, in his letter to Paul said he wanted them released. He delegates authority.. He expects his wishes executed and moves on to another topic. Mnuchin made it look as if he was doing something, albeit slowly, and, essentially, wasted four years. I think it was a stall tactic to keep the TBTFs' wishes alive. We all know they could have successfully released during that time of Trump's term. If Trump was at fault, it was for not looking back and making sure Mnuchin did what he wanted.
Cark Ichan suggested Mnuchin to Trump. I think he did so to help him (Ichan) get the government's hands off the GSEs so he could make another fortune. He held some $50M in GSEs at the time at enormously suppressed share prices. Mnuchin screwed Icahn over as well.

[Guido2]

THIS NOT A POLITICAL POST. SANDRA THOMPSON IS FANNIE MAE REGULATOR & CONSERVATOR. PLEASE DON'T DELETE.

Director Thompson is listed as #1: https://t.co/ODdMvEQsN1 https://t.co/hdxVnox4gy

— Vern McKinley (@VernMcKinley) May 21, 2024

[EternalPatience]

Or the other side of the argument is

They were able to convince why it's not a good idea and he got convinced..

There is no way they violated a code red order

[Guido2]

When the government Net Worth Swept, it also swept out it's own equity out of the corporations.

Treasury equity = $0.

SPS = $0

[EternalPatience]

But at the end of the day, if the president says I need this released. Do you think they would not have worked on it?

Look at it objectively without an excuse hat, R- hat, Trump hat. Just purely based on facts

In your company if your CEO says, this is what I want, do you think it happens or not?

[NeoSunTzu]

Shhhhhhhhh! Shush! Shutty! Do not let the cat out of the bag of the real massive differences between AIG and the twins, their functions, their actual businesses and actions - how they acted in the markets - during and the run up to the financial crisis... there's more on this but no more loose lips

[Donotunderstand]

https://home.treasury.gov/system/files/136/Treasury-Housing-Finance-Reform-Plan.pdf

[Donotunderstand]

So -- pages 28-31 OUT of CONTEXT - are the discussion most pertinent to future exit

When one reads this - these pages -- one can see IMO why there was no freedom during the DJT administration

And if JOE were to ask for a study and recommendations ---- these pages would read 95% the same and thus again no action

The policy did not - I repeat did not - do any math or analysis on should the GOV forgive - eliminate the LP obligation or Convert that amount (about $200B) to common stock. That is my memory. Those who decide to read it now - please let us all know if there are key ideas or paragraphs outside 28-31 for policy/action

Note - i read elimination of the Senior .... shares --- as flat out - call them paid off (I think other pages talk to making the GOV whole -- but again are not defined at all ---- and IMO (surprise but I have said it 100 times) --- with 300B going to GOV and $200B going to F and F ---- that is enough to eliminate without another dime --- ALL IMO (as dividends over 15 years needs to be viewed as part of making GOV square)

[Donotunderstand]

One of the five options to capital issues - in this DJT administration policy that was adopted

Placing the GSE in receivership, to the extent permitted by law, to facilitate a
restructuring of the capital structure

[Donotunderstand]

Here is the key two paragraphs of DJT TREASURY FHFA POLICY

(bold is me)

As described above, each GSE should remain in conservatorship until it has retained or raised
sufficient capital or other loss-absorbing capacity to operate in a safe and sound manner.
Potential approaches to recapitalizing a GSE could entail one or more of the following, among
other options:

? Eliminating all or a portion of the liquidation preference of Treasury’s senior preferred
shares or exchanging all or a portion of that interest for common stock or other interests
in the GSE;

Way back then - I read a lot of this report and it was not clear to me which of "Eliminating" v "Converting to common" was preferred

I recall something about receivership and will look for it -- likely on next page

[DaJester]

A wiser person would understand that there is no Charter Act for the existence of AIG as a private entity. And that Treasury made a $5B return on their $69.8B AIG common & preferred stock investment. At no point did the Treasury implement a solution that reaped at 100-200% return on their stock investment, which is what would happen if Treasury pulls another $200-300B out of the GSEs after already receiving $300B in dividends and NWS.

[jog49]

Geeeez Rodney5! The law, what stinking law. LOL!

[Donotunderstand]

Re DJT instruction to free or fix or resolve the Conservatorship

That became a study that then issued this report and a PR

I encourage people read it (and find the one for BO and explain the differences)
This report - the outcome of the DJT instruction became DJT - TREASURY and FHFA policy

https://home.treasury.gov/system/files/136/Treasury-Housing-Finance-Reform-Plan.pdf

(I will find the critical pages and be back)

[Rodney5]

Donotunderstand said: "The GOV has called them equity and the money "sent" to F and F is called an investment not a loan"

It does not matter if the SPS is called equity or not. READ THE LAW

It’s bad faith and unfair dealing when the Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval to pay down the Senior Preferred Stock the Director has the authority from Congress written in HERA:

HOUSING AND ECONOMIC RECOVERY ACT OF 2008

RESTRICTION ON CAPITAL DISTRIBUTIONS.— page 2731
‘‘(1) IN GENERAL.—A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized. The exception.

Quote: “Page 2732

EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.

NOTE: REPURCHASE, REDEEM, RETIRE...

WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.

Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf

In essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full. The Treasury did not take a Perpetual Equity Investment in the enterprises, the Treasury stated a temporary investment period!

The calculation of the pay down of the liquidation preference of the Senior Preferred Stock, I am asking this committee to apply the law written in the HERA legislation passed by Congress.

https://drive.google.com/file/d/15978NWfDcTtuClMBnwgWFmoPnwK94vWn/view

The liquidation preference has been paid and the Senior Preferred Stock should be canceled.

The law actually exists! FHFA and its Director are executive branch entities. They cannot make changes to federal laws. Only Congress can change the law.

Therefore, the U.S. Congress did not give DeMarco the power to take all the future profits of their wards in conservatorship into perpetuity, thus Nationalizing the GSES, based on an Incidental Power in HERA: The Net Worth Sweep.

The U.S. Congress would have given the FHFA more explicit instructions to do so than merely drafting in the HERA to do whatever it feels is in its best interests. DeMarco, this non-elected bureaucrat, has been allowed to steal the companies for the Treasury.

The SCOTUS upholding the NWS does not change the fact the liquidation preference can be paid down, and the Senior Preferred Stock redeemed under the terms of the law of HERA. The money kept by the Treasury by the NWS should be applied to principle and 10% interest and over payment should be returned to the companies. $301 billion is more than enough to pay the liquidation preference and redeem the Senior Preferred Stock.

[jog49]

These conservatorships have shown, at least to shareholders, what a JOKE our entire government has become. I'm not even confident now that justice can be achieved.

[jog49]

"I do not believe the two of them (Mnu and calab) would have the guts to violate the presidents order if he wanted it to happen. Particularly, if Paulson and Icahn were having his ears"

You know Calabria is a bird-brain academic who has to be brought inside when it starts raining. The snake-in-the-grass Mnuchin was telling him what to do and Mnuchin is a Goldman-Sachs alum. That's all you need to know to form a truthful opinion.

[EternalPatience]

Pressure and scare tactic with a bully attitude. -- that's one way of scare mongering technique

[Rodney5]

"Never gonna happen."

There you go again trying to be some kind of a prophet! Never??
Every time I hear someone say what will or will not happen that's a red flag! I think you are a con artist pushing the theft.

[The Man With No Name]

The prayer of relief Treasury declares Liquidation Preference paid in full and Senior Preferred Stock canceled.

Never gonna happen. The entire reason the SPS were modified such that the LP increases dollar-for-dollar with net worth is to retain absolute control over how a release is made. They may modify the SPS and make them non-cumulative based on their original face value, which would add $193B to tier 1 capital, then proceed with a conversion to increase CET1.

Whatever concoction they come up with, you can bet they won't be deeming their equity "paid in full".

[Donotunderstand]

nonsense

The Student Loan debt is not paid to colleges - !!!!

If they are in trouble - they need to attract more students or cut costs - or go out of business

Possible that college - if really educating with enough variability in courses with solid teachers and labs and ....- is not a business that can self fund (unless it is QUAK no education for profit diploma mills )

May be that State Universities - with some GOV help plus tuition is the only solvent business model for a REAL college education

[Donotunderstand]

link please

FNMA can not pay off student loans

[Donotunderstand]

Barron

yes - these are unique !!!

The GOV has called them equity and the money "sent" to F and F is called an investment not a loan
I imagine the GOV books reflect this

At same time - normally Preferred Stock are issued without an expiration date - for last 20 years or so (in prior years most JPS had maturity dates).

I do not think the SP have a maturity date but --- but ---- I do believe the GOV has the right to demand payment as if they matured - a put on F and F (this put might be after x years like 10 years OR OR when F and F have X in capital OR OR before F and F can again return to ---- ====== . Thus while an investment the GOV has a right to demand they be redeemed !!! So that cost to F and F - about 200B in cash sits on them as if it were debt and maybe more like DEBT that is matured --- but redemption is delayed while dividends are paid?

[Boat Shoes From Yahoo]

Nothing is getting “converted”. 15+ years of this & status quo.

[Donotunderstand]

$4
book value
or is this - earnings x 10 per share - with 1B shares and then with 5B shares

Companies trade at a price that reflects future earnings (discounted) -- or if you prefer - future dividends (a function of earnings) discounted

They do not trade on reserves or BV

[The Man With No Name]

These types of emotional answers are common when folks hold a security that's out of the money.

[Golfbum22]

Will this theft ever end?

Housing affordability is at an all time high and getting worse and gov rats don’t care by allowing big corporations to steal single family homes.

Release the gse’s and at least make it look like you care about housings future.

Go FnF

[QueenVic]

Local colleges are being shut down. Professors lost their jobs, and other faculty members.
Vicious cycle of the "forgiveness" student loan promise. 💤 😴 💤

[Sammy boy]

FNMA just paid 160,000 Student Loans off !

[Rodney5]

Treasury’s Liquidation Preference calculated value is more valuable RIGHT NOW than the calculated value of the entire business! Both JPS and Common are wiped out!

The danger of the conservatorship continuing in time the Liquidation Preference continues to grow and the SPS remains outstanding. Money owed to the Treasury becomes much larger.

The prayer of relief Treasury declares Liquidation Preference paid in full and Senior Preferred Stock canceled. Turn the companies back to the Shareholders. $301 Billion has been collected by the Treasury. It’s the ethical thing to do. Therefore both common and JPS holders are made whole.

[Rodney5]

the SPS LP increased for free is missing, because it carries an offset with reduction of Retained Earnings account, and shows that FnF are not building regulatory capital but SPS LP)

THAT’S EXACTLY WHAT EVERYONE HAS BEEN SAYING ON THIS BOARD FOR YEARS mr wise man and you think you’re the only person that gets it with your sheeeet emoji’s !

[Rodney5]

No one is confused by the SPS cumulative dividend feature. It’s stealing.

[Wise Man]

BOTTOM LINE. In order to see "Changes in Equity" now we have to look at the Income Statements, not the actual Equity (Balance Sheet). Huh?


SPS LP is stuck to $73B every quarter. Yet, the actual SPS LP outstanding stands at $123B as of March 31, including the $2,741 million scheduled to be increased on June 30th.
$50B SPS LP is missing, equal to the $50B Net Worth.

[Wise Man]

The 2 Extended Versions of the Income Statements include "Changes in Equity". Then, only one of these "Changes in Equity" is shown in Equity (Balance Sheet).
The idea that Trump wanted to end the Conservatorships, written in a Presidential Memorandum, is laughable, because he was just continuing with the same Separate Account plan adding the 3rd phase, otherwise every action is unlawful and a also a breach of the FHFA-C's Rehab power: restore soundness (build capital) and solvency (build capital and reduce the SPS).

The Trump Administration is behind the scheme: SPS increased for free as compensation to UST, that began with a one-time $3B in December 2017 with Mel Watt, after being warned in a tweet by a shareholder that the SPSPA is void as of 2018 ($0 NW target in the 3rd PA amendment, a breach of the Charter Act that requires a minimum).
He wanted to meet the capital requirements increasing the SPS LP every quarter while posting $0 EPS,


when it's precisely this $0 Net Income Attributable to Common Shareholders, the Common Equity (plus the OCI that I will talk about next) that should have been posted on the Net Worth of the Balance Sheet (fixed picture of a company at a determined date), because this information appears in a separate extended version II of the Income Statements created, precisely, for these Changes in Equity, that is shown below the original Income Statement "result of operations" (revenues and expenses during a period).

You can't post "Changes in Equity" on the Income Statement version II, and later you are reluctant to post the actual "Changes in Equity" on Equity (Net Worth), that is, on the Balance Sheet (all the SPS LP increased for free is missing, because it carries an offset with reduction of Retained Earnings account, and shows that FnF are not building regulatory capital but SPS LP)

This accounting rule exposes the plotters' Financial Statement fraud.
There is also an extended version I of the Income Statements, where the "result of operations" (revenues and expenses) should stop on the Net Income line item, but the companies add another line item: Other Comprehensive Income (OCI: fair value changes in AFS securities when a company has the intent to keep those securities to maturity and thus, avoid the volatility in Net Income and Net Income Attributable to Common Shareholders for the EPS. Thus, the HTM portfolio is BS), that is another "Changes in Equity" that shouldn't have been posted on the Income Statement if it's an Equity transaction shown on the Accumulated Other Comprehensive Income (AOCI) of the Balance Sheet (Equity), but, the same accounting rule (reflect accurately what really was earned by the shareholders) compels the companies to post it here and thus, they don't post just an Income Statement (result of operations) but the Comprehensive Income (adding up changes in Equity).

This is why it's been created this adjusted table: We see how the $2,741 mll in Comprehensive Income (Net Income + OCI) is swept to UST (as seen in the Income Statement too), the very moment that it's substituted for SPS LP worth $2,741.
The shareholders have earned $0 ($0 Common Equity built), as correctly seen on the Income Statements.



It's important to see it because, necessarily, this Common Equity is held in escrow, as the capital distributions (SPS LP increased for free) are restricted, and we use the exceptions to this restriction to legalize them. In this case, the CFR 1237.12 tells us, either in the exception 1, 2, 3 and 4 because it supplements and shall not replace or affect the restriction in the statute USC 4614(c) meant for the recapitalization, that it has to recapitalize FnF ("to meet the minimum capital level and risk-based capital requirement").

It also uncovers that it occurred the same with the prior capital distribution restricted, both the 10% and the NWS dividends. The exceptions are activated to legalize these payments:
-To reduce the SPS (obligations in respect of Capital Stock -SPSPA-)
-For their recapitalization: July 20, 2011 CFR 1237.12, in time for the moment that the SPS were fully paid off (Dec 2013/2014, resp.). It was needed another exception to apply the dividend towards (assessments sent to UST in the form of capital distributions, not actual dividends), knowing that the coming NWS dividend (2012) was going to repay them fast (fastest speed possible, as the 10% dividend prompted the losses and more SPS increased)
The FHFA-C's Incidental Power "any action", allows this plan of deception.

The capital requirements aren't met with the Net Worth, otherwise you would see low profile officials handing out SPS LP for free every quarter, equal to the NW increase, which coincides with the Common Equity increase.
Therefore, these people want to meet the capital requirements piling up SPS.
These people later want good deals from the administration in the sale of securities on the market later on. They can throw in Making Home Affordable programs to sweeten the deal and draw more politicians into their plan. Another Public-Private Partnership with secured deals for investors (Chamber investors), that began with the 1989 FHLBank scheme, that saddled the taxpayer with $30B in losses (The principal of the 40-year RefCorp obligation remained outstanding, as the bailout was renamed "obligation to pay interests" by the FHFA. Thus, considering it "satisfied". Good. But you have only paid the 40 years in interests, not the principal of a RefCorp obligation that only paid interests. Oops!), recovered in full recently with the seizure of $SVB after being leveraged to the max with FHLB's advances (loans) and the ongoing Fed's HTM portfolio scam (the eligible assets for Liquidity in their Contingency Porfolios aren't recorded at fair value).

Under accounting rules and, in order to give a more accurate information about what really has happened during the quarter and what the shareholders have really earned (the Preferred Shareholders are "the others", because they have "other ownership interest" -upon Liquidation-, as stated for instance, in the FHEFSSA definition of capital distribution), there is this separate extended version II, below the original one that ends with the Net Income and below the extended version I with OCI.

In this double Income Statements don't appear the compensations to the shareholders, because the objective is to know what they really earned in the quarter (without showing the volatility with OCI, commented before), not to show the compensation to themselves as the shareholders. That is, they own all the remaining Net Income Attributable to Common Shareholders, regardless that later it's distributed to them as dividend, or kept by the company as Retained Earnings.

The compensation with dividends and others like the SPS LP increased for free, are distribution of Earnings are "Changes in Equity", not items "result of operations".

[Wise Man]

Seek help, bro.

I and my other 35 pro se aliases don’t understand you.

[The Man With No Name]

You're dang right I'm sure and there's nothing novel about them. Senior/junior, etc. only denotes seniority in rights. Just because you have an ownership interest, i.e. - SPS, JPS, Commons......that doesn't mean the ownership interest has any value (in the case of negative net worth).

You seem to be confused by the SPS cumulative dividend feature.

[The Man With No Name]

A wise person would study how Treasury dealt with AIG and then understand 'fiduciary duty' is not at play here, as it was there. Occam's razor.

[Barron4664]

You say the SPS are equity. Are you sure? The SPS are a novel financial product that has never existed before 2008. (Violation of the Safety and Soundness act of 1992) If anything the SPS are more like obligations. Afterall, if the Companies are obligated to pay back the LP that has been accumulating since day one, how can you consider them to be equity? Isnt equity the residual ownership after all debts are paid off? The SPS LP is a debt that is owed to Treasury. The current value of which is greater than the company. So what equity do the SPS have in GSEs of a negative net worth of a couple hundred billion?

[naveedkhan]

The only things that guy is good at are3

1. Making money off taxpayers or from some BS think tank

2. Getting fat

3. Talking about fixing roofs when the sun is out

4. Petting his kitty