Fannie Mae-No Politics (FNMA)

[Always wondering]

HERA 2008 "REQUIRES" repayment and keeping FNMA private shareholder owned:

The financial agreements between Fannie/Freddie and the Department of Treasury to enable repayment.

Also, the Preferred Stock Purchase Agreement Stock Certificates between Fannie/Freddie and the US Treasury provides for the option for repayment.

The following is the section in HERA 2008 that discusses the repayment requirement:

“HOUSING AND ECONOMIC RECOVERY ACT OF 2008

REGULATED ENTITIES BY SECRETARY OF TREASURY.

(a) FANNIE MAE.—Section 304 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719) is amended by adding at the end the following new subsection:

‘‘(g) TEMPORARY AUTHORITY OF TREASURY TO PURCHASE OBLIGATIONS AND SECURITIES; CONDITIONS.—

‘‘(1) AUTHORITY TO PURCHASE.—

‘‘(A) GENERAL AUTHORITY.—In addition to the authority under subsection (C) of this section, the Secretary of the Treasury is authorized to purchase any obligations and other securities issued by the corporation under any section of this Act, on such terms and conditions as the Secretary may determine and in such amounts as the Secretary may determine. Nothing in this subsection requires the corporation to issue obligations or securities to the Secretary without mutual agreement between the Secretary and the corporation. Nothing in this subsection permits or authorizes the Secretary, without the agreement of the corporation, to engage in open market purchases of the common securities of the corporation.

‘‘(B) EMERGENCY DETERMINATION REQUIRED.—In connection with any use of this authority, the Secretary must determine that such actions are necessary to—

‘‘(i) provide stability to the financial markets;

‘‘(ii) prevent disruptions in the availability of mortgage finance; and ‘‘(iii) protect the taxpayer.

‘‘(C) CONSIDERATIONS.—To protect the taxpayers, the Secretary of the Treasury shall take into consideration the following in connection with exercising the authority contained in this paragraph:

‘‘(i) The need for preferences or priorities regarding payments to the Government.

‘‘(ii) Limits on maturity or disposition of obligations or securities to be purchased.

‘‘(iii) The corporation’s plan for the orderly resumption of private market funding or capital market access.

‘‘(iv) The probability of the corporation fulfilling the terms of any such obligation or other security, including repayment.

‘‘(v) The need to maintain the corporation’s status as a private shareholder-owned company.

‘‘(vi) Restrictions on the use of corporation resources, including limitations on the payment of dividends and executive compensation and any such other terms and conditions as appropriate for those purposes.

http://www.gpo.gov/fdsys/pkg/PLAW-110publ289/pdf/PLAW-110publ289.pdf