Fannie Mae-No Politics (FNMA)

[Mikey Mike]

It has been an ongoing discussion in the early stages with the Perry Capital case as well as in Congress...I am copying excerpts of their findings below...also according to Treasury the dividend suspension only applies to junior preferreds and commons and not the senior preferreds. Any Federally regulated entity under conservatorship that is facing severely undercapitalized status would have their dividends supended...treasury claims to have corrected this by injecting up to 200 billion as an ongoing capital so that Treasury can do a net worth sweep. The issue with that is it deters private capital to take stake in the GSE's while the Treasury has almost 80% stake due to investors wanting a return on their investment...so the current dilemma is how to exit the government while attracting private investors...so they say...

12 U.S. Code § 4501 - Congressional findings

The Congress finds that—
(1) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (referred to in this section collectively as the “enterprises”), and the Federal Home Loan Banks (referred to in this section as the “Banks”), have important public missions that are reflected in the statutes and charter Acts establishing the Banks and the enterprises;
(2) because the continued ability of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to accomplish their public missions is important to providing housing in the United States and the health of the Nation’s economy, more effective Federal regulation is needed to reduce the risk of failure of the enterprises;
(3) considering the current operating procedures of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal Home Loan Banks, the enterprises and the Banks currently pose low financial risk of insolvency;
(4) neither the enterprises nor the Banks, nor any securities or obligations issued by the enterprises or the Banks, are backed by the full faith and credit of the United States;
(5) an entity regulating the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation should have sufficient autonomy from the enterprises and special interest groups;
(6) an entity regulating such enterprises should have the authority to establish capital standards, require financial disclosure, prescribe adequate standards for books and records and other internal controls, conduct examinations when necessary, and enforce compliance with the standards and rules that it establishes;
(7) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation have an affirmative obligation to facilitate the financing of affordable housing for low- and moderate-income families in a manner consistent with their overall public purposes, while maintaining a strong financial condition and a reasonable economic return; and
(8) the Federal Home Loan Bank Act [12 U.S.C. 1421 et seq.] should be amended to emphasize that providing for financial safety and soundness of the Federal Home Loan Banks is the primary mission of the Federal Housing Finance Board.

https://www.law.cornell.edu/uscode/text/12/4501