Fannie Mae-No Politics (FNMA)

[big-yank]

Yes. I'll briefly explain why. Judge Cacheris ruled that shareholders ceded all normal rights to FHFA under HERA. So they cannot sue FHFA. But that does not preclude a litigation against Lew or UST. If the court rules to invalidate Amendment 3 as actions not authorized under HERA or facilitated by a taking. This could likely lead to a court order directing Treasury to revert back to the 10% SPD mechanism and apply any overpayment to a reduction in senior liquidation preference.

This creates an environment where the case ends, the 100% sweep is modified, but conservatorship remains and is not subject to any judicial review. This is the ultimate default outcome where limbo prevails until sagging income forces another draw, either with or without help from another external event... or... by an eventual wind down imperative succeeding in the new legislature in 2017.

The only gamechanger in this stalemate would be a major success in some other litigation which I have always thought would come via Jacobs, Hindes in Delaware. But even that looks like it has stalled in directionless inactivity.

JMHO.