Fannie Mae-No Politics (FNMA)

[big-yank]

My S/P prediction was very simply derived by comparing the S/P today with what I see if conservatorship ends and the basic changes I believe would transpire.

1. The sweep and SPD cease.

2. Income formerly routed to Treasury would be re-allocated to restore capital buffers.

3. Payment to junior preferred shareholders would have to re-commence after the hiatus since Q2/2008.

Obviously the big "what if" is some possible, large legal settlement that might be allocated to the GSEs and be used as a quick fix for recapitalization. But the lawsuits pending seem centered more on recovery for plaintiffs, not for the enterprises, themselves so I did not factor anything in for this.

JMHO.