Fannie Mae-No Politics (FNMA)

[big-yank]

The warrants are accounted for on Fannie's books at a value of $4.5 B, recorded on September 7, 2008. That represents the value of 79.9% of Fannie Mae's common share market capitalization at that time. Recovery of any amount above that total would carry deeply erosive tax consequences without some massive Trump business tax cut in place, and simple cancellation of the warrants would entail a $4.5 B asset impairment charge.

The government is not going to cede the warrants. They received them in exchange for initial backstops afforded Fannie Mae at the time conservatorship was set in place. The warrants only go away if Fannie Mae is released from conservatorship and the initial contracted agreements are cancelled, absolving UST of any further draw obligations to the enterprise.

In such case, FHFA would dissolve and the prevailing statute would revert to the GSE Act's provisions and those preceding that law.

JMHO.