Fannie Mae-No Politics (FNMA)

[capitalismforever]

"Did Fannie have a 4% capital surplus?"

We're talking about capital requirement here. You can't measure their core asset surplus to today's production because their capitalization was much different then. Today, you're working with $3b of MBS. Then, it was $1b. Today the shares outstanding is 1.16b without the government dilution. Then, it was 960m. So it doesn't matter what their surplus was then, it's incomparable in today's terms because the model has changed.

Today, the capital requirement is $25b. That's remained the same since pre-conservatorship. One thing that's not disputable, in order to privatize them and make the government backstop go away (which is what the discussion has been since 2008), you have to adequately recap the companies. The current levels are not sustainable. That much is clear.

Correctly translated, its pure speculation. Nobody knows, and can safely know, what the recap will be until they do it. One thing is without question, it will be much higher than $25b.