Fannie Mae-No Politics (FNMA)

[chessmaster315]

Professor Epstein:

The initial decision to throw the GSEs into insolvency depended upon a decision that the DTAs were of zero value in September 2008, at which point they could be written down, so as to allow FHFA to take over both companies on the supposed ground that they were insolvent. Without that determination, FHFA could make no finding of insolvency because Fannie and Freddie’s portfolios were filled with liquid assets that could pay off current obligations as they came due. Yet shortly after the NWS, the DTAs are reversed and brought back on the books, at a time when the entire value of the company has been transferred to Treasury, shortly after the adoption of the NWS. Clearly more is at stake than a simple timing issue, for the write-off comes at the expense of the private shareholders and the corresponding gains inure to the government, which had exclusive control over the timing of both the 2008 and the 2012 events.

In short, Fannie did not need the bailout and the government did the sweep to rip us off.

Source:
http://www.forbes.com/sites/richardepstein/2017/02/06/fairholmes-big-win-on-discovery/2/#635920451c59