Fannie Mae-No Politics (FNMA)

[contrarian bull]

I don't believe that this last part is correct. FnF just barely passed the point where they paid the $187B plus the 10% interest.

That means that until this point there was actually no difference between the NWS and the original SPSPAs if they had forced FnF to use their net worth to pay down the senior preferreds.

Or put another way, no difference between the NWS and FHFA directing FnF to put all net worth into paying down the senior preferreds while suspending normal capital requirements.

So if the NWS is only just now starting to be any different from the original SPSPA, there is no way that cancelling the NWS retroactively at this point will suddenly add $187B to capital.

I ran the spreadsheet treating the payments as interest and principal payments. The current NWS does not allow this - all payments are dividends only. No credit is given towards paying any principal.

But if the payments were considered 10% interest and the rest principal, as of the last quarter or two all of the principal would have been paid off - a little at each payment that exceeded interest for the quarter.

This is a huge difference. Without the NWS all shares of the senior preferred would have been paid and retired as of now. With the NWS f&f still owe the full $187.5 billion and all senior preferred shares are still outstanding.

The current balance sheet has the senior preferred as a liability, so it subtracts $187.5B from the total f&f net worth making in almost zero. If those shares had been paid off that $187.5B would be removed from the liability side - leaving a positive net worth $187.5B higher than it is today.