Fannie Mae-No Politics (FNMA)

[HappyAlways]

I spent some times studying the last few rulings. They share one thing in common. Bad law is law. HERA is law. Judges need to rule according to law. Shareholders cannot suit FHFA, as stated in HERA. FHFA has the sole right to make bad business decision even if death spiral is fake and NWS violates conservator role to conserve and preserve Fannie and Freddie.

However, by now, I can tell that most judges are aware that (i) death spiral is fake, (2) NWS is to rob the shareholders and against the conservator role, (3) (for some judges) Bad loans from TBTF banks are the major cause. Fannie & Freddie did not cause the housing crisis, and (4) (for some judges) GSE model works well and bailout is not necessary.

I think we need to work from other prospective, as implied by some judges: (1) on Contractual terms, (2) Illegal taking, which is obvious. And, (3) not as a shareholder (HERA does not exclude non-shareholders).

I hold Fannie for 8 years. I have faith that Fannie and Freddie shareholders will be properly compensated, given FnF are making good money. Replacing them will imply (1) risk to 30 years loan, (2) higher interest rate, and (3) TBTF banks to risk the mortgage secondary market. IMO and GLTA.