Fannie Mae (FNMA)

[contrarian bull]

Deficiency that triggers a draw not net worth. So while this draw for fannie won't change their net worth - it will solve their current "Deficiency".

From the SPSA:
for the avoidance of doubt, in measuring the Deficiency Amount liabilities shall exclude any obligation in respect of any capital stock of Seller, including the Senior Preferred Stock

So their net worth will remain negative. Which means it may be 2 or 3 quarters before Treasury gets a NWS again.

If fannie was liquidated today common stock would get zilch and junior preferred would get maybe 75% of face value. This was known and is the reason the stock is where it is.

However with them retaining all earnings until they make up the new draw amount plus $3B - each day they don't get forced into liquidation expect a stock price increase. By the time they retain $3B in a few quarters it'll be around $5.

So it's a bet on retaining earnings before liquidation happens. I'm taking that bet.

They are only getting the money they paid back if you assume they never pay off on the senior preferred. Maybe they won't.

Does it really matter at this point if they take a draw? They essentially are getting the money they paid in back...