Fannie Mae-No Politics (FNMA)

[contrarian bull]

Liquidation preference is what F&F need to pay Treasury to buy back the senior preferred shares and thus end conservatorship.

Yes capital build comes first - no NWS until the net worth hits the specified limit. You will see this in action in May. There is a good chance that Fannie will make no NWS payment to Treasury for Q1 since their net worth began the quarter at negative $5 billion. Thus they can retain $8 billion from 2018 profits. Fannie probably won't earn enough in Q1 to get any swept, although Freddie probably will.

In December Mnuchin wrote that letter increasing the allowed net worth by $3 Billion. No reason he could not write that same letter, but change that "3" to "100" and strike out the paragraph about increasing the liquidation preference.

It's so easy. Just a few key strokes and taps on the delete key in Microsoft Word.

No need for congress to vote, no bills to pass, no executive orders needed. Just a few taps on the keyboard, click send to F&F.

liquidation value --- amount the GOV claims we owe?

and the post suggests that the GOV/Treasury/Watt/Mnuchin can arrange things so capital build up comes first and NWS payment comes from remainder ?