Fannie Mae-No Politics (FNMA)

[kthomp19]

This is well-argued. The one problem is that there is a small loophole, one through which FHFA has been trying to pass a camel. That loophole is the fact that FHFA has suspended capital requirements while FnF are in conservatorship. Therefore "adequate capital" doesn't have a meaning, and FHFA is allowed to drain FnF's capital to zero (well, now to $3B each).

The whole thing stinks to high heaven, and I don't believe that FHFA's suspension of capital requirements is even legal (emphasis added):

‘(a) In General-

‘(1) ENTERPRISES- The Director shall, by regulation, establish risk-based capital requirements for the enterprises to ensure that the enterprises operate in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of the enterprises.

However, no plaintiff has sued over FHFA's refusal to impose binding capital standards, and no court has ruled on it.