Fannie Mae-No Politics (FNMA)

[bcde]

"As the "negative" at F and F (to the extent it existed) was all a paper loss due to write down of bond holdings --- where did this 187.5B go ? "

Donotunderstand,

First you need to understand why crookhank imposed conservatorship on FnF. The devious purpose was to destroy FnF but the official reason was to provide unlimited liquidity to frozen markets.

In late 2008, Bush UST/FHFA forces massive write down of assets and then forces SPSPA. Conservatorship uses this limited cash to provide limited liquidity to frozen markets. At the same time Fed starts buying FnF MBS in trillions providing most of the liquidity. If this were to be done without imposing conservatorship then FnF would have been massively profitable and the FnF pps would have skyrocketed. This would have highlighted success of FnF business model and failure of banking model. But the purpose of conservatorship was to paint opposite picture.

After 3 years in 2012, FnF plan to reverse the massive loss reserves. Sensing the impending release from conservatorship, OB UST/FHFA impose NWS to prevent highlighting massive success of FnF business model and failure of banking model.

In short whatever $150B money Gov invested in FnF to provide liquidity was a small change compared to massive FnF MBS purchases by Fed to provide unlimited liquidity to markets.