Fannie Mae-No Politics (FNMA)

[kthomp19]

2) the court CAN invalidate! They can say that the NON Severability clause itself (the clause you are quoting) is itself not enforceable.

What good would this do for anybody? Treasury is never going to exercise the non-severability clause anyway. It can do so in its sole discretion, i.e. only if it wants to, if any part of the SPSPA is found illegal or unenforceable.

Treasury exercising this provision would mean they give up all profits gained from 10% and NWS dividends, and the seniors, and the warrants. The funding commitment that Calabria and Treasury hope to use to reassure MBS investors would also disappear. In short, there are many, many reasons (hundreds of billions of them!) for Treasury not to use the non-severability clause, and no good reasons for them to do so. The clause might as well not exist because it will never have any impact. Therefore it doesn't matter if a court strikes it down.