Fannie Mae-No Politics (FNMA)

[kthomp19]

While the SPSPA remains in force and fully functional, the Us GOV stands behind payment of $5.5 trillion in mortgage bonds issued by Fannie Mae and Freddie Mac.

Only up to the limit of the funding commitment. I think FnF have around $200B combined that they haven't drawn yet. If FnF were to sustain losses higher than that amount, FnF bondholders stand to lose money (after all FnF equity holders are wiped out, of course).

If GOV gives back $300 B and that ends the SPSPA, that also winds down any GOV guanantee of outstanding bonds which become the sole responsibility of the GSEs.

Nope. The government doesn't guarantee any FnF bonds and they never have.

Now you're right that unwinding the SPSPAs gets them out from under the funding commitment, albeit at an unreasonably high cost; why pay $300B to avoid maybe having to shell out $200B someday?

This also explains why GOV inserted the "warrant" provision into the SPSPA. It was NOT, as claimed pesterday, to enhance returns to taxpayers on the bailout. It was to compensate taxpayers for an explicit guarantee of MBS bonds issued by the GSEs for the duration of the conservatorship.

Wrong again, because this doesn't explain why Treasury insisted on getting warrants for other bailout participants like AIG and Citi. The 79.9% warrants were just standard operating procedure for Treasury at the time, and designed to enhance taxpayer returns along with avoiding moral hazard.