Fannie Mae-No Politics (FNMA)

[YanksGhost]

Sure. But there are two separate points in the narrative.

1. The Treasury is allowed to purchase "obligations and other securities" from the seller (Fannie Mae or Freddie Mac). That basically means MBS.

2. Then you have what are believed to be anecdotal comments from Hank Paulson over financial aid for the enterprises only being given during consevatorship, not under charter auspices.

I see nothing incongruous in these declarations. The SPSPA formed a contract basis for support to the enterprises beyond the statutory ones extended in the charter which were amended several times as FNMA was converted from a Federal entity to a private enterprise.

I have read a lot of talk about the reason for the purchase provision. I have long maintained that it arises from Treasury's concern that MBS with uncertain guarantees could become unsellable in 2008. Consequently, he opted for an SPSPA conveyance whereby UST could purchase MBS and only take guarantee responsibility for what THEY bought and not for what was held elsewhere. The thought, I believe, was to keep the mortgage market from freezing from GSEs unable to buy bank paper from them.

If you have some additional point, please share it. I am well familiar with the texts involved.