Fannie Mae-No Politics (FNMA)

[YanksGhost]

I'm not sure even Superman with x-ray vision could read that fine print without the aid of an electron microscope. But I digress...

The Senior Preferred Shares are but a tiny piece of the SPSPA which is a contractual agreement between the Seller, Fannie Mae (or Freddie Mac) and the Purchaser who is U.S. Treasury. The transactional value of that was, from memory, $1 billion for the purchase of Senior Preferred Shares. From an accounting perspective, this is identical in treatment to how any of the Junior Preferred Shares were loaded onto the balance sheet.

What ever that total was goes into "paid in capital" and does count as core capital until the point when all core capital was later exhausted, via quarterly "net worth" sweeps, that sadly purged all capital assets.

The long and the short is that a $1 B piece of capital is not worth any lengthy debate and would not be especially consequential to recapitalizing the GSEs.