Fannie Mae-No Politics (FNMA)

[car123]

Navy, very informative article but want to add two views.

1. After administrative reform, GSE will go back to prior 2008 operation with big capital. FNMA at 2006 has PE value of 16.5. So the author should use 16.5 rather than 10 to project the PPS after release. i.e FNMA PPS shall be $40-$200 depending on how warrant is cancelled. No need to consider legislative reform as everybody know it will not happen in the next decade.

2. regarding TARP, TRAP programs for banks bring a return of ~12.4% to UST which includes warrant, interest, dividends .... For GSE, excluding $25B NWS overpayment, UST still makes a profit of ~47.6% (four times of banksTRAP return). UST shall cancel the warrant. They steal too much money from GSE. It is not fair.