Fannie Mae-No Politics (FNMA)

[jeddiemack]

Looks to me like the Liquidation Pref is the problem.

If folks remember I mentioned this early on as a schtick and circular motion a couple of weeks ago. As a possibility, it really is like rubbing it in.

But, really? Liquidation pref is only important according to definiitions as if liquidated. But these two really shouldn't be anywhere near that, if honest accounting occurs.

Next.. since the $3B stays with thecompany instead of gifting it to treasury they have the opportunity to make money off of that equity. So, its actually a really good thing.

Finally, if the net worth sweep is against the law so should this liquidation pref as it promises the value to another and thus from an accounting side really is more like a debt than equity. Thus they've not really added to capital if in the meaning of what is debt -v equity from an accounting theory perspective. Consequently, it should be against the sound and solvent criteria as well. "sound" what is sound... in the meaning / definition... to me that means having the wherewithawl to act in a manner of soundness. Having inadequate capital and restless shareholders as a result is not sound.

Thus i'd have to say, this liquidation pref thing is not a sound move on the part of fhfa or treasury and should be challenged.

peace to all.