Fannie Mae (FNMA)

[YanksGhost]

Yes, fully possible to redeem select series of preferred shares and seek lower coupon forward offers. Just went through one of these... a huge one ... with Annaly Capital/NLY. But the problem, as NLY revealed, was the redemption gets reported as a loss and, thus, would be a negative to retained earnings and core capital. Not an attractive scenario for FNMA or FMCC.

The better strategy would be to buy back the warrants from Treasury, say for $10 B. And why would GOV forego the lure of the Moelis $100 B jamboree? Because it can recap the GSEs almost immediately, make a private capital entry less risky and more profitable and rid UST of the further draw facility in the SPSPA,,, nearly $200 B. Remember MC's comment ysterday about improving ROE? This explains it, IMO.

You are right about different postures on JPS between the two GSEs. Could be done differently for each, I suppose.