Fannie Mae-No Politics (FNMA)

[kthomp19]

If the government invested in FnF, it couldn't collect dividends during conservatorship. If it was a loan, it's been overpaid.

The first part is incorrect because FHFA suspended capital standards on FnF during conservatorship, thus no part of HERA prevented such dividend payments. HERA gives FHFA a ton of leeway over such determinations anyway; if the director at the time of each NWS payment decided that it was in the best interest of the agency to make such a payment then HERA allowed for it.

The second part is irrelevant because the seniors were not a loan.

The government is using voodoo accounting to make zombies of two of the most profitable corporations in the world.

Given your background in accounting, please be more specific just what it is you mean by "voodoo accounting". What about it invalidates the incontrovertible fact that FnF report a combined core capital of negative $170B as of the end of 2019?

Both had more capital before conservatorship than they do now.

True.

In the meantime, during conservatorship they earned over $300 billion after taxes. If, as you say, they now have a negative $170 billion it is because they are using voodoo accounting.

No, it isn't voodoo accounting. It's the seniors' 10% dividend that has eaten up all the difference. That same 10% dividend rate that no plaintiff seeks to overturn, not even Washington Federal.

10% per year on $187B worth of senior liquidation preference (and it has since increased due to the Q4 2017 draws and two letter agreements) adds up in a hurry. Since nobody is seeking to have this changed, there is no reason to believe that it ever will.

Can't believe anybody with common sense would defend the Government's position.

I am not defending the government's position here, just stating facts.