Fannie Mae-No Politics (FNMA)

[Louie_Louie]

From Treasury Dept release plan for GSE's:

The guiding principle for ending the conservatorships should be that each GSE should remain in
conservatorship until FHFA determines that that particular GSE can operate safely and soundly
and without posing an undue systemic risk. The specific preconditions for FHFA considering a
particular GSE’s exit from conservatorship should include, at a minimum, that:
? FHFA has prescribed regulatory capital requirements for both GSEs;
? FHFA has approved the GSE’s capital restoration plan, and the GSE has retained or
raised sufficient capital and other loss-absorbing capacity to operate in a safe and sound
manner;

Notice to prefs, it does not say that fhfa IS RESPONSIBLE to undertake raising capital, it does not say to do a pref conversion, it does not say to do a reverse split.

You gotta wonder if pref shares are even necessary at this point in the GSE's business since they ARE too big to fail and the government has proved this by forced conservatorship and said taxpayer bail out (which we all know was unnecessary). My point being...if government is going to say too big or economically important to fail, then why have pref class share that only counts on a liquidation that will never happen. Basically pref's are loaning the companies their money with no say so and no guarantee of coupon payment since the companies can postpone that indefinitely until healthy.