Back in mid-February, THIS is how you framed the so-called SECRET PLAN. Sounded appealing. Too good to be true? YUP!
Let's all agree to stop with the Secret Plan garbage and focus on known facts as investors.
There is no silver bullet other than an unforeseen, huge court win that can easily solve Fannie Mae's Capital problem. This is an absolute fact because in statutory law, a Conservator or a Regulator can only impose capital requirements that, at minimum, meet the statutory standards signed into law. The Capital Plan can include a period of forbearance where Capital can be amassed, over time, as you correctly observed in the FHA example... a ten year window to rebuild to statutory levels. The same 10 year period of grace was also apllied in the FDIC capital build-up, by my recollection. But the end game MUST include and meet or exceed the statutory capital levels set by an Act of Congress. Simply put, Calabria cannot set a standard below what the Charter Act and OFFHEO set, unless Congress confirms via passage of a new law.
Fannie Mae reports its statutory capital position in their quarterly 10-Q report. That report in its most recent results, stated a capital deficiency of $131.3 B (reference page 66). That number is for Fannie Mae, only, not Freddie Mac.
Now read the FHFA Capital Proposal. NUMEROUS times, that 400+ page document states "the higher of" his mathematic model vs. statutory capital requirements as being the standard which will be imposed. There is an extensive review of this legal standard raised on yesterday's Corner of Berkshire & Fairfax site (link on gselinks)... posts by Midas79 in the last 48 hours.
There is NO legal basis where the Secret Plan refunds will meet the legal standards of release and some $200+ common share price. Beyond that, the likelihood of Government deciding to refund $billions they don't have is zero, zilch, nada, bupkis... you name it.
There is no Secret Plan. There never has been any Secret Plan. There will never be any, future Secret Plan. There are many positive outcomes for investors here. I have listed many of these over the last few days. But there is NO PIXIE DUST SECRET PLAN that is going to rescue FNMA from 12+ years of imprisonment. This is going to be a hard fought battle and time will be required to get to an eventual positive result.
No reply needed or encouraged.
FACTS MATTER!
