Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

Great find, I found this when I googled "Alex J. Pollock":

"The original bail out deal for Fannie and Freddie created a senior preferred stock with a 10% dividend. As everybody knows, the amended deal makes all their net profit a dividend, which means there will never be any reduction of the principal, no matter how much cash Fannie and Freddie send the Treasury. It is easy, however, to calculate the cash-on-cash internal rate of return (IRR) to the Treasury on its $189.5 billion of senior preferred stock. So far this is about 7%-- positive, but short of the required 10%. But as Fannie and Freddie keep sending cash to the Treasury, the IRR will rise, and will reach a point when total cash paid is equivalent to a 10% compound return plus repayment of the entire principal. That is what I call the “10% Moment.” It provides a uniquely logical point for reform, and it is not far off, perhaps late 2017- early 2018."

It's from 2016, but seems relevant.

https://www.urban.org/policy-centers/housing-finance-policy-center/projects/housing-finance-reform-incubator/alex-j-pollock-seven-steps-housing-finance-reform