Fannie Mae-No Politics (FNMA)

[kthomp19]

So, then the SPSA IS NOT A LOAN, but EQUITY, that is it is a Cumulative 10% payable/12% in kind Coupon PREFERRED SHARE EQUITY INVESTMENT that happens to include a warrant to purchase up to 79.9% of the common shares for a nominal amount that expires in 2028?

The SPSPA is an agreement (neither loan nor equity), in which Treasury got both the seniors and warrants in return for the funding commitment. But the seniors and warrants are not tied to each other. Treasury has its warrants no matter what happens to the seniors.

So what were the gses suppose to payoff prior to the 3rd Amendment NWS, assuming they had retained earnings to do so, principal of a loan, interest on a loan, or redemption of the preferred shares?

None of the above, actually. The seniors are not a loan (so the ideas of "principal" and "interest" do not apply to them), and FnF never had the ability to pay down the seniors any time they wanted while the funding commitment was in place, which it has been since 2008.

If they paid off the entire amount plus the 10% dividend BEFORE THE NWS, then all that would be left is a 79.9% equity warrant that UST could exercise by 2028 for a nominal amount?

Again, FnF didn't have the ability to pay down the seniors even if they had a trillion dollars on the books. I find that aspect of the seniors odious, but nobody challenged it in court in such a way as to have it overturned so it's going to stand.

Prior to the NWS, the Preferred Shares never get retired UNLESS THE GSES PAYBACK THE 10% Annual Dividend plus Principal, then all UST has left is the periodic commitment fee plus 79.9% warrant exercisable by 2028.

It's even worse. The only way FnF could have paid down the seniors while the funding commitment existed, either prior or subsequent to the NWS, was to issue stock, the proceeds of which would go to Treasury and pay the seniors down. But who would buy stock in a company when the first $193B of that money would go down the drain and not even recap the companies so they could be released?

So you agree that the NWS is an abusive and coercive use of governmental power that should never stand, as there is no way to pay it off?

The NWS is an agreement, not something that can be "paid off".

I do think the NWS is blatantly illegal, but there was no use in me filing my own lawsuit over it because by the time I found out about it in 2016 several other lawsuits had been filed; mine would have been merely a duplicate.