Fannie Mae-No Politics (FNMA)

[kthomp19]

There really is no hurry to reach the full capitalization standards, as long as we have a consent decree in the fairly near interim.

The urgency will be determined by Calabria, not you.

The opposite is true here: there is no reason to delay a capital raise, and plenty of reasons to hasten it, the foremost being safety and soundness.

Why not see how much will be raised over the next 4 or so years through retained earnings, with a consent decree. Then seal it with a capital raise AFTER that timeframe.

We already have a ballpark of how much FnF will retain in the next 4 years, somewhere around $80B. Given the size of Calabria's capital standards it won't be anywhere close to enough, and any variance from the estimate will be small by comparison.

Calabria said "It has always been my view that an exit from conservatorship is going to require a large capital raise by Fannie and Freddie. I have always believed that that's a 2021, 2022 event." at 7:03 of this CNBC interview in April. That clearly means that release, even with a consent decree, will come at the conclusion of a large capital raise, not before. Certainly not 4 years before.

Thereby, those investors who supply the final capital will be at least amount of risk, knowing that their investment will make the difference in sealing the consent decree release.

I agree with this sentiment, but doing so in the next 6-12 months rather than 4 years from now will make FnF safer and sounder in the interim. And that's Calabria's main job as a safety and soundess regulator (as he describes himself).