Fannie Mae-No Politics (FNMA)

[kthomp19]

That is a documented fact

It's at best a half truth, and that's being generous.

1) Both Fannie and Freddie talked about private sector capital raises in addition to retaining earnings in their capital rule comments. They certainly did not endorse a retained earnings-only path to full capitalization.
2) FnF will actually raise the capital, but all of their decisions on that front are subject to approval by the FHFA director. They do not have free rein to raise capital however they want. This fact is conveniently ignored by those who claim that FnF can raise capital however they want.
3) The CET1 capital standard, along with the facts that there is only room for $33B of prefs in the capital structure for FnF and that the PCCBA must be all CET1, means that FnF must raise all their capital via retained earnings and common share issuance, unless the juniors are converted to common.
4) The "long path" part is an opinion (and obvious wishful thinking), not fact.