Fannie Mae-No Politics (FNMA)

[Donotunderstand]

I am not arguing about needed or not

There were some GAAP accounting issues that caused heartburn

From there on - there was a lot of dispute


My sense is that it was not accounting - it was not a prospective intent to use FNMA as a garbage can - it was FEAR the CHINESE and RUSSSIANS -acting in simple self interest - would start dumping FNMA and FREDDIE paper and test the IMPLICIT GUARANTEE . If Prices fell - they would dump big time = causing a panic on top of a panic

So in came an explicit guarantee - in the form it took

Done - I do not want to argue yes or no to original sin

It happened

My point is that NOW - for FNMA to exit - there will need to be a form of GUARANTEE That is explicit
Such GUARANTEE at the moment is assumed to only come with conservatorship

I argue that it can be issued by TREASURY in return for F and F raising some capital (in a promise) without dividends for say 5 years (common or JPS) and then agreeing to revise corporate structure to GOV regulated private utility

Whatever happened - is past

Now the question is how can we exit

IMO we can not exit and issue Trillions of dollars of MBS paper without explicit Treasury guarantee - and that there are ways to secure such without conservatorship

And to the poster - a day or three ago - who said F and F had such explicit TREASURY Backed guarantee - I still wait proof

As I was taught years ago - GNMA paper had such guarantee and FNMA paper did not !!!

In normal times the implicit understanding stood well. In the panic and with fear of actions by Russia and China who owned a boatload and more of our paper --- we needed the explicit guarantee

inellegant way of giving it to us

let them find an elegant way to let us keep it and exit conservatorship that does nothing now