Fannie Mae (FNMA)

[Guido2]

Rick –
You wisely advised us to step into Mnuchin’s shoes. kaoboy hasn’t. I did. The reason Mnuchin didn’t write down the SPS and now continues to increase the LP with earnings not remitted was that he took Collins to SCOTUS. He wants SCOTUS to rule that his predecessors were wrong. He wants SCOTUS and other courts to right this wrong. He and Calabria did what needed to be done immediately – remove the $25 billion earnings retention cap from Fannie as we all know that Fannie will easily exceed it when Q4 (and annual) results get posted. If he hadn’t, he and Calabria would be in violation of the enbanc ruling. In the meantime, they kept everything else intact. They just made sure that the incoming government would not be able to use Fannie and Freddie as ATMs as Obama definitely and Trump possibly did.

Mnuchin and Calabria have handed over the keys to the resolution to the litigants. They set aside $5 billion to resolve all the claims. As I mentioned in an earlier post, the smaller litigants might find it attractive to take what they filed their suits for, plus court costs. Why would the bigger litigants settle? They could make anywhere from $20 billion to a $100 billion if they continue the fight. I believe Mad Max saw this (am I giving her too much credit?) when she accused Mnuchin and Calabria of helping the hedgefunds. Attached are Fridays common and preferred closing prices.

https://finance.yahoo.com/quotes/fmcc,fnma,fmckj,fmcki,fmccm,fmcck,fmcct,fmcci,fmckk,fmccg,fmcch,fmccl,fmccn,fmcco,fmccp,fmccj,fregp,fmckp,fmccs,fmcko,fmckm,fmckn,fmckl,fnmap,fnmao,fnmfo,fnmam,fnmag,fnman,fnmal,fnmak,fnmah,fnmai,fnmaj,fnmas,fnmat,fnmfm,fnmfn/view/v1

One huge favor that Mnuchin did to shareholders was to ask SCOTUS to rule whether anyone other than FHFA can file direct claims against itself while the corporations are in conservatorship. I expect 9 out of 9 Justices will rule that when FHFA acts ultra vires it’s authority, the shareholders can file direct claims. This will revive lawsuits previously dismissed.

I didn’t buy a ticket to Fantasy Island. So, lets deal with facts. They currently have $34.6 billion in CET1 capital. The corporations stand to get back $124 billion in the Federal Court of Claims. This would bring their CET1 to $158.6 billion. In the meantime (I agree with kaoboy here) they earn $20 billion to $30 billion annually. The outside capital raise, if needed, will be very little. No need for caoboy’s “Big Money”. No need for it to be immediate. By having them in conservatorship, their MBS have the full backing of the US Government. Those who bought their MBS the past 12 years were unharmed. They won’t be harmed now that the corporations are finally accumulating capital.

JPS like good fulcrums sit passively while the CET1 grows and get the corporations ready to exit conservatorship. That’s how Calabria planned it. See Table 1 of the Final Rule. CET1 Capital $207 billion. Tier1 Capital $240 billion. Wonder of wonders $240 billion - $207 billion = $33 billion. Ain’t that the same amount of jps?

https://www.fhfa.gov/SupervisionRegulation/Rules/RuleDocuments/Enterprise%20Capital%20Final%20Rule%20for%20Website.pdf

Some additional thoughts on the latest letter of agreement:
10% interest? SCOTUS will get rid of the SPS and LP. 10% of nothing is nothing.
Warrants. They will be challenged. 11,000 documents in Federal Court of Claims and 65,000 documents in Judge Lamberth’s court will take care of that.

Thanks again Rick for copying caoboy's posts and asking for my opinion. Greatly flattered. When we meet, the hot dog and soda are on me. Will include a slice of pizza.