Fannie Mae-No Politics (FNMA)

[RickNagra]

Kao seems pretty confident that the recent letter of agreement was essentially a lockbox to a settlement. Mnuchin and Calabria essentially hinting let’s settle this once and for all. For starters they shockingly lowered the capital requirement for a release to 3%. I think that means instead of reaching $200B we now just get to $150B. They want all lawsuits settled and even set aside $5B for the lower level litigants has an incentive. They address the warrants in the letter. And finally they talk about the need for third party capital. Is Kao right ? Treasury desperately wants to settle ? Thoughts ?