Fannie Mae-No Politics (FNMA)

[clarencebeaks21]

FOFreddie, thanks. IMHO Calhoun is long on rhetoric, short on details.

Calhoun suggests that this vaguely-described joint venture between FNMA and Freddie would be "operationally similar" to the FHLBs. Huh? How?

Guarantors are not banks, and banks are not guarantors.

I am skeptical that this venture could be a profitable stock, and in fact, it is not even clear to me who would be able to buy the stock or if any dividends would even be paid. By analogizing the JV to a FHLB, Calhoun seems to imply there could be required some kind of distinct ownership and liability conditions in order to be able to participate in the benefits of the venture. (One risk is arbitrage...could the member bank/ use the funds for something else higher risk or not part of the mission?)

Regarding F/F recap, I think this would be a nice turn of events. The F/F AFH business, most likely (IMHO and guesswork) is NOT a profit center, or if it is, it's probably extremely thin and subject to higher tail risk. Thinking more, if my assumption is right, this might also suggest why FHFA hired so many people in 2020 during a pandemic -- partly to add staff to analyze where and how to cut costs, without also harming the statutory public mission goals? I kinda like it, in truth.

[FWIW, when Calhoun mentions fiduciary duty it is in context of a post-conservatorship GSE world, so, it merely repeats what the law already requires of a recap, post-conservatorship. Nothing to see here IMO.]