Fannie Mae-No Politics (FNMA)

[kthomp19]

With two signatures, the minimum capital level required for release can match the amount of capital on hand at the time of release, WHENEVER THAT WILL BE.

To an extent, yes. But there is a lower limit: HERA specifies that core capital has to be at least 2.5% of balance sheet assets for Fannie or Freddie to avoid the "significantly undercapitalized" designation.

I'm guessing AFTER the dust has settled from all the litigation and each party knows what their positions are without legal doubt.

I agree, though my agreement is based on a third-party capital raise, and it is these investors who would insist that all litigation be gone.

This as well is easily changed with 2 signatures.

See above. FnF's combined core capital right now is around -$133B, and 2.5% of balance sheet assets is around $175B. With normalized annual earnings of $20B (2019 and especially 2020 were outliers, due to the adverse market fee and balance sheet explosion) and taking into account the fact that total assets have gone way up and will continue to rise in the future (though likely not as fast as in 2020), that's where 20-22 years comes from.

Treasury cancelling the seniors or converting them to commons takes care of $193B of that gap in an instant, and that's where my 5-7 year timeline would kick in.

Crucially, these two timelines are based on a capital requirement that is as low as the law allows it to be. Any capital requirements greater than that (like Calabria's 4% or Thompson's 3%) would require either more time to retain earnings or a bigger capital raise.

I think an important legal point here is often overlooked by likely the vast majority of equity investors in the twins and that is simply that a law may legally authorize the government to act, BUT THAT DOESN'T PRECLUDE FINANCIAL RECOVERY BY THE PLAINTIFFS FOR A TEMPORARY AND/OR PERMANENT TAKING BY UNCLE SUGGY!

Right, but non-plaintiff post-conservatorship (and post-NWS) shareholders like me don't care about direct takings claims. We want the derivative claims to succeed because then FnF would be that much closer to fully capitalized, and if/when they get to that point it would be impossible to justify continued conservatorship.

But I think any monetizing of the gubmints 'investment' will happen AFTER the dust settles from all the litigation and that could take awhile...

Maybe. There are probably some plaintiffs that won't settle without knowing the fate of the seniors. Especially those with derivative cases.

No cases have been certified as class actions yet so there's still the possibility that all named plaintiffs get paid off to settle and all the cases go poof. But I certainly hope that doesn't happen.