Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

Could you be more specific as to which "uses of power" you're referring to?

Well I think the major Constitutional powers are currently being litigated as well as the breach of contract claim. Your views that the Judges hands are tied to the certain limited outcomes you have envisioned in some of your previous posts may not necessarily be the case. Also the current litigation could spring into even more potential legal claims or future actions by UST and FHFA could spur brand new litigation.

We know that this type of litigation is measured in years not months and if the conservator decides to seriously follow their primary duty under HERA, the twins should be able to accumulate capital via retained earnings.

It's clear that Treasury thinks the liquidation preference is relevant, even outside of an actual liquidation. Otherwise they would not have insisted on the liquidation preference ratchet as earnings are retained.

You see, I think a more proper statement would be, "We know that SM wanted the LP intact and ongoing to "protect the governments 'investment'". Do we really know what Yellen and the current administration wants? Was SM'S insistence to keep the LP in place a result of his boss telling him not to make it look like we are helping out DJT'S billionaire buddies and giving his political opposition more ammunition?

FnF retaining earnings is certainly far better than them not doing so. Where we differ is in our estimated impacts of those earnings on the size and price of a future common share offering. I think the retained earnings will make a marginal (though positive) difference, you think they will make a huge positive difference.

I believe that the federal government is not in the profit maximization business but is primarily concerned with the safety and soundness of the two biggest players in the Secondary Mortgage Market and keeping the up to $7T+ in MBS off their balance sheet.

How exactly the LP and warrants are dealt with is almost impossible to tell without clarity on: (1) what the current administration in control at time of release thinks about them (2) opinions if any from the courts and (3) any passed legislation from Congress.

I've noticed in a lot of your posts that you tend to make conclusionary statements like this or that WILL HAPPEN and that's why the fulcrum security is so bad ass, blah, blah, blah BUT the reality is no one knows for sure EXACTLY HOW THIS WILL UNFOLD.

But I am personally thankfully that you stuck with it and didn't bail on us like so many others post SCOTUS, because you bring alot of knowledge to the table and I firmly believe that vigouros debate of the subject is the key to understanding.