Fannie Mae-No Politics (FNMA)

[kthomp19]

BUT, does this not also imply that the senior preferred dividends couldn't be paid until buffers are reached? I know it's probably meaningless because the seniors need to be monetized before capital can be raised anyway, but it makes me feel better that we're ensuring that no more money goes out the door to Treasury, either. I was always irrationally concerned that Treasury would revert to a 10% model--as SCOTUS shat on the NWS--and reverse the Calabria work that prevented distributions during the capital build.

The January letter agreement set FnF's quarterly dividend payable to Treasury to the lesser of 2.5% of the liquidation preference (1/4 of 10%) and in the increase in net worth from the prior quarter.

Dividends to all shareholders (existing common/pref and Treasury) are deducted from income, so they wouldn't count towards an increase in net worth. The January letter agreement actually allows for dividends to be paid to non-Treasury shareholders.

You're right that the seniors, if the January letter agreement remains in force, can't receive any dividends at all until full capitalization is reached. I'm heartened by Sandra Thompson saying that FnF are continuing to build capital, and that Treasury can't plunder FnF's earnings until they are fully capitalized.