Fannie Mae-No Politics (FNMA)

[familymang]

You asked why an organic re-cap is a fairy tale and I explained.

And i'm explaining why any "organic recap" that starts from negative $250b of equity as a starting point (and not the actual cash on the books) is a fairytale and recap/release is irrelevant if that's the case because its never happening and lets just focus on litigation instead.

75 million capital raise is not enough to meet the capital buffer. So all your mathematical scenarios are void ab initio. No need to 'walk through' another fairy tale.

Counter-point.. if you think they can actually achieve a $100b+ capital raise in one shot I have a bridge to sell you. They have $75b today, this time next year they will have $100b-$110b, and the minimum requirement to exit conservatorship via consent decree (as per the last letter agreement and updated Sandra Thompson capital rule) is ~$180b. So call it a $80b difference in a year, why would they over raise more than the required minimum to exit?

Furthermore, do you really think new money will invest in this at the percentages you stated if treasury is taking 25% of the profits? That's like having a perpetual 1/4 NWS. Not happening.

The GSEs are much bigger today and are earning ~$30b annualized these days, call it $25b normalized so closer to 1/5-1/6 of profits not 1/4. Small price to pay to own 37.5-50% of a 20-25b income stream (post the 5b perpetual fee, maybe its set much lower 1-2b, i'm just highlighting other avenues for the government to monetize the GSEs which btw was highlighted as an option by Mnuchin/treasury). At $25b, net income is ~17b, 12x p/e for this business (~8% return on equity seems right for monoline insurers implicitly backed by a gov't gaurentee) = ~$200b market cap.

P.S. i was just trying to have a friendly conversation/debate. No need to get hostile! Happy new years friend