Fannie Mae-No Politics (FNMA)

[kthomp19]

You can only have accumulated deficit when you have losses.

Fannie and Freddie suffered significant losses from 2008 to 2011. The tweet you linked to in this recent post has a graph that proves it.

How can a corporation that pays more in income taxes than Berkshire Hathaway and most of the Dow Jones 30 have accumulated deficit?

They didn't pay income taxes in the years in which they accumulated that deficit. In fact, they generated income tax benefits in those years.

Once they started making profits again, the accumulated deficit was already in place. It's the NWS that prevented FnF from filling that hole. Your argument is misguided here.

It's there just to prop up the equally bogus SPS.

Again with that word "bogus". Deal with the facts: the senior prefs are on the balance sheet, and Treasury isn't going to just wipe them out no matter how many Bill & Ted references are dropped.

When the SPS is written down, they'll have retained earnings.

Change "when" to "if". If the seniors are written down, you're right that the accumulated deficit will be increased by the amount of the seniors, finally making it positive.

If the seniors are converted to common instead, the senior pref line item should move into "additional paid in capital" and the accumulated deficit will remain. But that won't affect FnF because additional paid in capital and retained earnings/accumulated deficit both count equally towards all forms of regulatory capital.

Ignore LP. It only matters in bankruptcy.

Wrong. It matters in a restructuring too, and the seniors must be restructured for FnF to hit their regulatory capital requirements.