Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

"By early 2012, the GSEs had turned a corner and begun to record net profits. PSAMF ¶ 37;
DRPSAMF ¶ 37. Nevertheless, the GSEs found themselves in a circular problem of having to draw
further on the Treasury Commitment to pay its required dividends to Treasury, and so on August 17, 2012, Treasury and FHFA adopted the Third Amendment to the PSPAs, the subject of the
parties’ present dispute. DSUMF ¶ 17; PRDSUMF ¶ 17. The Third Amendment replaced the fixed
10 percent dividend each GSE would pay to Treasury with a process known as the “Net Worth
Sweep,” whereby each GSE would be required to pay Treasury the difference between its net
worth and a predetermined capital reserve each year, with that capital reserve decreasing until it
reached zero in 2018. DSUMF ¶ 17; PRDSUMF ¶ 17; see Third Amendment § 2, Ex. FF to Defs.’
Mot. for S.J., Fairholme ECF No. 145-33, Class ECF No. 143-33. The Third Amendment thus
eliminated the circular-draw problem, but it also eliminated any future possibility for any non-
Treasury stockholder, including plaintiffs, to receive dividends from the GSEs, because the GSEs
owed their net worth to Treasury and would not take on further debt to pay dividends to other
shareholders. Importantly, the Third Amendment did not alter the Treasury Stock Certificates’
restrictions on paying down the Liquidation Preference. See id. § 3(a). Treasury and FHFA
amended the PSPAs three times after the Third Amendment, no amendment eased the existing
restrictions on paydown of the Liquidation Preference. DSUMF ¶ 10; PRDSUMF ¶ 10."