Fannie Mae-No Politics (FNMA)

[kthomp19]

Correct me if i am wrong: I think there is a clause in original PSPA's that if any court rules against action of conservator the entire PSPA's become invalid?

Only if Treasury does so voluntarily.

What you're thinking of it Section 6.12 in the original SPSPAs (which has not been amended):

6.12. Non-Severability. Each of the provisions of this Agreement is integrated with and integral to the whole and shall not be severable from the remainder of the Agreement. In the event that any provision of this Agreement, the Senior Preferred Stock or the Warrant is determined to be illegal or unenforceable, then Purchaser may, in its sole discretion, by written notice to Conservator and Seller, declare this Agreement null and void, whereupon all transfers hereunder (including the issuance of the Senior Preferred Stock and the Warrant and any funding of the Commitment) shall be rescinded and unwound and all obligations of the parties (other than to effectuate such rescission and unwind) shall immediately and automatically terminate.

The key part is "Purchaser may, in its sole discretion". The Purchaser here is Treasury. If the entire SPSPAs get unwound, Treasury would be forced to send $300B of cash back to FnF for basically nothing in return.

It's safe to say that Treasury will never voluntarily choose to do that. Therefore that clause in the SPSPAs is a giant nothingburger.

Thinking that it is automatic, and thus that any ruling against FHFA or Treasury will result in an enormous shareholder windfall, is yet another piece of common nonsense.