Fannie Mae-No Politics (FNMA)

[The Man With No Name]

Hi No Name

Any thoughts about CFR 31 902.2?

Section 902.2 of title 31 of the Code of Federal Regulations sets forth standards for the “compromise of debts” by the Administration. On the basis of its review of those standards, CBO believes that a reduction in the value of the Treasury’s preferred shares could be undertaken as part of the recapitalization of the GSEs.

As you know this restructuring will not be governed by the US Bankruptcy Code, State Insolvency laws or FDIC guidance. Dont think you have dealt with USG accounting and compromise of debt issues before? - have you?

Yeah, I've dealt with compromise of debts. It's nothing, no big deal. It's just a haircut.

You may as well take a step back from the CBO paper and understand it is not static. This is a moving target. And it's moving because the GSE's portfolios keep expanding.

If ever there is a release, there will be compromises. Compromises in the preferred shares. Existing commons will be smashed like a little bug and there's not a damn thing existing commons can do about it. Nothing, nadda.

Furthermore, don't count out the bankruptcy code. I can imagine a dozen different scenarios whereby this or part of this is spun off into receivership and/or a Chapter 11.