Fannie Mae-No Politics (FNMA)

[kthomp19]

The slow methodical rehabilitation of the GSES balance sheets seems to be fine with all stakeholders EXCEPT us beleaguered and battered shareholders.

Unfortunately this appears to be precisely the case.

Sure politicians love to spend money, but what is the catalyst that will move the federal government to do a recap?

Just that: money. Calabria and Mnuchin chose to suspend the cash NWS until FnF hit their full, with-buffers regulatory capital requirements in the January 2021 letter agreement. Thompson and Yellen only made minor changes to that agreement in 2021 which didn't affect the NWS. That means Biden must have been okay with Treasury not getting that cash.

The only ways I can see for Treasury to get cash from the FnF situation are either restarting the cash NWS or monetizing its FnF equity stake (seniors, warrants). The latter is not a fast process, and carries the additional benefit of denying that money to future administrations.