Fannie Mae-No Politics (FNMA)

[clarencebeaks21]

IMHO, Wise Man is right —but not for any of the reasons he thinks. It’s actually much simpler.

(1) In 2011 FHFA published its final rule & regulation (R&R) that specified that for purposes of the HERA section quoted by Rodney5, *any* payout to a shareholder is considered a “distribution”. Thus a judgment payout or a settlement payout are all precluded — until the capital-related conditions specified in the R&R are met.

It was clear that the ostensible intent of the R&R in 2011 was to prevent huge litigation damages (a prescient & timely concern given the status of various cases 12 years ago) from impacting the assets of the enterprises. Twelve years later, the R&R is unchanged, and I have not heard any intelligible contrary argument. [I’ll also see if I can dig up the law firm blog post I read on this subject. Give me a few days.]. Payment will be mandatorily deferred until the R&R terms are satisfied.

(2) If the USG refuses to pay a court-ordered judgment, there is no auto-enforcing mechanism to compel any differently. Just as for any defendant who refuses to pay a judgment, Ps would have to initiate some manner of civil action to thwart the refusal (e.g., Ps might file a declaratory action regarding the R&R). But the USG will defend itself, and USG will argue the enterprise assets are covered under either a federal statutory exemption and/or are statutorily protected assets. And the odds are the USG will be right on at least one of those.

All IMHO—just another day for a bored board lawyer.

“Hallelujah. Nobody wins” —Brian Fallon