Fannie Mae-No Politics (FNMA)

[Rodney5]

Vancmike, News Release: FHFA Announces Suspension of Capital Classifications During Conservatorship.

The FHFA freely with out restriction admitted in the SAME NEW RELEASE both companies were adequately capitalized at the exact same moment the Regulator suspended the capital classifications.

The Suspension of Capital Classifications by the FHFA did not affect the Restriction on Capital Distributions; The FHFA Regulator cannot just up and decide to change the Law.

Minimum Capital
Fannie Mae’s FHFA-directed capital requirement on June 30, 2008 was $37.5 billion and its statutory minimum capital requirement was $32.6 billion. Fannie Mae’s core capital of $47.0 billion exceeded the FHFA-directed capital requirement by $9.4 billion.
Freddie Mac’s FHFA-directed capital requirement on June 30, 2008 was $34.5 billion and its statutory minimum capital requirement was $28.7 billion. Freddie Mac’s core capital of $37.1 billion exceeded the FHFA-directed minimum capital requirement by $2.7 billion.

Risk-Based Capital
As of June 30, 2008, Fannie Mae’s risk-based capital requirement was $36.3 billion. Fannie Mae’s total capital of $55.6 billion on that date exceeded the requirement by $19.3 billion.
As of June 30, 2008, Freddie Mac’s risk-based capital requirement was $20.1 billion. Freddie Mac’s total capital of $42.9 billion on that date exceeded the requirement by $22.8 billion.

THE TAKE DOWN!

Tim Howard Quote: “Fannie and Freddie’s regulatory guidelines [FHEFSSA] would have prohibited them from paying cash dividends while severely undercapitalized, but FHFA suspended those guidelines because it wanted the companies to have to draw more senior preferred stock from Treasury to pay the annual dividends in cash, to balloon their outstanding senior preferred and increase their required annual dividends by still more. It was only after it was obvious that the companies were about to enter a “golden age of profitability” (because of the end and then the reversal of the non-cash expenses put on their books by FHFA), that FHFA and Treasury claimed to be concerned about a “death spiral” of borrowing to pay the senior preferred dividends in cash—and their solution was not the 12 percent annualized accrual of Treasury’s liquidation preference specified in the SPSPAs, but to impose the net worth sweep.” End of Quote

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Suspension-of-Capital-Classifications-During-Conservatorship-and-Discloses-Minimum-and-RiskBased-Cap.aspx