Fannie Mae-No Politics (FNMA)

[The Man With No Name]

According to Professor Richard Epstein
The Senior Preferred Stock would have been redeemed.

Quote “The conflict of interest took a more ominous turn with the adoption of the Third Amendment between FHFA and Treasury nearly four years later. At that time, the market had quieted down, and the GSEs were making timely dividend payments on Treasury’s preferred stock. Nonetheless, FHFA and Treasury ripped up the old agreement, and substituted in its place a new deal that created a “net worth sweep” whereby all of the funds received by the GSEs were paid over to Treasury as a dividend, even in amounts far in excess of the original 10 percent dividend. The consequences have been huge. Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed. With the Third Amendment, about $128 billion that could have been used to redeem the preferred shares has been reclassified as a dividend payment, rather than a return of capital.” End of Quote

Dick Epstein is like Tim Howard. Making up things to suit his emotions. The "net worth sweep" was not a reclassification of anything, it was an increase of the 10% dividend to a 100% dividend based upon net worth.

And $128 billion isn't enough to redeem the SPS. But that couldn't be done anyway because FnF must be above the minimum capital buffers to make such a redemption, which they wouldn't be.

Nevertheless, he knows it was a dividend.....Louie...you reading this?