Fannie Mae-No Politics (FNMA)

[Wise Man]

CORRECTION: The section in the Charter enabling JPS, is the SEC.303, not 304(b) pointed out yesterday.
Though both overlap, as a JPS is an obligation (in respect of Capital Stock) and for the Capitalization (SEC.303), Basel requires the Preferred Stocks to be REDEEMABLE (callable) at the option of the issuer, which is what the SEC.304(b) is about: Redeemable obligations.
This is why all the series of JPS are redeemable stocks.

The bottom line is that the SPS (Equity) could have been purchased through subsection (b) redeemable obligations, and (c) at a rate similar to Treasury yields, as a cheap UST backup of FnF as a last resort, a feature contemplated in the section Purposes (Public Mission) of the Charter Act, as the operations can be financed both with Debt and Equity.

Not with (g) unlimited rate, inserted in the Charter by HERA (the bazooka requested by Paulson, as he stated in his book), trampling the Charter dynamics.
We use the unlimited rate (10%/NWS dividends) for the Separate Account plan, as dividends are restricted and there weren't Earnings available for distribution, out of a Retained Earnings account with deficit all along. There you go!