Fannie Mae-No Politics (FNMA)

[DaJester]

"That makes no sense at all. The two things are opposites. Writing off the seniors is throwing an asset worth potentially hundreds of billions of dollars in the trash can for no reason. The dollar-for-dollar liqiudation preference makes Treasury's stake more valuable."

I don't know how you can't see the double standard here. The reason is because the increase in the LP was given for no consideration. It would be like me telling you "In consideration for you keeping your annual salary, you will owe me your entire annual salary." That equates to a NWS, the GSEs giving all of their profit away. Perhaps not for cash now, but for LP. If the NWS doesn't work for cash, how is it supposed to remain viable for future LP redemption? Delaying when you collect doesn't make it any more legitimate.

Returning/reducing the LP is NOT for nothing. It is to correct an action that the courts have recognized as a breach of good faith and fair dealing. Throwing hundreds of billions of dollars in value in the trash can is exactly how this whole thing started.

"No specific law was cited in Calabria's book, but that doesn't mean Treasury didn't have a specific one in mind."

There is no such law. And even if there were, there are millions of contracts that start with "In consideration for $1..." or fill in the blank.. We retire the SPS.