Fannie Mae-No Politics (FNMA)

[kthomp19]

The reason is because the increase in the LP was given for no consideration.

Wrong. Before the letter agreement in September 2019 that started the LP ratchet, the amount of capital that FnF were allowed to retain was only $3B per company. Anything above that would be swept to Treasury.

The September 2019 letter agreement increased that cap to $25B for Fannie and $20B for Freddie, and the January 2021 letter agreement raised the caps to their full with-buffers capital requirements (hundreds of billions each).

As a result of the letter agreements, FnF were allowed to retain more earnings than they would have under the terms of the Third Amendment. That is the consideration FnF received in return for the liquidation preference ratchet.

Perhaps not for cash now, but for LP.

One dollar of LP is not nearly worth one dollar in cash. Especially now when the LP is greater than the entire value of the companies.

It is to correct an action that the courts have recognized as a breach of good faith and fair dealing.

Wrong again. The jury found that the NWS was a breach of the implied covenant of good faith and fair dealing. The letter agreements that started the LP ratchet happened years after the NWS amendment.

There is no such law.

Treasury clearly thinks there is. If you disagree with them, too bad. They are the ones in charge of the fate of the seniors.

We retire the SPS.

Again with this "we" stuff. See the previous statement. Treasury thinks differently than you, and what they think is what matters in the end.