Fannie Mae-No Politics (FNMA)

[DaJester]

Nothing could be unwound because there were no grounds to do so. All the agreements were previously valid until proven otherwise. "Otherwise" just happened in the last couple weeks. Anywhere there is a sweep in the agreements, we now know that was an underhanded self-serving deal, not negotiated in good faith between two arms-length parties.

"It's a completely separate amendment to the SPSPAs. You're right that the LP ratchet is unnecessary to build capital, but it's the return consideration Treasury wanted in return for amending the "Reserve Amount" definition in the SPSPAs to allow FnF to retain more than $3B each of net worth."

Return consideration that has no value is not consideration. The reserve amount can be changed with a pen swipe - it's a completely 1-sided agreement, there is no no tit-for-tat contractual negotiation. It's just a policy change as noted in the first paragraph of the Agreement: "Effective September 30, 2019, the Senior Preferred Stock shall have the following designation, powers, preferences, rights, privileges, qualifications, limitations, restrictions, terms and conditions:" It's just stated as a fact that the rights of the SPS are changing. This is not a negotiated contract. There is no mention of consideration anywhere.

Suppose hypothetically, Treasury decided it wanted the Capital buffers back to $3B. They could simply issue a 5th Amendment and make it so. The excess would go to Treasury because it has nowhere else to go and the SPS can't be paid down, dividends to shareholders can't happen, can't buy back stock, etc. All benefits go to 1 side with a pen swipe. That is not a contract, that's a policy.