What are they waiting for? Certainly not to his letter claiming that "the purpose of Conservatorship is to retore FnF to financial health". The conservator's power: Put FnF in a sound and solvent condition, by building capital and reducing the obligations with the taxpayer, respectively.
Which wouldn't be fulfilled as of end of June, 2023:
- Adjusted Core Capital = $-194 billion. A whopping $400 billion Capital shortfall over Min Leverage Capital requirement.
-$304 billion SPS outstanding.
-$-216 billion in their Retained Earnings accounts tasked with absorbing future losses.
-Financial Statement fraud with the gifted SPS absent from the balance sheets.
It seems that this hedge fund manager wants them back but severely damaged, just like all other plaintiffs: Bryndon Fisher, etc. This is why he talks about government's profits to lure the White House into his plan.
The odds are that FnF have been recapitalized to perfection, under the Separate Account plan and according to the Law. When the level of capital is such, that allows the redemption of the JPS at their par value and FnF remain Adequately Capitalized.
This way, the existing holder of ownership interest (Cs) and "other ownership interest" (JPS), considered "captives" by the FHFA (like some unwanted FHLB members expelled recently), are released from their captivity. The way to expel the common shareholders is with a Takings at the adjusted BVPS. Then, the UST resells the Cs at a PER 14 times, for instance.
The time has come.
Freddie Mac would have more than 25% of the Capital Buffer afterwards.
Fannie Mae $1B short of Tier 1 Capital as of end of June (Undercap, restricted, but we can make an exception being so close to the end of the quarter)
Then, it's expected that they will be allowed to amortize the Deferred Income into earnings in one fell swoop, which would be earmarked for building Capital Buffers or, distributed as dividend to the shareholders (holders of common stock) taking into consideration the resulting percentage of total Capital Buffer, to determine the limit in the Payout ratio (Table 8 of the Capital Rule)
Hindes fools no one.
