Fannie Mae-No Politics (FNMA)

[Wise Man]

The SPS LP can't be written down as if by magic. That is, not only for no reason, but also not contemplated in any statutory provision pertaining to FnF.
This is what Fisher called for: a resolution cattle market-style, with two people sat at a table choosing from a Menu: a little bit of this, a little bit of that. Also known as: "What if...."
The repayment of the SPS is contemplated in the law FHEFSSA, as amended by HERA, as an exception to the Restriction on Capital Distributions when FnF are undercapitalized, which is what has happened with the phony dividend, as it's restricted and there weren't Earnings available for distribution as dividend, out of a Retained Earnings account with Accumulated Deficit all along (Balance Sheet = picture of a company)
So, no actual dividend was ever paid, but a capital distribution under the guise of dividend payment.
This is like the FHLBanks in their 1989 bailout: they had to pay an annual assessment and if it's more of the annual annuity that was used to pay interests, it was called "credit to the FHLBanks", and it was applied towards the reduction of the principal of the obligation in a statutory provision entitled: SEPARATE ACCOUNT, with monies invested in zero coupon Treasuries. This is what is written in the law, although they likely simply paid interests and the UST lost the $30B invested in the RefCORP obligation.
With FnF, the entire assessment was used to repay the principal of the obligation SPS, as dividends are..............RESTRICTED.
So, it was not an actual dividend but an assessment in the form of capital distribution, thanks to the FHFA-C's Incidental Power that allows it to lie ("Take any action...") if the endgame is the rehabilitation of FnF ("...authorized by this section")
Restore FnF to a sound (Recap) and solvent (reduce debenture SPS) condition (the FHFA-C's Rehab Power)
A dividend payment is NOT an interest payment.
You can't claim "mandatory" dividend (FHFA attorney) so that a dividend is turned into interest payments.
A dividend is a distribution of Earnings. Thus, a Change in Equity, as Retained Earnings is Equity and Core Capital, subject to restrictions when FnF are undercapitalized.
Interests are expenses, like personnel costs, etc., with no restrictions.
A SPS pays dividends, not interests.
Cumulative dividend though. It's been assessed at a weighted average 1.8% dividend rate, with a 0.5% spread over Treasury yields in each quarterly investment (0.299% spread in the 1989 FHLB bailout -GAO report-), pursuant to the original and prevailing cheap UST backup of FnF in the Charter Act since its inception. It's netted out with the amount of interests due to FnF on the $152.3 billion cash that the UST and FHFA owe to them.

Once the SPS were fully repaid (late 2013 and late 2014, in Freddie Mac and Fannie Mae, respectively), the FHFA had already contemplated this case when years before (July 20, 2011 Final Rule, coinciding with the Acting Dtr Time Limitation) it enacted the CFR 1237.12: capital distributions (deplete capital) applied towards their recapitalization (in a separate account obviously). Quote: "to meet the Risk-Based Capital requirement and Minimum Capital level".

The same occurs with the current compensation to UST with gifted SPS: both a capital distribution (restricted) and a breach of the FHFA-C Rehab Power (it prevents the recapitalization of FnF, concealed with Financial Statement Fraud, as these gifted SPS are absent from the Balance Sheets, in order to don't post the offset with reduction of Retained Earnings)
Hence, the Core Capital remains stuck every quarter since September 2019 at $-194 billion.
Because there isn't an assessment that exits the balance sheet, this new scheme is considered a "joke" instead of a Separate Account, thanks to the same FHFA-C's Incidental Power.
The Common Equity (Retained Earnings + AOCI) is held in escrow as well and, eventually, it will be returned to the Balance Sheets with the cancellation of these gifted SPS.

We can't allow these rogue lawyers to change the rules, making all up with kind words.