Fannie Mae-No Politics (FNMA)

[kthomp19]

Mark Calabria's book is now the official "record" of Treasury's position? Wow.

It's the best evidence we have, from someone who was told directly by Treasury that a senior pref writedown would be illegal.

It is clear that for some reason this isn't good enough for you.

Maybe I missed the official stance of Treasury being stated (outside of this book), with a reference to a statute that prevented this action.

Yup, Calabria's account wasn't good enough. You act like only evidence directly from the source matters and everything else is meaningless. Do you ever eat a salad without having grown all the ingredients in your own garden?

What reason would Treasury have to publicly release its stance on a senior pref writedown anyway?

I can't recall nor point to any official Treasury stance, which doesn't mean there isn't one. But the recollection of a conversation in a book is NOT any way an official stance, nor indicative that future Treasury Secretaries or the FHFA won't review whether they can write down the SPS.

Again, if you're waiting for an official stance you won't get one until it's too late. You have to make your decision as to what to own now, which necessarily involves predictions based on imperfect evidence. The quotes from Calabria's book are not perfect but they are completely relevant and far, far better than nothing.

I never said Treasury cannot or will not revisit and possibly change their stance. I did say that I don't think there is any reason to believe that they will, because the relevant laws haven't changed in the last 3 years.

You are making this out to be an all-or-nothing situation. Yes, either Treasury will convert the seniors to commons or they won't. But from our point of view all we can do is assign a probability to it. Right now I'm at 75%, and saying 0% is ridiculous in light of the evidence.

What is your number, and what is your reasoning behind it?