Our negotiator adds dramatism once we enter unchartered territory.
Under the Separate Account plan, FnF weren't released upon Undercapitalized enterprises (mandatory release in the FHEFSSA struck by HERA: Core Capital > Minimum Leverage Capital requirement), nor when they met the threshold to resume the dividend payments (Table 8: Payout ratio. >25% of Prescribed Capital Buffer), for the sake of waiting for the JPS's fair value to fetch its par value, but FnF have continued to build capital thanks to the FHFA's Incidental Power (best interests of FnF and the FHFA) and now we are using as benchmark the threshold established by Calabria/Mnuchin in the January 2021 PA amendment, contending that there is no release until the CET1 > 3% of Total Assets.
If the February 16, 2021 ERCF requires Tier 1 Capital > 2.5% of Adjusted Total Assets, clearly that benchmark was overblown (Tier 1 Capital = CET1 + AT1 Capital -JPS-), for the only reason to encourage a swap JPS for Cs, and the assault on the ownership. It's ruled out.
This is why we must promote a more reasonable CET1 > 2.5% of Adjusted Total Assets as a new benchmark for the release, that would enable the redemption of JPS, which is suitable for the 2011 3-option Privatized Housing Finance System revamp (Basel framework) in the case that the Congress wanted that bigger players acquire FnF, and FnF would still meet Tier 1 Capital > 2.5% of Adjusted Total Assets in the ERCF.
We still don't know which of the 3 options has been chosen by the Congress for the Privatized Housing Finance Sytem revamp, chosen, in turn, by the UST as "recommendations on ending the conservatorships, no later than January 31, 2011", at the request of the Dodd-Frank law (the same law that imposed the annual Stress Tests)
Fannie Mae was lagging and it surpassed this threshold last week. So, now we are in unchartered territory, as there are no more reasonable thresholds to meet beyond this point that justify the lengthly conservatorship.
The dramatism is necessary to help our friends JPS holders suffering with a non-cumulative dividend stock. Although there are no victims as everything is legal with the FHFA-C's Incidental Power, their role of helping in the recapitalization of enterprises (Core Capital), authorized in their contract, can't be used and abused beyond what is strictly necessary. This is why the financial companies are managed by people with experience in Finance, not by attorneys.
Did I say unchartered territory? This is it!
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How the Common Equity is calculated.
The plaintiffs feel the heat.
