Several sources explain the 79.9% in terms of debt on the books or ?
Interestingly the new AI on bing/edge gave this
This is a complex question that involves some legal and financial concepts. I will try to explain it in simple terms, but please note that this is not a professional or official answer.
The government owns 79.9% of the stock of Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that buy and guarantee mortgages. These stocks are called senior preferred shares, which means they have priority over other types of shares in terms of dividends and liquidation 123.
However, the government does not have voting rights or control over the management of the GSEs. The government also does not consolidate the GSEs’ debt or assets on its balance sheet. This means that the government does not fully own or operate the GSEs as its own entities 123.
The reason why the government chose to own 79.9% of the stock and not 100% is because it wanted to avoid some accounting and legal implications. If the government owned 100% of the stock, it would have to recognize the GSEs’ debt as part of the national debt, which would increase the government’s borrowing costs and fiscal deficit. It would also have to comply with some regulations and restrictions that apply to federal agencies, such as the Freedom of Information Act and the Congressional Budget Office 123.
Therefore, the government decided to leave 20.1% of the stock outstanding, which is owned by private investors. These stocks are called common shares or junior preferred shares, which have lower priority and higher risk than the senior preferred shares. The government also agreed to pay a periodic fee to these investors for their consent to the arrangement 123.
In summary, the government owns 79.9% of the stock of Fannie Mae and Freddie Mac, but it does not fully own or control them. The government left 20.1% of the stock to private investors, but it takes 100% of the profits from the GSEs. This is a unique and controversial situation that has been challenged in courts and debated in Congress. The government has expressed its intention to end this arrangement and privatize the GSEs in the future, but the details and timeline are still uncertain
