Fannie Mae-No Politics (FNMA)

[Barron4664]

Any profits by the GSEs make must first go by law to the account specified in the the Safety and Soundness Act. I forget the name they use. Lets just call it retained earnings account. Capital distributions such as dividends are paid out of this account. However, if the GSEs do not meet the definitions of minimum capitalization set out in the law then dividends are prohibited. Thus the reason the share certificates state that dividends on the Senior Preferred Shares can only be paid out of legally available funds. So as Wise Man has for years noted, FHFA has made a few exceptions to the prohibition on capital distributions. None of the exceptions allow dividends. Therefore, the monies paid to Treasury must be for one of those exceptions because dividends are not allowed.