Fannie Mae-No Politics (FNMA)

[Wise Man]

No. It states "undercapitalized", not "classified Undercapitalized under its definition in the subsection (a)(2) of this section", in the first sentence of the Restriction on Capital Distributions. U.S. Code §4614(e).
You already said it and I debunked it, but you don't care.
Also, it starts with "IN GENERAL", which reminds me Sandra Thompson in the Congress and the FHFA reports, stating that FnF are undercapitalized, in general as well.

A distribution of capital would also break the FHFA-C's Rehab power ("put FnF in a sound condition"), as Calabria reminded us:


It denotes that you don't know about financial matters. You intend to distribute capital when they are Significantly Undercapitalized or during a Conservatorship for Critically Undercapitalized enterprises.
Zero sense of what a restriction on capital distribution is for: to build capital.
You simply read the sentence unaware of the financial meaning behind. This is why you always use the trick of deleting words to fit your narrative, unaware of the fallout. For instance, shamelessly removing the "authorized by this section" in the FHFA-C's Incidental Power.

FHFA suspended the Capital Classifications in 2008. Evidence of Separate Account plan from the onset, as not only it's relieved now from having to declare FnF Critically Undercapitalized ($-76 billion Core Capital officially as of Sept 30, 2023; $-194 billion adjusted Core Capital with the offset for the $118 billion SPS LP absent from the Balance Sheets), but also, under the Separate Account plan, having had to change the Capital Classifications each time, first from Critically Undercapitalized to Significantly Undercapitalized, then Undercapitalized, and now Adequately Capitalized.
It would have exposed that the FHFA is now concealing their statutory Critical Capital level in their ERCF tables.
No problem! The Treasury of Mnuchin recommended Congress to repeal the statutory definitions with regard to capital. In the definition of each Capital Classifications, it explains that the capital requirements are met either with core capital or total capital.
They rather make up their own rules, and they intend to meet the capital requirements with the Net Worth. A NW built with the SPS LP increased for free absent from the balance sheets. A fraud that the attorney for Berkowitz, David Thompson, not only defended in court but he also sought a compensation for constitutional damages: the "for cause" removal restriction prevented this Wonderland scenario from happening sooner (Collins case).