Fannie Mae-No Politics (FNMA)

[Wise Man]

Howard talks about the CET1>3% of Total Assets for the release from Conservatorship written in the January 14, 2021 PA amendment, by Mnuchin and Calabria.

It was clearly meant to encourage a conversion of the non-convertible JPS of Mnuchin's buddy, Berkowitz, for Common Stocks, and the assault on the ownership of FnF (Common Stock).

An overblown figure for these reasons:
- 3% and CET1, are much higher than the minimum capital required in the ERCF: Tier 1 Capital > 2.5% of Adjusted Total Assets (Leverage ratio. Image below). First, a 3% instead of 2.5% and, secondly, Tier 1 includes the JPS (Tier 1 = CET1 + AT1). Too stringent, outside an ERCF that was about to come into effect (February 16, 2021). Therefore, Mnuchin and Calabria knew that the threshold was overblown and they thought that no one would notice it. Also, enacted 12 days before secretary Yellen was sworn in.

-The threshold mentioned before: Tier 1 Capital > 2.5% of Adjusted Total Assets, was a MANDATORY release in the FHEFSSA (Source. Core Capital is similar to Tier 1 Capital) before being struck by Calabria's HERA. Therefore, Calabria knew quite well that CET1 > 3% of ATA is an overblown threshold.

It's been de facto snubbed.
The laggard Fannie Mae met a more reasonable CET1 > 2.5% of ATA with its Q3 2023 Earnings report, under the Separate Account plan in accordance with the law, that, not only assumes that there was no dividend all along (calculated simply with accumulated Total Comprehensive Income + the charges for 3 Accounting Standard changes), but also a refund of the PLMBS lawsuit settlement in a case against 18 financial institutions, plus a refund of the $18 billion worth of CRT expenses, net (a scam and illegal operations)

CET1 > 2.5% of ATA is an important milestone because it enables the redemption of the JPS at their fair value equal to redemption value, because, afterwards, FnF would still meet the ERCF with a Tier 1 Capital > 2.5% of ATA.
It's achieved the FHFA's will of getting rid of unwanted Equity holders (a carbon copy of the FHFA 2010-2016 plan for the FHLBanks, with the expulsion of "captives". Source), though the Congress might disagree and choose an "as is" scenario instead, where the existing Equity holder stays.
Anyway, because this is an ongoing Conservatorship (non-stop), the redemption of JPS is now a corporate decision, and the JPS holders must go. More if, afterwards, there is an amortization of the entire Deferred Income in one fell swoop ($65 billion, gross, currently recorded as Debt.) that would help to build Capital Buffers for the Leverage ratio (for the Risk-Based capital requirement, it's estimated that they would start out with 13% of the Prescribed Capital Buffer in Fannie Mae, and 46% in Freddie Mac.)


The ERCF (Capital Rule Basel framework) is all that matters, not Mnuchin and Calabria conspiring all day long, jointly with other chamber investors on social media and the U.S. Courts.