Fannie Mae-No Politics (FNMA)

[Wise Man]

Hard to watch Warrent Buffett's coulda/shoulda/woulda moment, referring to the purchase of Fannie Mae

20 years ago or close to it, when Fannie Mae was having some troubles.

A December 2021 video, so it's related to 2004, the aftermath of the period of massive fraud by the former Fannie Mae CFO, Timothy Howard, according to the 300-page OFHEO report portraying him as the sole mastermind behind the plan to steal from the shareholders (Lack of internal controls, accounting fraud to boost his EPS target bonus, etc.). Let alone the current Treasury Stock (stock buybacks) to the same end (these stocks aren't accounted for in the EPS), that is reducing the core capital in Fannie Mae ($7.4 billion).
Howard was acquitted of all charges in 2012 by a DC judge because he had no intent to commit fraud. Huh? It explains his personal blog and his SCOTUS amicus brief to repeat a dozen times that "the SPS are non-repayable securities", something that isn't written anywhere, but the opposite: exception to the Restriction on Capital Distributions: reduce the SPS, and unavailable Earnings for distribution as dividend as well.

I could have bought the whole company for practically nothing.
....
And I blew it.

Thinking that he is entitled to purchase Fannie Mae nowadays at the same price, after watching the common stocks trading at rock bottom prices, subject to a Separate Account plan during the Conservatorship.
He doesn't know that all the numbers are adjusted, and the adjusted fair value of FNMA stands at $288ps, assuming accounting change in the Deferred Income (name "Upfront Guarantee fee" switched for Delivery fee), that renders the purchase price at $273ps after the amortization of the Deferred Income into Earnings in one fell swoop, and an effective PER of 14 times with the annualized 3Q2023 adjusted EPS, a Privatized Housing Finance System scenario (no TCCA/CRT fees) and fully reserved for CECL (Allowance for loan losses: $8.7B)
For the UST, there is the BVPS as fair value. Currently at $112ps as of September 30, 2023.
Expected UST cash refund: $78B (SPS overpayment + CRT expenses, net + PLMBS lawsuit settlement calculated with a 27% share in the settlement, based on its AOCI -unrealized losses in PLMBSs- as of June 30, 2008 in comparison with Freddie Mac, and an amount net of attorney fees)

Did you want to conceal the remarks posted above, that start on the 4:00 mark, navycmdr?

the Fannie comments begin 4:30 mark