Fannie Mae-No Politics (FNMA)

[Wise Man]

Geithner: "Don't listen to banks...". Remember?

Don’t listen to banks…Their interests are not aligned perfectly with the broad interests of the American economy. Their job is to evade, or avoid, or weaken, any constraint on their ability to operate our job to make sure we’re protecting the american economy from the risks they inevitably take.

Two days later:

The president did not want the new rules to end up being written by those who brought us to the edge of catastrophic financial failure.

The banks rather repurchase their stocks that reduces the Retained Earnings account and Additional Paid-In Capital account when they are retired, otherwise they reduce the regulatory capital through the Treasury Stock line item that reduces both the common stock par value (CET1) and Equity (a contra-Equity account)

With Retained Earnings (Common Equity: both CET1 and Core Capital), not only we make sure that the banks reinvest in their business instead, with the cash attached to the increase in the Retained Earnings that quarter (double -entry accounting cash-Retained Earnings), but also this cash is leveraged (more debt) thanks to the capital ratio.

I would propose to remove the banking license to those banks buying back stocks. Pay an extra dividend instead or acquire other company. Evidence that they are clueless about the banking business or it's too risky, and they rather trade with stocks on the market.

Also, I would remove the Capital Buffers since there are bank CEOs that still think they are capital requirements, like the Bank of America CEO.
The managements would have the Capital Buffers they want. Just so you know, if the Adequately Capitalized threshold is broken, the Prompt Corrective Actions kick off: dividend suspended across the board, as set forth in the banks FDI Act for undercapitalized banks (HERA mirrors the FDI Act)
The FnF JPS holders know the drill.

The banks seem poised to challenge their federal regulators requirements for holding yet more Capital: (todays WSJ): "Banks have spent more than a decade since the financial crisis showing relative deference to regulators. Now big banks have signaled they are considering legal action,...

Legal action.... Give me a break.


And in HERA: