Fannie Mae-No Politics (FNMA)

[kthomp19]

They would need to pay the 10% annual dividend rate (or NWS whichever is lower), and then they still need to pay off the SPS LP by dilution (according to you and others). Is that not paying both a higher dividend AND the higher LP amount itself?

No, that's not the same thing. A senior-to-common conversion costs the companies nothing at all, not a single penny of cash. It also greatly increases all forms of regulatory capital. To the companies that conversion is all upside, no downside.

"Pay[ing] off the SPS LP by dilution" is not a good way to phrase it at all. Treasury would get cash from the conversion, but that cash would come from outside investors, not the companies.

The 2.5% quarterly on the growing LP could in fact be larger than all the quarterly profit earned.

If the LP ratchet continues then yes, this is likely going to be the case in the future. It's even true now: FnF make around $25B per year right now but the LP is more than $250B.

It's a worse situation than if the NWS didn't happen. So you can claim all these efforts are "helping" the GSEs but I think that's just an ignorant stance. Not a single entity, corporation, or person would think this helps their financial situation.

The current situation is worse than if the 2012 NWS had never happened, but it is better than if the 2012 NWS did happen and the September 2019/January 2021 letter agreements didn't.

You seem to be misinterpreting what I have been saying. I said the letter agreements help the companies relative to what had been in place before those letter agreements (full cash NWS). That's the only comparison that can be made because this world in which the 2012 NWS never happened is a counterfactual.