Fannie Mae-No Politics (FNMA)

[Wise Man]

The actor kthomp19 talks about "off-balance sheet SPS" again.
More shenanigangs like the other day with the Restriction on Capital Distributions, claiming that it's when FnF are classified Undercapitalized, when the law states "undercapitalized" and "IN GENERAL", like nowadays.
Sandra Thompson: "FnF remain undercapitalized...."
He claims that this restriction is void, since the FHFA suspended the Capital Classifications on day one.
But above all, he doesn't know the financial reasoning behind. It's restricted (Dividends, SPS LP increased for free, Lamberth rebate. Watch the statutory Definition of capital distribution numbers 1, 1 and 3, respectively.) to build capital (soundness). It isn't done to attack the Equity holders or to enrich the government with dividends just for it.
It's the stocks' role and the reason why the are recorded in regulatory Core Capital (loss-absorbing capacity capital-related).
So, FnF can't even set aside a reserve for the Lamberth rebate, as seen in Q3.

The SPS LP increased for free must be posted on the Balance Sheet, along with its offset that happens when someone issues or increases(fraud) stocks for free (stock dividends, stock compensation to employees, etc), as seen with the initial $1B SPS LP gifted to the UST, debited from the Additional Paid-In Capital account (Core Capital and CET1. A breach of the FHFA-C's Rehab Power).

Currently, all the SPS LP increased for free as of December 2017 ($118B) is absent from their Balance Sheet, which coincides with their Net Worth.
Once adjusted, we see that FnF are building SPS, not regulatory capital (the Retained Earnings built is wiped out with the offset attached to the gifted SPS LP), and the plotters want to meet the capital requirements with these gifted SPS.
Beyond Machiavellianism.

Even if these gifted SPS were "off-balance sheet", he claims that it doesn't affect FnF.
More shenanigans by this attorney, who reminds me a lot of the DOJ's Mooppan, who took a crazy stance and defended it firmly before the Supreme Court:

The 3rd amendment NWS dividend, was a typical renegotiation of obligations. Thus, within the FHFA's powers.

Even if they were "off-balance sheet", which means that it's held in a Special Purpose Entity (SPE), like all their MBSs held in MBS Trusts nowadays, they must be posted on the Balance Sheet, along with their offset with reduction of Retained Earnings.
FnF present their results on a consolidated basis, that show the aggregated financial results for multiple entities or subsidiaries.
-Consolidated Balance Sheet.
-Consolidated Income Statement.
-Consolidated Cash Flow Statement.
Etc.
Therefore, their MBS (Liability) and underlying mortgages (Assets), do appear.

In this world there is nothing "for free", it has to be debited from somewhere. That is, someone has to pay for it.
Finally, the Asset-Liablity Matching principle tells you that you can't have SPS LP (Liability) out there lingering. There is the offset mentioned to comply with this accounting principle.

Off-balance sheet. Thus, it doesn't affect FnF.

Mooppan, is that you?