Fannie Mae-No Politics (FNMA)

[Wise Man]

Make no mistake. Congress has no say on the Conservatorships of FnF. That is, their Core Capital stands at $268B; Common Equity = $236B; CET1 > 2.5% of Adjusted Total Assets, as of September 30, 2023, under the Separate Account in accordance with the law and basic Finance.
Congress is required for the release from Conservatorship. Very different.

Both are intertwined, because the release is related to the capital levels in FnF (prior MANDATORY release Undercapitalized in the FHEFSSA, when the Core Capital > minimum Leverage capital requirement, struck by HERA) and also in light of the FHFA-C's Rehab power, and the Treasury at the time saw an opportunity to attach it to a Privatized Housing Finance System endgame in the 2011 Report to Congress, when it was required by law to come out with "recommendations on ending the conservatorships".

From the beginning, it was all about removing their privileges that the enterprises and, thus, their Equity holders, enjoy ("FnF are NOT ordinary businesses", by the SCOTUS-appointed amicus), by winding down their Investments Portfolios with PLMBS funded with low cost bonds, thanks, in turn, to their UST backup: Winding down their Investments Portfolios 10% per year, established in the SPSPA. Soon it was changed to 15% per year, until a cap of $250B was reached. This cap was reduced further by Calabria to $225B as of end of 2022.
Also removing their "unfair advantages in capital standards" in the FHEFSSA (quote taken from the 2011 Report to Congress), for delivering below-market guarantee fees, as required in the Charter Act, etc.
All comes down to revoking their Charter with the most precious privilege: a UST backup of their operations as a last resort (either purchasing debt or Equity), expressly written in the section Purposes of congressionally-chartered private corporations, where is laid out their Public Mission that makes them take on more credit risk.

Therefore, we are waiting for Congress for the ultimate Housing Finance System revamp, because it affects FnF if Congress chooses so, otherwise they remain as is, regardless of the option chosen from the 2011 UST's 3 option plan for the release:
1- Privatized Housing Finance System + targeted assistance: FHA, USDA, VA.
2- 1 + Govt guarantee in crisis.
3- 1 + Govt Catastrophic-Loss reinsurance.

Congress might want deeper changes:
-Does it want FnF as public companies like today (the stocks publicly traded), or as private companies owned by stakeholders in Housing Finance, FHLB-style.
This is why FnF have fetched a CET1 > 2.5% of ATA, to get rid of the JPS (AT1 Capital). The "unwanted" Equity holders will be expelled, like occurred with the FHLBank membership in a 2016 Final Rule.
No one cares if the holders of the Non-cumulative dividend JPS are annoyed about the stock valuation 15 years later (fair value = par value), primarily because their dividend should have been resumed (fair value = par value) one year ago in Fannie Mae and two years ago in Freddie Mac (threshold: 25% of Capital Buffer. Table 8: Payout ratio), if they were promised the assault on FnF with anti-loss protection called "anti-dilution" by Bradford and back dividends with the Lamberth rebate, in comparison with a common stock. Each share class has its own stock valuation.
This extended conservatorship might be used to accumulate stocks presumably by the UST through a hedge fund, because of the 2009 deadline to buy securities of FnF. This is a sum-zero game and now the U.S. courts can't be used to make up for the losses for the dividend missed during 1 and 2 years, respectively, with the amount of damages accruing every day, while still trying the great assault on the ownership of FnF with the Govt theft story and the Trump card, which is what the Lamberth rebate looks like.
A shadow agreement between the parties.
Some of them, plaintiffs, will be hit with a penalty in Punitive Damages for a conspiracy in the U.S. courts.

-Chartering authority for the FHFA?

-Will FnF be combined?

-Will the Treasury take advantage of their current market price, taking them over at the stocks' fair value, knowing that only the government is allowed to buy them out at their BVPS (Common Equity per share) and also to sweep their current Deferred Income to itself, aiming to resell them later to bigger players in Housing Finance at an effective PER 14x? It's estimated that the Treasury could make a whopping $349B profit with this option ($151B cash refund due)

-Government Catastrophic-Loss Reinsurance or private?

-The current 10 bps guarantee fee (TCCA fee. Now BBB fee), funneled to Treasury quarterly will be cancelled in a Privatized Housing Finance System. But will it stay or the g-fee will be reduced 10 bps?

-Etc.

The redemption of the JPS is a corporate decision that should be made by the conservator using its Incidental Power, so it can skip their Redemption dates "in the best interests of the FHFA".
Compliance with TIER 1 Capital > 2.5% of ATA afterwards (ERCF)