Fannie Mae-No Politics (FNMA)

[Wise Man]

Off-topic.

Treasury has been busy tonight, cashing in on SAVE and YELLQ.

Supreme Court-appointed amicus:


Now we know why you call the Funding Commitment "credit line", and the dividend "interests".

It's a dividend (restricted) and it's a UST backup embedded in the Charter Act since its inception as part of the Charter dynamics, at rates similar to Treasuries, because of their Public Mission that makes them take on more credit risk and not appropriately compensated.
Section Purposes:


The operations are financed either by Debt and Equity. FnF needed Equity (SPS, obligations in respect of Capital Stock. A debenture that reflects the taxpayer's assistance and must be paid back asap)

So called "Public Mission":
- #3. Charge less to low- and moderate-income families (28 bps guarantee fee prior 2009.Today? 62 bps, evidence that FnF are bound for a Privatized Housing Finance System revamp scenario, chosen in 2011 by the UST for the release from Conservatorship, at the request of the Dodd-Frank law. That is, Charter revoked);
- #1 and #3. Countercyclical role with Secondary Market Operations (MBS market), that is, to step up in a financial crisis, like FnF did in 2008. Unnecessary in an economic crisis (COVID), as it's a buying opportunity; Step up in crisis isn't about refinancings and loan modifications all across the board.
- #4. Duty to Serve. HERA usurped this concept to give the FHFA some task. But it's a mandate in the Charter, not in HERA. Nowadays, pointless.
- #2. Everybody understands that it might be needed some sort of UST backup of their operations as a last resort (colored sentence in the image), after FnF had tap private capital in numerous occasions in 2006-2008, both with issuances of JPS and common stocks. This is what the Purpose #2 could be about (both Equity and debt)