Fannie Mae-No Politics (FNMA)

[Wise Man]

The column "Capital Shortfall" removed from their ERCF tables.
More evidence that FnF are being conned with the "rehabilitation of FnF", based on the FHEFSSA-invalid capital metric "Capital Reserve", badly assessed (adjusted CR =$0), so they can spread the slogan: "Why are FnF still in Conservatorship?".
"Rehab FnF" was the prerequisite laid out by the Supreme Court to authorize the Separate Account plan "in the best interests of FHFA".
The last time we saw it, was with the data as of June 30, 2023.




Not that it matters, because it's the result of subtracting the "available capital" from the "capital requirement". So, DIY.
It's a problem of attitude.
No one can claim that FnF have been rehabilitated (Fannie Mae CEO) with such enormous capital shortfalls in the most important table of all. The amount posted, later needs to be adjusted for the offset (reduction of Retained Earnings -Core Capital-) attached to the SPS LP increased for free, both absent from the balance sheets to evade it, where the data is taken from ($-78B in Fannie Mae and $-48B in Freddie Mac as of December 31, 2023).
The outcome is a whopping $402B core capital shortfall over Leverage capital requirement together (Undercapitalized threshold. Prior Capital Classification for MANDATORY release.)
The adjusted Core Capital remains stuck at $-194B every quarter, and FnF only build SPS in their Net Worth, more debentures with the taxpayer.
So much for "rehab".

This reminds me that the Critical Capital level is also missing in the ERCF tables (0.25% of the MBS trusts + 1.25% of the Retained Portfolio).
They are 3, not 2 capital requirements.
HERA amended the FHEFSSA to authorize the FHFA change the percentages in the Minimum Leverage Capital requirement, add new capital metrics (CET1 and Tier 1 Capital) and reserves (Prescribed Capital Buffer), and come out with a new formulaic for the Risk-Based Capital requirement (without the required 18-month implementation provision, by the way), but nothing about the Critical Capital level that remains as is.
Because all of them emanate from an express grant of authority in the FHEFSSA (a law enacted exclusively to oversee the soundness of FnF. Capital adequacy matters), it's why the ERCF is also statutory, regardless that it's laid out by regulation. FHFA has very limited powers.

The same reason: not meeting a capital level consider "Critical" bothers for their slogan "FnF have been rehabilitated" and "release".
12 U.S. Code §4614(a)(4)

An enterprise shall be classified as critically undercapitalized if—
(ii) does not maintain an amount of core capital that is equal to or exceeds the critical capital level for the enterprise;

Sandra Thompson:

Since entering conservatorship in 2008, the Enterprises have remained undercapitalized,

She is quoting the reason why the capital distributions are restricted (12 U.S. Code §4614(e))

IN GENERAL. No capital distribution if, after making the distribution, the regulated entity would be undercapitalized.

We know. The Incidental Power "Zing!", right?