Fannie Mae-No Politics (FNMA)

[kthomp19]

When fully capitalized NWS resumes!!!

Wrong. Under the original NWS, Treasury was sweeping not only every dollar of profit FnF made but also every dollar of net worth they had on the balance sheet. It was impossible for FnF to ever build any capital.

Under the January 2021 letter agreement, FnF can build and retain capital all the way up to their full capital requirements, including full PCCBA and PLBA buffers, before ever having to pay Treasury anything.

Another difference is that under the original NWS, Treasury got all of FnF's net worth every quarter no matter what the liquidation preference was on the senior prefs. Under the current agreement they only get either 2.5% per quarter (10% annual) of the liquidation preference or all of FnF's profit for the quarter, whichever is LESS. That means the current agreement can never lead to FnF having to pay Treasury so much that it even dips into the buffers, let alone the base capital requirements.

Why stop the lawsuits?

1) Because the January 2021 letter agreement is a fundamentally different animal than the August 2012 NWS.
2) Lawsuits cannot last forever. Under the current agreement, FnF won't have to pay a cent to Treasury until around 2040. The current lawsuits cannot last that long; even maximal delay tactics by the plaintiffs and/or defendants would still have all current lawsuits fully resolved by 2034 at the latest.