Fannie Mae-No Politics (FNMA)

[Wise Man]

Capital Classifications are set forth in the FHEFSSA of 1992, not in HERA which simply amended the FHEFSSA and the Charter Act. HERA isn't a law in itself if it just states:
"Section .....of the FHEFSSA is amended by inserting..... after subsection ...." Etc.
All of a sudden, you have deleted the 4th Capital Classification: Critically Undercapitalized.
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;

HERA directed the FHFA to come out with a new formulaic of the Risk-Based Capital requirement, without the required 18-month implementation when a law directs someone to do something, like in the FHEFSSA for the first time by the way, with the goal to establish a "back-end Capital Rule", that is, enacted after the Transition Period to meet the new capital requirements recommended by the UST for the release in a 2011 Report to Congress, at the request of the Dodd-Frank law, (In the end, the goal is to remove their privileges, like Capital Standards thanks to the UST backup of FnF in the Charter Act: "Increasing the guarantee fees"; "Stringent capital requirements" written in the option 3 -Govt Catastrophic Loss Reinsurance-, hence the Commingled Securities to that end unveiled in June 2022; 3-option Privatized Housing Finance System revemp, that is, Basel framework for capital requirements); change the weights in the Minimum (Leverage) Capital Level and add new capital metrics (TIER 1 Capital, CET1).
But nothing about the Critical Capital level that remains as is: 0.25% of the off-balance sheet assets (MBS Trusts. Financial statements consolidated on the balance sheets) and 1.25% of the Retained Portfolio.

The refusal of the FHFA to post the Critical Capital level in their ERCF is, thus, an act in defiance.

Then, with their Capital Available deep in the red as of December 31, 2023 (ERCF), in the case that they are released from Conservatorship, they would be declared Critically Undercapitalized and placed into Conservatorship again: the FHFA director would appoint the FHFA "conservator", the dividend remains suspended more years, etc. All over again, until someone understands what "put FnF in a sound and solvent condition" and Restriction on Capital Distributions mean.

How can someone even lie with the number of Capital Classifications?
-Adequately Capitalized.
-Undercapitalized.
-Significantly Undercapitalized.
-Critically Undercapitalized.

THIS IS THE STRAW THAT BROKE THE CAMEL'S BACK.

Outside of conservatorship, i.e. once FHFA is forced to give FnF capital classifications as required by HERA, FnF will have to be classified as "significantly undercapitalized" by 12 USC 4614(a)(3)(A)(ii) if they don't meet the minimum capital requirement.

Kthput19 is another member of The Tipp-Ex Gang.