Fannie Mae-No Politics (FNMA)

[kthomp19]

For all you accounting knowledgeable people, (I have a basic understanding), how does FNMA create net worth if all income is sent to the Treasury?

FnF are not sending any cash to Treasury right now, and haven't in almost 5 years. They create net worth by retaining their earnings.

What Treasury gets in return is a dollar-for-dollar increase to the liquidation preference of the senior prefs, but that increase is off balance sheet. Net worth is a balance sheet calculation, so FnF retaining earnings (on balance sheet) while increasing the off balance sheet LP really does add to net worth.