Fannie Mae-No Politics (FNMA)

[FOFreddie]

Urban Institute Webinar just finished. A couple of interesting perspectives:
1. There was discussion that the sale of GSE stock could be used to pay for DJT tax cuts and included in Reconciliation Bill - this would be good since it will shorten time line
2. The FHFA Director has the unilateral power to keep the PSPAs in place post Conservatorship to maintain Credit Ratings
3. The FHFA Director has the unilateral power to change the ERCF - both these points were made by Laurie Goodman who is no friend of shareholders
4. The MBS market will most likely need the PSPAs in place since Banks will have concentration limits if the implicit guarantee does not continue.
5. Lots of discussion about the Charter ect - possible changes in FHFA mission to help multifamily or construction lending will need Congressional support - ie how can the GSE recap help the Housing Market
6. Parrot and Zandi issued a report this morning basically saying that a recap will increase MBS guarantee costs - just negative spin as usual
7. The CBO guys presented the ERCF assumption at 4.5% which is not favorable to common valuations. They did not mention the 3% scenario

Some may totally want to dismiss the CBO Report but perhaps it is good to understand all the perspectives out there. Parrot and Zandi will spin it for their own perspective so perhaps it is good to know what they are spinning.