Fannie Mae-No Politics (FNMA)

[RickNagra]

Great post. Thanks.

The gist I get from reading Parrot and Zandi's impicit guarantee argument is that it's less of a counter-argument and more of a concern and acknowledgement that Trump's already going ahead with the privatization as they please. I find it hard to believe this is the reason for the pullback today.

They also acknowledge that "given their much-improved capital position, their expanded line to Treasury, their more conservative underwriting standards, and stricter regulatory oversight, their standalone ratings this time around would be much higher than their stand-alone ratings of a decade ago, but at best they would likely be consistent with large SIFI banks"

https://www.urban.org/sites/default/files/2025-01/Fannie%2C%20Freddie%20%26%20Implicit%20Guarantee%20-%20Parrott%20%26%20Zandi%20-%20January%2014%2C%202025.pdf

FitchRatings don't sound as negative post-conservatorship.

https://www.fitchratings.com/research/non-bank-financial-institutions/fannie-freddie-conservatorship-exit-would-not-be-immediate-ratings-catalyst-08-01-2025#:~:text=Fitch%20Ratings%2DNew%20York%2FChicago,own%2C%20according%20to%20Fitch%20Ratings.

When it's all said and done I think we're all good and it's just a waiting game now.