Fannie Mae-No Politics (FNMA)

[Rodney5]

bcde Quote: “FnF can build their core capital using SPS as backstop outside conservatorship.” End of Quote

Administrative means to provide financial support by ongoing fee is not authorized by Congress.

It has been the general expectation that, upon exit from conservatorship by administrative means, the PSPAs would continue to provide financial support to the companies and there would then be an ongoing fee to compensate taxpayers for this risk. This fee remains unknown, as it has yet to be developed or specified by Treasury. TO DO THIS CONGRESS WILL HAVE TO APPROVE IT… why? Because the SPSPA will have to be terminated to exit conservatorship AND Congress did not authorize funding amounts to increase beyond December 31, 2009. Treasury cannot just decide to loan money out without congressional approval.

With the passing of HERA this explicit obligation was increased above the limit of $2.25 billion to $200 billion to purchase obligations of the company (MBS Obligations) up to the point in time expired December 31, 2009. Page 18 charter act.

Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).

THIS IS WHAT ACTUALLY HAPPENED.

The difference in what the Treasury had authority to do and what actually happened during conservatorship as it relates to Treasury's actions, simplified. The GSE’s had a limited explicit obligation from Treasury in the amount of $2.25 billion. With the passing of HERA this explicit obligation was increased above the limit of $2.25 billion to $200 billion to purchase obligations of the company (MBS Obligations) up to the point in time expired December 31, 2009. Page 18 charter act.

HOUSING AND ECONOMIC RECOVERY ACT OF 2008, (HERA), gave to the Treasury this purchasing power; OBLIGATIONS, MBS OBLIGATIONS (nothing more nothing less)... Rather than purchasing obligations of the companies the Treasury decided to create a new product called the Senior Preferred Stock with an illegal commitment fee attached. Neither the Charter Act nor HERA authorize a commitment fee to be charged by the United States Treasury.