Fannie Mae-No Politics (FNMA)

[FOFreddie]

Hi Nats, I had the same response to the idea that Pulte will just change the ERCF without a comment period. I will take the ROLG at his word that it is possible but as you said I think it is politically intendable and would be a reckless move if sanctioned by Bessent since there is a possibility that the MBS market would and maybe want to act in a very adverse way. One thing to consider is why Calabria set such stringent standards in the first place - maybe because he was inept but more likely in my opinion is to politically overshoot so that the market can clamor for less stringent ratios rather than risking losing market confidence that never can be reclaimed.
I think the ERCF stays in place and they start a rule making comment period and most likely start adding more risk on the balance sheet which would mean that the end result would probably be the same amount of regulatory capital but a lower ratio because more risk has come on the balance sheets via retained MBS portfolio investment and stoppage and/or redemption of CRT issuance.
The key will be working with the ERCF Dividend an Employee Bonus Restrictions of the ERCF which I am thinking will be done at the enterprise level since the UST will continue to hold warrants for most of its stake for some period. If the percentage restrictions are at the Enterprise level - then the Div Restrictions can be easily met since the public float even with a SPO would be easily met - most likely no more that 25% float vs fully diluted shares
Great to see your comments. Happy Holidays and a Very Happy New Year to all of us!!