Fannie Mae Preferred S (FNMAS)

[Joe Stocks]

Any thoughts on why TSY is allowing them 3B in retained earnings...why not sweep it all?

With FnF passing all profits to the treasury, or more well defined as any sums over $3m bil in net worth, they walk a thin line between solvency and insolvency. Amazing, isn't it? Freddie turns $4.5 bil profit in one quarter and they are $3 bil away from insolvency which would necessitate receivership and liquidation unless that taxpayers put more capital in. In addition, profits could be offset simply buy a negative change in the value of their MBS portfolio. I imagine the $3 bil is a cushion that they feel they can wind down as the MBS portfolio winds down.