Fannie Mae Preferred S (FNMAS)

[rosen62]

The last ammendment to the PSPA contains a clause by which FF are allowed a maximum net worth of 3 billion the first year the ammendment takes place (2013) with a reduction of 1 billion a year, if I remember correctly.

What is not clear from the ammendment is if the 1 billion change takes place "per year" or in quarterly installments. We will know next quarter when they announce the sweep.

In this pr, they announced 5.8 billion sweep for March. Which is the result of present net worth 8.8 billion minus the max allowed 3 billion = 5.8 billion goes to Tsy. If the next quarter's equation has the max. net worth at 2.75 billion then we know that the discount will be 250 million each quarter for the next 12 quarters.

Remember, by Jan 1 2016 -I think- net worth should be zero. So the GSEs have basically 12 quarters to have net investment at zero and pay back taxpayers to let shareholders push their claim. Even when the companies will still owe the Seniors funding just as they may owe the Jrs. Problem is, if net worth is zero, there is really no company left. Even if profitable. It's all about Tsy's magick wand. Now you see something. Now you don't see it anymore.

My understanding only.