Fannie Mae Preferred S (FNMAS)

[stockanalyze]

Do you think they will need to issue new shares considering this statement by millstein? How many? Any idea? Guesses?

"FHFA projects more than $60 billion of additional repayments to Treasury from net income through 2015 (exclusive of potential deferred tax asset write-ups and reserve releases)"


dta is big and not included here , strange


"The first step is to end the GSEs and to recapitalize and privatize their mortgage guarantee businesses,

The private mortgage guarantee businesses should be recapitalized and sold as private "first loss" insurers, with significant capital standing in front of the government's new reinsurance. They will have no special privileges, and no implicit or explicit guarantee of their liabilities. As private companies, they will have no ability to issue government guaranteed debt to fund expansive on-balance-sheet mortgage portfolio investments as they did under the “government sponsorship” model.


FHFA should immediately direct the enterprises to increase their fees to marketlevels and keep them there until a sufficient capital cushion is built.


Treasury should suspend its profit sweep so that the mortgage guarantee businesses can retain those guarantee fees and build up capital. Building capital is the first step in getting them ready to be sold back into private hands. It is also essential to building a stable private mortgage market that can absorb most shocks without triggering government reinsurance.

Once the companies have enough capital to cover their “first loss” insurance exposure, Treasury should convert its preferred stock into a sufficient percentage of common stock to ensure that taxpayers' investments can be repaid in full. The firms could then be released from government control and Treasury's equity in the restructured entities sold to private investors over time. This is exactly what Treasury did with its 92 percent stake in AIG, with great success.

I believe that this plan will not only return all of Treasury's net investments in the enterprises, but that its adoption would also have an immediate positive impact on budget negotiations. I estimate that the plan could score between $100 and $190 billion in deficit reduction (that is, a negative subsidy) under Congressional Budget Office accounting.

FHFA projects more than $60 billion of additional repayments to Treasury from net income through 2015 (exclusive of potential deferred tax asset write-ups and reserve releases)"


http://financialservices.house.gov/UploadedFiles/HHRG-113-BA00-WState-JMillstein-20130424.pdf