Fannie Mae Preferred S (FNMAS)

[rosen62]

When Judge Collyer dismissed the Bivens claims on 4/30/12 she wanted to demonstrate that Fannie Mae was not part of the government -mandatory for Bivens-. Among the conclusions she reached was that a) Treasury did not exercised warrants, therefore had no major influence as shareholder and that this render NO permanent control over the company, b) Treasury had no voting privileges from its Sr. preferred investment, therefore had NO permanent control through votes. From this and other facts, like that "the nature of conservatorship is temporary" and that the FHFA placed itself in a private role ("in the shoes of Fannie"), she opined that Fannie Mae was NOT made part of the government. In layman terms, Fannie was a private company and continued to be one after conservatorship.

This intro is just to say that from her opinion the conclusion reached was that Treasury's interest was that of a shareholder (holding warrants and Sr. preferreds) out of which NO permanent control could be determined. (no full intervention, no nationalization, etc.).

As for the role of the Treasury in changing the agreement, the PSPA includes a clause that delegates this authority to the Treasury alone and there is no interference with decisions done by Fannie or Freddie. Please note, changing the agreement affects Fannie Mae and Freddie Mac BUT the agreement is only between Treasury and FHFA -the conservator-. The companies have NO say. The agreement has given Treasury both the authority to set the terms and the role of a shareholder.

GSEs management, BOD and shareholders are frozen in time with c-ship. DeMarco occupies all those roles, technically. Although he has had the good sense not to get too involved and has given the new BOD and the new management A LOT of leeway.