Fannie Mae-No Politics (FNMA)

[bmp152]

The SPSA was initially set up for FnF to pay treasury quarterly dividends that equalled 10% of their outstanding liquidation preference. The fatal flaw with that setup occurred when FnF were unprofitable, so they were actually borrowing more money from the treasury just to pay the dividend.

Seeing this as unsustainable DeMarco was forced to make an amendment to the SPSA (Aug 2012) allowing for the dividend sweep only in periods or profitability (i.e. no profits, no payment). This was great because it stopped the negative borrowing loop. Therefore, I wouldn't say the dividend sweep is unlawful. However, one does have to question why FnF made that amendment on the verge of these huge profits.

IMO, once the balance "owed to treasury" is "paid in full" there will be a push to exit cship. In the meantime, enjoy trading and taking profits along the way. Rinse and repeat until near the end of the year...