Fannie Mae-No Politics (FNMA)

[smoke_em]

LOLssss, what a load of Government BS!

Consequently, the Third Amendment eliminated the prospect of future insolvency caused by the required fixed-dividend payments. The Third Amendment did this by eliminating the Stock Agreements’ provisions requiring the payment of a fixed, 10-percent dividend (see Compl. ¶ 66) that the Enterprises could not pay without further drawing on Treasury’s investment commitment. Instead, the Enterprises must now pay a quarterly variable dividend – known as a “net worth sweep” – only if the Enterprises are profitable and able to maintain capital reserves. Compl. ¶ 66. If either Enterprise’s net worth is negative in a quarter, no dividend is due from that Enterprise. The amendment was designed to strengthen the Enterprises, decreasing their funding costs and avoiding draws on the limited backstop provided by Treasury in the Stock Agreements. Thus, the modification maintained market stability by preserving Treasury’s ability to support the continued solvency of the Enterprises and avoiding the statutory trigger for receivership and liquidation.