Fannie Mae-No Politics (FNMA)

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rosen62, thanks for posting all of these docs.

I find this passage interesting (found in the 2nd link of rosen's post):

Testimony by Mario Ugoletti, Special Advisor to the Office of the Director of the FHFA.

19. These changes in structure [enactment of the 3rd Amendment] did not change the underlying economics of the PSPAs. It was my belief at this time, given the size and importance of the Treasury commitment, that through the liquidation preference, fixed dividends, and the market value of the PCF, Treasury would receive as much from the Enterprises under the Second Amendment as it would under the Third Amendment. Thus, the intention of the Third Amendment was not to increase compensation to the Treasury -- the Amendment would not do that -- but to protect the Enterprises from the erosion of the Treasury commitment that was threatened by the fixed dividend. The Third Amendment was therefore consistent with the intent of the original PSPAs to (1) fully compensate Treasury for the value of its financial support, without which the Enterprises would have been forced into receivership and (2) protect the Enterprises and the national housing market.

20. At the time of negotiation and execution of the Third Amendment, the Conservator and the Enterprises had not yet begun to discuss whether or when the Enterprises would be able to recognize any value to their deferred tax assets. Thus, neither the Conservator nor Treasury envisioned at the time of the Third Amendment that Fannie Mae's valuation allowance on its deferred tax assets would be reversed in early 2013, resulting in a sudden and substantial increase in Fannie Mae's net worth, which was paid to Treasury in mid-2013 by virtue of the net worth dividend.

--signed Dec. 17, 2013

Seemingly, FHFA is admitting the 3rd Amendment was enacted to keep FnF solvent and to secure their initial investment. Once this has been returned in full (as early as Feb?), the Amendment should be repealed as its objective has been met. They also seem to indicate that compensation according to the PSPA 2nd Amendment is more appropriate. Of course, all IMO and the only person's interpretation that matters is the presiding judge.