Fannie Mae Preferred S (FNMAS)

[Donotunderstand]

I too find it hard to believe that on the day the 3rd amendment was put in place the parties to such transaction would not have given me 5:1 odds the FNMA and Freddie were about to make big money on operations - use tax aids - and write up reserves !!

I have no idea what they were really thinking that day

Here is a potential explanation - that if true the GOV should simply admit to

(note - I like Government - a left leaning capitalist moderate)

Gov moves slow and slower

Gov (Treasury) was getting tired of giving money to FNMA to get it back as dividend (as that meant that for some period of time FNMA was in theory insolvent relative to cash obligations - and it was dumb and dumber as a visible practice)

Gov decides that to avoid that insane situation they would go to an all sweep (figuring if there was more then 10% it would be gravy and their bosses would love the add to the Treasury)

It took 6 months or 12 months from the time GOV felt they should fix the I pay you to pay me to put in the 3rd amendment

At that time - they should have called an audible and change the play but did not - and we had an "interesting" answer in search of a problem (left) to solve

So the slow slow pace of decision making - and not worrying about getting too much money for the Treasury - are the reasons the 3rd amendment came into being and then was not stopped before it was implemented.

i.e. by the time it was implemented they really have no excuse for such action other then momentum