After I read this I burst out Laughing: from FHFA.gov website PSSPA
Read the definition and tell me what you think with respect to the definition of dividends with respect to Conservatorship agreement. The government states the following:
Dividends Instead of paying the Treasury a 10 percent dividend on outstanding senior preferred stock as was the case prior to 2012, Fannie Mae and Freddie Mac will pay Treasury a quarterly net worth sweep, based on a formula. In many quarters the payment will equal quarterly net profits. This change eliminates the possibility of the Enterprises having to borrow from Treasury to pay dividends, which could have eroded market confidence. This change also ensures all the Enterprises’ earnings are used to benefit taxpayers.
So the gov says instead of paying a 10% dividend, it will quarterly sweep all money so in effect it eliminates the enterprises from having to borrow money from treasury which could of hurt market confidence. It also makes sure that earnings are used to pay back taxpayers.
Okay so Here's the Summary;
#1 gov sweeps all money from both companies based on formula to eliminate the possibility of the enterprises having to borrow more money from treasury to pay dividends. -This does not make sense.
#2 gov sweeps all money again but this time for market confidence reasons. Huh?
#3 gov sweeps all money to ensure taxpayers are repaid. Are taxpayers not repaid? Huh?