Replies to post #353213 on Fannie Mae-No Politics (FNMA)

[brandemarcus]

1. yank, this exchange began when I explained how the Blackstone document disproved the death spiral defense and showed that those loss reserves were overstated in 2011. I have said that the gse's may have needed a combined 35-40 billion for the five years after 2008, not 187.5 billion! So did Citi Bank , Bank of America and they were charged 5% and no net worth sweep. No one has said they have to be liquidated and have a broken business model.


2. I remember reading that article and thinking how can they use mtm on held to maturity items. In defense of that article , I think they were just predicting a hole caused by losses of 50 to 60 billion of subprime which were not part of the guarantee book. That article has nothing to do with overstatement of loss reserves in 2011.

3. You said the gse's sole positive income for the whole period 2009-2015 was reversal of dta's and derivative gains in the post I responded to. I just said" Look in the 10k's that's not true." What does a Barron's article in March of 2008 have to do with either my statement or yours?!

[brandemarcus]

1. Sorry, did not read all your points, but the figures in the 10k are net figures they include net interest expense already! You also have to subtract administrative expenses but they are rather small in the scheme of things.

2. The rest of your post keeps citing figures from 2007-2008, I and the plaintiffs are looking into the reality of 2011 and 2012. This is what the court cases are about not 2008! What happened in 2008 has little to do with
overstating reserves in 2012.

3. Now, you could perhaps loan the gse's an extra 20 billion and count as excess capital on the same the terms as the banks got. Then simply allow them to pay it back! Don't shove into reserves as "losses" in the name of conservatism and preparing for some future problems. Finally you don't charge the usury rate of 10% on money that " we think you might need some time in the next 30 years".

4. On your point #3. On every loan in the guarantee book either there is mortgage insurance or the borrower put 20% down. I am talking about the guarantee book for which reserves are allocated not the held portfolio which is much smaller and was largely written down by 2011 anyway. That's what the dated Barrons article was referring to.