Replies to post #363659 on Fannie Mae-No Politics (FNMA)

[JosephS]

No. These companies cannot and will not be forced to recap over 15-20 yrs. No company that has profits like these guys would do that. It is too risky. Like AIG, you do capital raises in the secondary market. This lowers the likelihood of a problem in a 25-40% decline in housing environment.

A recap IS bringing private capital back to the market. Period. The scream for private capital can be silenced.

[Zargis]

Chessmaster, this doesn't make sense to me.
DTAs are a tax benefit, not something the company owes the government.
instead think of it this way, the government stole over $64 billion.
Fannie and Freddie have billions in DTAs

They are owed both because one is a tax benefit and the other was cash ripped from their coffers.

The government in all seriousness, owes the GSEs the over payments in their entirety.
The GSEs should cash in their DTAs to recapitalize over 2 quarters.
Done.

These companies make $100 - $129 billion in revenue per year, and a profit of only about 8% (for many reasons associated with FHFA trying to kill them.)

May Melvin Watt choke on his turkey today.
Be well,
-Zargis

[hnstabe]

I think the $54B in the F&F DTA account was paid to the UST a couple of years ago. I also thought all the monies paid to the UST also about $50B in excess of the $187B draw was being accumulated in a special account, just in case!!

Isn't recapitalization going to require a lump sum in restitution from the UST? the GSEs can not just depend on normal profits going forward to build up their capital quickly.

[Zargis]

Another thought; DTAs are normally acquired due to losses, and in all technicality, the payments of excess funds to Treasury is coming from profit - not from losses.
So DTAs would not accumulate simply by paying Treasury their profits.

I also do recall Fannie and Freddie still have some DTAs, but I don't recall them being significant anymore. I seem to recall they were around 10-18 billion per company but I haven't looked in a while to validate the numbers.

Be well,
-Zargis