Replies to post #377376 on Fannie Mae-No Politics (FNMA)

[chessmaster315]

According to the book, "Unchecked and Unbalanced" by Mr. King, FNMA was seperated from the government precisely to get FNMA's debt off the government books in 1968.
source:
https://books.google.com/books?id=iqHTjhf5w8cC&pg=PA3&lpg=PA3&dq=when+fannie+was+privatized+it+was+done+to+take+debt+off+the+government+books&source=bl&ots=nUWaeNAjUj&sig=6cdh2QFbMgXC_Y-or69rhOK_BmY&hl=en&sa=X&ved=0ahUKEwiE_pb8r77RAhXLRSYKHZ_yC5QQ6AEIITAB#v=onepage&q=when%20fannie%20was%20privatized%20it%20was%20done%20to%20take%20debt%20off%20the%20government%20books&f=false

If the government acquired 80% of FNMA, then it follows the government would be forced to put the debt on its books.

Hank Paulsen discussed this also, in his book, and it was the reason it was done the way it was done...Congress is unlikely to raise the federal debt ceiling by another 5 trillion to accomodate the debt of the GSE twins.

While Im not an accountant, the 1968 privatization goes to great lengths to demonstrate that investments in FNMA are NOT guaranteed by the government. Please read the circular on Fannie mae's website, which explicitly states that the US Government does NOT guarantee the profits on fannie, including the preferred shares and the MBS.

However, given that the US Government could become an 80 percent owner in FNMA even if said investment did not meet the accounting criteria you cited, remember "perception" is everything.
China, for example, could easily decide that they feel an 80% US Government ownership in FNMA amounted to a 5 trillion increase in the debt, and, its possible or even likely that Chinese investors could begin pulling their investments...with disaastrous conseqences.