Replies to post #436708 on Fannie Mae-No Politics (FNMA)

[kthomp19]

When the Senior stock was "issued" - there had to be some asset (e.g. reserve) set up to absorb the CASH or line of credit

My assumption based on some prior posters who seem in the know is that $187B was "deposited" with F and F and that such money is there when the SPSA is to be killed

Freddie Mac's most recent 10-Q

The balance sheets are on page 81 of that document. There is nothing in the asset section about a reserve against the senior preferred.

The senior preferreds show up in the equity section as a positive number. When they were issued they increased shareholder equity by that amount. The dividends that have been paid since then (both before and after the NWS) have driven the accumulated deficit far into the negative.

If the NWS is revoked and the senior preferreds are declared paid off, the senior preferreds would disappear (driving down equity even more!) and the accumulated deficit would be reduced to reflect the dividends actually being paydowns on the senior preferreds.

But that doesn't make money appear out of nowhere. Equity now on Freddie's balance sheet is $5.25B. To even reach 2% of total liabilities it would need to be $40B.