Replies to post #440798 on Fannie Mae-No Politics (FNMA)

[kthomp19]

I have a question about Dick's comments maybe someone here knows more? He said fannie's "common equity" was negative $132 billion.
What is he talking about here? It seems to be something very different from net worth.

Fannie's most recent 10-Q has:

Senior preferred stock: 117,149
Preferred stock: 19,130 (these are the juniors)
Total stockholders' equity: 3,648

If for some reason Fannie were to go into receivership, the common equity (what is left for them at the end of liquidation) is Assets - Liabilities - Senior preferred - Junior preferred. Doing the math from the balance sheet that's

3,330,759 - 3,327,111 - 117,149 - 19,130 = (132,631)

That's negative $132.631 billion. Net worth includes the preferreds (both senior and junior).

He also said fannie's "total equity" was negative $9 billion. Again - how is this different from net worth and how is this determined? This does not include the DTA hit - he said that after the tax hit their "total equity" would be negative $19 billion.

The only combination of equity numbers I can use to get close to negative $9B is

Total stockholders' equity - Treasury stock - Common stock - (Junior) Preferred stock, or 3,648 - (7,400) - 687 - 19,130 = (8,769) which is negative $8.769B.

I don't know what kind of accounting sense that equation makes though.

I'm not sure about the tax hit being $10B. Fannie's DTA right now is $30.454B. Multiplying by 0.2/0.35 gives $17.402B for a writedown of $13.051B. My calculation method is likely wrong.