Replies to post #485717 on Fannie Mae-No Politics (FNMA)

[kthomp19]

But the fnma is not insolvent.

This is true, but insolvency is not the only condition for discretionary receivership in section 1367(a)(3). Did you even read it?

Example: subsection (K)

‘(K) CRITICAL UNDERCAPITALIZATION- The regulated entity is critically undercapitalized, as defined in section 1364(a)(4).

This gives the FHFA director the authority to place the companies into receivership if they are critically undercapitalized. Note that this has nothing to do with either profitability or solvency.

Conservatorship is custodial to make it sound and healthy. If unable to make it sound and healthy then the question of receivership cropped up.

It's not only "unable". "Unwilling" works too.

And since the FHFA director cannot unilaterally get out from under the NWS, the companies actually are unable to recapitalize themselves (make themselves "sound and healthy") at the moment.

Last, a return to a sound and healthy state is not the only way out of conservatorship. Putting the companies into receivership is another way out of conservatorship. Check HERA 1367(a)(4)(D):

‘(D) RECEIVERSHIP TERMINATES CONSERVATORSHIP- The appointment of the Agency as receiver of a regulated entity under this section shall immediately terminate any conservatorship established for the regulated entity under this title.