Replies to post #529128 on Fannie Mae-No Politics (FNMA)

[bcde]

Fully Diluted,

Thanks for the response. I am not sure we are discussing in the same logical dimension.

However, there is different truth in the existing treaties. Neither the SPSPAs, nor HERA address a possible repurchase of the SPS. There is simply nothing about it in it. Only in the SPS certificate you will find the text passage I posted before, which says that a buyback of the SPS is not possible as long as Treasury's Commitment exists.

SPSPA is a private contract and also SPSPA is not compliant with HERA and many other laws. That is why Watt said inter agency agreement SPSPA has trumped the laws.

The main point here is not about buying back SPS but setting SPS liquidation preference value to zero after reversing NWS and continuing SPS as revolving LOC after release and during Recap. This is how SPS was designed to operate as a revolving line of credit. FHFA as usual faked it as equity to satisfy regulatory requirements.

The concept of equity comes from ownership rights to residual assets after liquidation, with restrictions that no cumulative dividends and also no fixed ROI. JPS and SPS do not have these rights and restrictions. More ever its wrong to call SPS, a cumulative fixed dividend/interest investment as equity. Anything that has cumulative fixed interest or dividend is a debt/loan.

If there are no termination/buyback clauses in SPSPA or SPS or HERA then it is even better, nothing to worry about. FnF can simply terminate the agreement and that is the end of it, even though that means no SPS credit line from UST.

Mnuchin's lawyer confirmed this at the en banc re-hearing by saying that SPS elimination remedy was not possible under SPSPA.

It a wrong statement. Anything is possible with private contract agreements. If SPSPA was a law then only the above statement is true.

Let me put it this way: anyone who claims to simply return to the original contract and eliminate the SPS in the process has not researched thoroughly. Because the original contract excludes SPS elimination as long as Treasury's commitment exists.

Who is talking about eliminating SPS?. This claim is not relevant in our discussion. Once again the main idea is to set SPS LPV to zero and use it as revolving LOC for release and recap plan. Read Post Card plan once again.

[andydub]

Yes, as you say the agreement precludes any reduction in LP. The only way would be for both parties to agree to amend (perhaps even completely abrogate, though I think that unlikely) the agreement to deem the previous payments to have paid down the LP.

This time it would be Mnuchin and Calabria conspiring on the amendment instead of Slick Eddie D. and Timmy 'da Weasel' Geithner. While I like our chances much better now, I always consider that anybody who has gotten that far in the political arena is still, well, political, if you know what I mean.