Replies to post #559045 on Fannie Mae-No Politics (FNMA)

[ZZ Fannie]

PPS is staying STRONG! NWS/CONSERAVTOSHP IS ENDING!!

[contrarian bull]

I think for political reasons it would be bad form for Treasury to hand billions of dollars in cash to Fannie and Freddie. Might remind people of the pallets of money shipped over to Iran... fannie and freddie are about as popular as Iran with the American public and politicians.

So if Treasury refunds any of the sweep to F&F they will give it first by writing off the liquidation preference on the senior preferred, then by giving credits against future taxes. More DTA's. That way no cash changes hands.

And as we know from 2018 - DTA's do count as capital/net worth. Of course they will need to multiply the amount refunded based on the tax rate to come up with the exact DTA amount to credit them.

But that is step two after they are FORCED to give back the overpayment. In the short term they will most likely replace the sweep with a 10% fee. They will use the full nearly $200B amount to charge interest against, meaning F&F will still need to pay around $5B on 12/30/2019. They were scheduled to pay between them $5.191B, so hmm... they won't retain much.

But fear not - Treasury will have to give it back eventually.

I heard that Mnuchin wants to give tax credits to FNF and don’t want to end completely NWS.

Credit is credit, not considering as capital.
So with this guy we don’t know what cames out at the end of month- amendement agreement!!