Replies to post #631741 on Fannie Mae-No Politics (FNMA)

[FFFacts]

The only things certain on that timeline is:

- Sept 14 - Final Listening Session

If trump loses:

- Finalize capital rule before Jan 20.
- Amend PSPA anytime before Jan 20.

[GAK-]

Timeline

.

I guess my main questions revolve around the timing between the amendment of the PSPA and the approval of the capital plans. These amendments will, obviously, have a substantial impact on those capital plans. How long will the GSE's need to formulate these capital plans, how long will the FHFA need to review them and approve them?

If they try to postpone all of this until after the election, can all of this be done before inauguration?

Are there any historical examples that provide a template for this timeline?


And since any conversion of Pfds will be a part of the capital plan (assuming that is the route FnF want to go), those capital plans first need to be approved before that conversion takes place.

[kthomp19]

12 USC 4622 is the part of HERA that deals with capital restoration plans.

It seems that FHFA could not approve any capital plans that do not have clarity on the final PSPA.

I agree. One requirement of the capital restoration plans is that they be feasible, and FnF cannot feasibly raise capital while the seniors or the NWS are in place.

But pushing capital plans into Nov gives very little time for the advisors to do a roadshow with investors before inauguration day.

The section of HERA above doesn't place a minimum wait time on Calabria approving the plans or FnF submitting them. I don't see anything stopping FnF from submitting their plans the day after the SPSPA amendment and Calabria approving them shortly thereafter.

He might wait a little to give the appearance of having considered the plans, but if he really is serious about recap and release he should have already directed FnF to start crafting several possible plans with contingencies on what actually happens and in what order.

Obviously, SCOTUS has not ruled against FHFA at this point, so Calabria is safe in his position until they do. So perhaps the time horizon should not be 1/20/2021, but more like the summer of 2021

That's a very dangerous game, because while many settlements do need an impending deadline as an impetus, actually letting the Supreme Court rule is in the interest of neither party.

If Calabria really wants to serve out as much of his term as possible under Biden while not being subject to at-will removal, he needs Collins to be settled so that someone would have to file a new lawsuit to make him removable at will by the President. Such a lawsuit would probably take at least a couple of years from filing to final ruling (most likely by the Supreme Court because it would get appealed all the way up and they would take this new case because they took Collins).

In the past I have said that if the Supreme Court actually hands down a ruling then it means the administration is not serious about recap and release. This ruling also cannot accomplish recap and release on its own: the administration (both FHFA and Treasury) must play ball. Thus I don't think any current FnF shareholder should be rooting for the Supreme Court to rule. We should be rooting for a settlement.



(from another post)

And since any conversion of Pfds will be a part of the capital plan (assuming that is the route FnF want to go), those capital plans first need to be approved before that conversion takes place.

I expect this to be part of the capital restoration plans because the conversion (if fully subscribed) would add $33B to CET1 capital.

[trunkmonk]

Will see, nicely laid out.

[camaro4me]

BUMP

Timeline?




Sept 14 - Final Listening Session
Sept 28 - Finalize Capital Rule
Oct 16 - Relist on NYSE
Oct 30 - Settle Lawsuits?
Nov 6 - Amend PSPA
Nov 13 - Approve GSE capital plans
Nov 20 - Convert Pfds
Nov 30 - Release (under consent decree, depending on election outcome)


It seems that FHFA could not approve any capital plans that do not have clarity on the final PSPA. But pushing capital plans into Nov gives very little time for the advisors to do a roadshow with investors before inauguration day.

Obviously, SCOTUS has not ruled against FHFA at this point, so Calabria is safe in his position until they do. So perhaps the time horizon should not be 1/20/2021, but more like the summer of 2021