Replies to post #661334 on Fannie Mae-No Politics (FNMA)

[Potty]

SCOTUS will not be taking this recent amendment into consideration in their ruling, I believe.

You can look at what Mnuchin and Calabria did in two ways -- they are forcing a resolution by pressuring plaintiffs to settle or SCOTUS to act. Or you can see it as Mnuchin betting SCOTUS will not touch past amendment, that Treasury will be set to maximize its Senior prefs and warrants after SCOTUS and that this amendment is designed to block any liberation of GSE's back as private companies that Republicans have always hated

I tend to the half full view. And I just cannot justify tying up capital till June when (i) the risk-reward looks bad; (ii) there are so many other things to invest in right now and (iii) I could just keep cash, wait for a crash and buy proper companies on the cheap with no BS about government/congressional decisions

This really needs to get to 10% par on JPS before (i)-(iii) gets over-ridden for me and I make a speculative investment

[DJVan57]

If we are being rational and using common sense ( which does not always pay when analyzing this deal) then most certainly SCOTUS will rule that the SPFD is paid - with maybe some $ going back to GSE’s. That then frees the GSE’s to raise capital and the Gov still has the warrants to make out like bandits. Perhaps Mnuchin already knows the result or he just sees the writing on the wall. He also gets no blowback from the whole thing when the GSE’s can raise capital and escape. Calabria should be safe until SCOTUS rules and then he is certainly gone but it will be pretty irreversible at that point.

There is one thing that is pointed out and that is the original PSPA said the SPFD could not be paid back (don’t remember the details of under what circumstances it could be retired) but that could be a problem. I always thought that was an illegal part of the agreement so thought the courts could reverse but not sure that is part of this case. Any remedy will have to consider how to get around that , I think.

It seems to be a lot of people have done much work to get to this point only to give up at that last minute / maybe there is a deal that’s been negotiated and it will now play out / but then again I may be guilty of wishful thinking again .