I think TH hinted at this yesterday and expressed a fear of this WAY before the ruling yesterday, that Justice Thomas (and others) would be persuaded by their friends from the Federalist Society to stick it to the gses! Like most Libertarians, the FS HATES GOVERNMENT INTERFERENCE IN "FREE MARKETS" and I am sure many are not fond of Fannie Maes invention whose genesis is from the FDR Administration. Also let's face it, BOTH PARTIES are equal opportunity haters of the twins!
Yesterday, the SCOTUS explained in their decision how they accepted the "Death Spiral" narrative HOOK, LINE, AND SINKER!
Saw this yesterday on TH'S Blog: Soto: "Even if the Biden administration cancelled the SPS liquidation preference and reworked Calabria’s capital rules (two huge if’s), who would invest in the GSEs under HERA’s current SCOTUS-interpreted structure? A new administration could replace the FHFA director immediately and once again sweep funds and rework the capital rule to accomplish anti-GSE policy goals. The agencies are functioning, but the old capital paradigm seems irreversibly broken save legislation to amend HERA.
TH: "You make an excellent point. In the past, investors in Fannie and Freddie common and preferred stock always knew the companies had political risk, but they viewed that risk as being legislative, in the form of a bill adverse to the companies’ interests–which never actually came to pass–not, as it turned out, executive (the conservatorship forced on the companies by Treasury) and certainly not judicial (having the Supreme Court uphold the taking of their profits in perpetuity as legal). It will be the challenge of the Biden administration, or some future one, to figure out how to alleviate the concerns of this now much broader definition of “political risk.”"
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