Replies to post #706738 on Fannie Mae-No Politics (FNMA)

[JOoa0ky]

Let me offer an alternative scenario in the distant future.

So we are forced to raise capital for up to 4% of assets and we will hold 4% retained capital for X number of years. Then at some point in time, someone will wise up and say we only really need 2.5% at best.

What do you think will happen when it gets readjusted from 4% ~> 2.5%?
- That's a lot of free excess cash.

It wouldn't be 30 years but it would be some considerable period even if we get some money back from the NWS. I didn't go back and look it up, but my understanding is that the cap requirements are based on a percentage of assets - which are growing. So the cap requirements raise every year and the retained cash also grows somewhat faster and eventually closes the gap. But not in just a few years. That's why organic recap is not practical in an environment where the Government seeks to resolve this in the foreseeable future.

Otherwise, I agree with a lot of what you said.

Nats