Replies to post #741004 on Fannie Mae-No Politics (FNMA)

[LuLeVan]

If they were to nationalize the GSEs, the over $7 trillion from the MBS would have to be added to the U.S. national debt. That's not in Tsy's interest. It would drive up the ratio of government debt to GDP.

In fact, the main reason Fannie went public in 1968 was to take the MBS off government's balance sheet. Therefore, IMHO, there is no alternative to recap/release. However, FHFA und Tsy could delay it for a few more years.

Whether Biden has the guts to do the IPO by 2024, no mortal knows. To be sure, the up to $100 billion he would receive - off balance sheet - is a big draw. But keeping the GSE in limbo is most convenient.

[Donotunderstand]

?
SPS is equity not debt

there is no insolvency when a company can not buy back its preferred paper