Replies to post #747113 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Well, I would imagine anyone or more people with access to $100B to $200B in capital would want to know what exactly they are getting into and the inherent risks involved in investing in a 1st Loss Position of their Capital with a statute that gives FHFA SO MUCH UNACCOUNTABLE AND BROAD SWEEPING POWERS.

You're still not getting it. The entire point of raising capital is to get FnF out of conservatorship. At that point the UNACCOUNTABLE AND BROAD SWEEPING POWERS would disappear because those only apply to FHFA as conservator.

FHFA won't let FnF out of conservatorship until they meet at least the base leverage capital requirement (core capital of 2.5% of adjusted total assets), and new investors won't buy shares unless FnF are released from conservatorship. The only way to reconcile those is to have them be simultaneous.

No capital raise means no exit from conservatorship before 2028 (if Treasury restructures the seniors) or 2040 (if they don't). It's just math.