Replies to post #750791 on Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

Nice one, Guido!

[Brooge warrants cancelled]

https://dsnews.com/news/03-13-2023/fannie-mae-postpones-500m-bond-sale

[Donotunderstand]

Guido

Private shareholders responsible for 7T debt?

What planet are you on ---- 7T in debt would somehow be paid back by shareholders

??

There must be an explicit or assumed Treasury Guarantee on this debt --- or the entire housing finance market freezes and dies --- THAT does not mean we can not be private with adequate normal capital and say 5B shares worth 20 bucks a share ------ BUT no way does anyone think the shareholders of ANY company can be responsible for 7T of debt

[FOFreddie]

Great points Guido. Now is the time to exit Conservatorship and raise new equity while interest rates are low. The current value of the GSEs according to the 2024 budget is $ 224 bn and if interest rates rise the value of the GSE equity will decrease as interest rates rise.

Additonally now is the time to exit Conservatorship to ensure that the $7.2 billion MBS portfolio is properly backstopped by private shareholder equity as you mentioned. MBS investors assume the interest rate risk in the MBS pools due to the potential change in prepayment speeds but the GSE continue to assume the risk in potential market value declines in the liquidation of the underlying houses backing the MBS pools