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Wise Man

07/21/23 3:09 AM

#759873 RE: Rodney5 #759795

Are you new here? The SPS are "obligations in respect of Capital Stock", as stated by the Treasury department in the SPSPA:

The Charter Act wasn't constructed to allow them to fail for carrying out a Public Mission, whether you want it or not.
So, in "any (redeemable) obligation", we include the SPS.

The UST backup inserted by HERA in the Charter Act, subsection (l) has an unlimited rate and in an unlimited amount. Though with a deadline December 2009 that was skipped with the Securities Law violation of SPS increased, instead of issued, as the deadline was related to the purchase. The UST hasn't purchased any security in 15 years, yet it claims it has "investments".
On the other hand, the original UST backup, subsection (c) prevails, with a rate similar to Treasuries. It's been estimated a weighted-average 1.8% dividend rate in the quarterly investments in SPS, applying a 0.5% (50 bps) spread over treasuries, higher than the 0.299% spread (GAO report) that the other GSEs, the FHLBanks, had in their failed rescue by Congress in 1989. The cumulative dividend owed to Treasury in its 5- and 6-year investments in SPS, is netted out with the interest rate owed to FnF on the $151B expected cash refund.
GAO report:

It's estimated that the Treasury lost the entire $30B invested in RefCorp obligations or, likely, $30B has now been forgiven taking into consideration the 10% interest rate paid until 2011, thinking that they only had "the obligation to pay interests", not the principal of the obligation, just like the recent student loan debt forgiveness announced by the WH last week. Those with high interest rates locked-in in the past, get loan forgiveness.