Replies to post #773518 on Fannie Mae-No Politics (FNMA)

[Wise Man]

Neither Howard refers to repayment but forgiveness, nor the dividends were actual dividends but assessments in the form of capital distributions under the guise of dividends (restricted and unavailable Earnings for distribution as dividends, out of an Accumulated Deficit Retained Earnings account) that we apply towards these exceptions to the Restriction on Capital Distributions in the law/CFR (Separate Account plan):
-Reduce the SPS. FHEFSSA (U.S. Code §4614(e))
-Recapitalization. CFR 1237.12.

Playing the fool is not an option.

[LuLeVan]

You need not waste your time on Howard's pipe dreams.
"deemed repaid".....that's stupid. dividends don't repay anything.

You are right that dividend payments are not a repayment of debt and that the SPS are shares. But in my opinion, the political winds have changed as a result of the jury verdict. The death spiral argument can no longer be used in the public debate. Even if the Lamberth trial was only about breach of contract, there are political reverberations that may force the government to compromise. These compromises could include assessing the SPS as "deemed paid" even though they are not debt.

If the government just exercises the warrants, it would still raise over $100 billion. The SPS conversion would raise only about $25 billion more - but could cause problems, such as subscribers to the new shares holding back on the IPO.

I find it hard to believe that the government will haggle over $25 billion when two TBTF enterprises with total assets of over $7 trillion are to be re-listed.