Replies to post #778622 on Fannie Mae-No Politics (FNMA)

[kthomp19]

At the time of the "treasury draws" the GSE's were more than solvent.

No. When FnF took those draws they were balance sheet insolvent, which would have triggered mandatory receivership 60 days later if they didn't restore net worth to at least zero. That balance sheet insolvency was the entire reason they took the draws.

What caused the balance sheet insolvency was nefarious accounting decisions forced on FnF by Lockhart. But that happened before the draws, not after.

They put that money in the coffers under false pretenses and manipulating the books to create a backstop for what was coming.

The insolvency was caused by non-cash accounting changes.

And the money that came from the draws went to FnF.

I sure hope that last part isn't a reference to the "FnF were forced to buy toxic mortgages" myth that has reared its ugly head again recently.