Replies to post #782241 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Would like to know your thoughts on Lockhart's comment that the GSEs should create "new" subsidiaries capitalized by the parent GSEs and then go public though these subsidiaries "to get them out of Government control." Can this be done? Can it EASILY be done?

I am not aware of any way for Fannie and Freddie to transfer their charters to other companies, even their own subsidiaries, outside of receivership. And I don't see any language in Fannie Mae's charter that would allow them to spin off a company that would retain Fannie's powers that were granted by Congress in the charter.

This isn't something I had fully considered before so I can't say this reasoning is bulletproof, but I will keep looking into it.

Is this a specific bulls-eye to screw legacy JPS & Commons by keeping these securities at the 'parent level'?

If FnF moving their assets and liabilities to subsidiaries while freezing out shareholders in the parent companies is possible, yes your scenario could happen.

Guess Congress can 'do anything' if they want, but is this a non-starter/possible/highly probable?

The whole subsidiary thing was a thought experiment that didn't involve Congress. If Congress does get involved they could easily bypass existing FnF shareholders in any number of ways. I see this as highly, highly improbable though.