Replies to post #791359 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Right, why would they possibly want any of the capital taken from the GSEs over the past 15 years to do anything useful. Like say, ummm. Pay off the SPS - Shares that can't be legally paid down.

What I meant by "what need do they have for capital beyond the regulatory requirements" was to look at that from the perspective of the government as financial regulator, not from the perspective of the companies.

The very purpose of FnF having sufficient capital, as defined by law and regulation, is to prevent them from being a danger to the financial system. This is true of other financial institutions as well. From the government's point of view, if FnF have enough capital, where "enough" is defined by law and regulation, what purpose would there be for the companies to have more?

I think that's the justification for the past-full-capitalization cash sweep.