Replies to post #794506 on Fannie Mae-No Politics (FNMA)

[Wise Man]

The SPS are redeemed, not converted to Cs. Hello?

[Wise Man]

The Supreme Court required the "rehabilitation of FnF", adding "in a way, although not in the interests of FnF (awful ERCF tables), it's beneficial to (the written text states "in the best interests of") the FHFA", with the add-on "...and the public it serves", for the utilization of FnF for public policies.


Corroborated by judge Willett in the prior ruling over the same case, with "any action within the enumerated powers", which refers to the power of Rehabilitation, without saying it. This is why it was a half-baked ruling, synced-in with Justice Alito that finally said it: "Rehabilitate FnF": (may) put FnF in a sound and solvent condition", were "may" doesn't mean that the conservator is excused from complying once the capital has been generated (Legal dictionary), but about activities that make them take on more credit risk or bear losses, as explained by Freddie Mac here.


This is what the Restriction on Capital Distributions is for. A statutory provision covered up by the parties from the onset, in a clear case of collusion.

Justice Alito saw more his desire to peddle the hedge funds' Govt theft story, rather than what he was required, read the text, because there is no "monetary benefit" possible, as someone might think of with his opinion, in a regulatory agency, with respect to the entities it oversees, by any stretch of the imagination.
It's the benefit of a Separate Account plan and enjoy the pleasure of watching their Equity holders saddled with losses with their stocks trading at rock bottom prices (the stocks' fair value), and fighting against the assault attempt on the ownership by the holders of Preferred Stocks.


MAKE NO MISTAKE, the rehabilitation of FnF and actions authorized by this section, in the best interests of the Agency, go together at the same time.

You cannot take actions in the best interests of the Agency (10% and NWS dividends, and nowadays SPS LP increased for free) and then, 15 years later, claim that it's when you will "rehabilitate FnF" with the write down of the SPS that show up on the balance sheet, and the conversion to common stocks of the ones increased for free that are illegally absent from the balance sheet, which is what the government attorney, Mr. khtomp19, says in the comment that I'm replying to.

that writedown really would increase CET1/Tier 1/core capital by $193B.
I do think this is a viable path forward because it would allow FnF's retained earnings account to accurately reflect the reality of the company's health.
...and convert the off balance sheet LP into just as many commons as if they had converted the whole lot.

The reality of the company's health must be restored on a daily basis, both building up capital and with the reduction of the SPS, obligations that must be redeemed for cash, not increased for free out of the blue, because you wouldn't be rehabilitating FnF, measured in financial companies with the capital levels, not with the Net Worth.


Finally, the attorney Hamish Hume has a lot of explaining to do, for the voluntary dismissal of the Wazee case on May 22nd, and thus, refusing to file the scheduled appeal on May 24th, as seen in this image:

A case that, for the first time, challenged the ongoing Common Equity Sweep with the SPS LP increased for free every quarter. You cannot rehabilitate a company increasing the SPS LP of the government for free, in the same amount as the Net Worth increase.
Another capital distribution, restricted.
Remember: rehabilitate FnF and in the best interests of FHFA has to happen at the same time, otherwise it's NOT authorized by this section once the capital was generated.
What Justice Alito authorized, is a Separate Account plan. Hence the "not in the best interests of FnF" on paper (ERCF tables).

[Wise Man]

Just so you know, the draws from UST, 1:1 SPS, were $191B, not the $193B that appears on the Balance Sheet, as it includes the initial $1B worth of SPS issued for free (1 million SPS at $1,000 each) out of the blue in each enterprise, that, not only aimed at reducing the Core Capital in the same amount, through the offset when stocks are issued/increased for free (Missing with today's SPS. A fraud), and justify the conservatorship for Critically Undercapitalized enterprises,


A clear breach of the FHFA-C's Rehab power (soundness).
But also, it paved the way for the plan to skip the December 31, 2009 deadline on the authority of UST to purchase obligations of FnF at up to infinite rate (for the Separate Account plan).


The SPS LP is increased each time that FnF tap the UST for funds. No new SPS was issued. Then, no purchase of stocks took place and the deadline was skipped (Securities Law violation, as the stocks need to be issued, purchased and dated).
The original UST backup at rates similar to Treasuries prevails, complying also with the Fee Limitation of the UST as part of the Charter dynamics, which strikes the initial $1B gifted SPS for a second time.

that writedown really would increase CET1/Tier 1/core capital by $193B.