Replies to post #794522 on Fannie Mae-No Politics (FNMA)

[Rodney5]

“ What is the current LP of the SPS? Is that total LP reflected on the balance sheet?”

Page 59 Senior Preferred Stock Liquidation Preference $199,181 in billions

Link: https://www.fanniemae.com/media/51196/display

[Wise Man]

The SPS aren't in Separate Account, plaintiff Joshua Angel.
The Separate Account is where the capital distributions under the guise of cash dividend payments have been deposited for the redemption of the SPS (a capital distribution #2, but it has an exception in the Restriction on Capital Distributions, U.S. Code §4614(e)) similar to the SEPARATE ACCOUNT FOR THE PAYMENT OF PRINCIPAL OF THE REFCORP OBLIGATION statutory provision in the 1989 bailout of the FHLBanks (Source)
A provision inserted in the FHEFSSA in this Chapter of HERA:


All the Preferred Stocks are redeemable at the option of the issuer by definition, and the repayment of the taxpayer's assistance is another Prompt Corrective Action, that is, first thing to do in layman's terms.

And then, once they were fully redeemed, FHFA's DeMarco had already enacted "the supplemental" in July 20, 2011, to use this separate account for the recapitalization with the same trick of using the exceptions in the plan of deception (CFR 1237.12).
This amount ($110B SPS overpayment) that aims "to meet the minimum capital level and Risk-based capital requirement" (Exception 1 in the Restriction on Capital Distributions. Also 2, 3 and 4 as it "(c) supplements and shall not replace or affect the one by statute" posted before that is meant for the recapitalization too) along with the PLMBS settlement and the illegal CRT expenses, net (Charter-unauthorized in the Credit Enhancement clause), are assumed that have been reinvested in "zero coupon Treasuries" like the FHLBanks did, and this is why we are requesting interest payments on the $152B owed to FnF. This amount due is netted out with the cumulative dividend on SPS that FnF owe to the Treasury (estimated at a weighted-average 1.8% rate) in its 5- and 6-year investments in Freddie Mac and Fannie Mae, respectively.

The hedge fund manager Donald Trump's plan with the 3rd phase, currently in place, is about the SPS LP increased for free considered a joke. Another capital distribution restricted (#1), they were never meant to stay, with the evidence that they are already missing on the Balance Sheets (Financial Statement fraud though).
Only the layman plaintiff Joshua Angel would say that it's in a SEPARATE ACCOUNT precisely the only thing that it's not: the gifted SPS. They are illegally absent from the balance sheet, so that Bill Ackman and ST in congress, can repeat the lie: "FnF continue to build capital through retained earnings".
Sandra Thompson in charge of Financial Analysis since she arrived at the FHFA in March 2013 as Deputy Director.

Also, Regulatory Policy: Critical Capital level absent from the ERCF.
Capital Policy: Adjusted $402B core capital shortfall over minimum Leverage capital requirement. A Separate Account behind. She is now obsessed in attempting to pass the Net Worth off as the capital that has to meet the capital requirements, as seen in her written testimony to the Senate one month ago. Also, as seen with how FnF calculate the capital metrics beginning with the Net Worth and subtracting the SPS, instead of the sum of their components, attempting to conceal also the Accumulated Deficit Retained Earnings account deep red (Also in her job in charge of Financial Analysis).

We don't need more laymen playing the fool and wearing diapers in this board. The Diapers Gang says that the SPS will "diaper", which is "disappear" in layman's terms.

[Donotunderstand]

I have seen the LP (which is investment and then the phantom capital gain at F and F) quantified as about 300B

[kthomp19]

What is the current LP of the SPS? Is that total LP reflected on the balance sheet? If I were to look at the 10K or another official financial statement, where would the total LP be listed?

I would recommend reading through Fannie Mae's 2024 Q1 10-Q form and Freddie Mac's 2024 Q1 10-Q form. Search for the term "liquidation preference" to see the answers.

For Fannie the total LP right now is $199.2B (page 49), $120.8B of which is on the balance sheet (page 59).
For Freddie the LP right now is $120.4B (page 2), $72.6B of which is on the balance sheet (page 45).

I thought the LP has never been paid down.

Correct, it hasn't and by the terms of the SPSPAs it cannot be.

Still owe the original 200 billion borrowed.

"Paid down" and "owe" and "borrowed" are the wrong words to use here. The seniors are equity, not debt.

The LP only entitles Treasury to FnF's residual equity (assets minus liabilities) up to the amount of the LP in the event of a liquidation.

So isn’t the total like some astronomical number hundreds of billions and growing every quarter?

Yes. The off balance sheet LP grows by $1 for every $1 FnF retain as earnings. That's roughly $4.2B per quarter for Fannie and $2.6B per quarter for Freddie at current rates.

If it is on the balance sheet why wouldn’t there be a negative net worth? If it is not on the balance sheet, is it a real liability?

The LP that is on the balance sheet showed up there because it was the offsetting accounting entry when FnF were drawing money from Treasury in 2008-2012. Every draw added cash to FnF's balance sheet (assets) and thus needed the same amount to be added to equity (the seniors).

The LP that is off the balance sheet keeps growing per the terms of the December 2017, September 2019, and January 2021 letter agreements. All of those are linked to on this page that FHFA maintains. I highly recommend bookmarking that page and reading every document that it links to.

Why do we need a cram down or even acknowledge it if isn’t on the balance sheet of the GSE’s?

The off balance sheet LP still exists and can't just be ignored. Treasury's valuation of the total LP ($220) exceeds that of the balance sheet portion ($193B), showing that Treasury clearly thinks the off balance sheet portion has value too. Since they must approve any exit from conservatorship, the way in which they remove the LP overhang must be agreeable to them.

The cramdown is a way for Treasury to realize some cash value for that LP. From their perspective it is much better than just writing the LP off, which is part of why I expect the cramdown to happen as opposed to a writedown.

Or has Wise Man been correct all along and it is in a separate account not reflected on the balance sheet?

lol, lmao even

The only advice I can give you regarding Wise Man is to just ignore everything he ever says. Not a lick of it ever truly makes sense once you really dig down, regardless of how much he dresses it up. There is no secret account, dividends ARE allowed during conservatorship if the conservator decides they are in the public interest, etc.