Replies to post #795770 on Fannie Mae-No Politics (FNMA)

[Rodney5]

Clarence, for your convenience...

Quote "The SPSPA itself states that the SPS are authorized by section 304." End of Quote

SENIOR PREFERRED STOCK PURCHASE AGREEMENT
dated as of September 7, 2008

Page 1

B. Purchaser is authorized to purchase obligations and other securities issued by Seller pursuant to Section 304(g) of the Federal
National Mortgage Association Charter Act, as amended (the “Charter Act”). The Secretary of the Treasury has determined, after
taking into consideration the matters set forth in Section 304(g)(1)(C) of the Charter Act, that the purchases contemplated herein are
necessary to (i) provide stability to the financial markets; (ii) prevent disruptions in the availability of mortgage finance; and
(iii) protect the taxpayer.

Link: https://www.fhfa.gov/sites/default/files/2023-07/FNM-SPSPA_09-07-2008.pdf

[clarencebeaks21]

Barron, and Rodney elsewhere in reply, thank you for looking into this. But I still do not reach the same legal conclusion.

To me, the key is that FNMA’s charter Act Section 303 states quite plainly that it covers “preferred stock”. Ergo, any effort to try and fit the senior preferred stock into a section other than 303 is problematic at best, and simply runs afoul of 303’s plain language at worst.

That said, I can see how Section 304(g)1(A) might cause wonderment. That section authorized UST to purchase “any (FNMA) obligations and other securities” —which refers firstly (clearly) to debt and secondly to non-debt. But so what? The purpose there is to grant “authority to Treasury”, as it says. So considering 303 and this paragraph’s purpose, it seems far-fetched to think that 304(g)1(A) pulls double-duty as a silent, implied authority mechanism for some but not all FNMA preferred stock.

Thus, since in my view the Sr Preferred do not fall under 304, they do not qualify as a regulated “product” under HERA.

I may be wrong but I think that’s how a lawyer would see it. That’s how I see it, anyway. But your approach is a novel one so I wish you the best with it. If no one files suit we will never know, so until that happens it’s worth less than cyber ink. Good luck.