Replies to post #846059 on Fannie Mae-No Politics (FNMA)

[blownaccount9]

Realistically they will be removed from conservatorship once they’ve got adequate capital. If they want max share appreciation they’ll need to remove all the government risk which means removing conservatorship. The government will still be the controlling majority shareholder and they’ll still be regulated by the FHFA.

[Fully Diluted]

Hi fdicr,

Fannie and Freddie can be released from conservatorship by consent decree / consent order. Formally speaking, however, they would remain in conservatorship until they have achieved the milestones explicitly set out in the consent decree.
In a consent decree, all subsequent powers of the FHFA and the handling of SPS and warrants can be irrevocably stipulated. It is even possible to agree on the interpretation of specific sections of HERA, such as that Fannie and Freddie may no longer be placed in conservatorship solely by the consent of the board of directors as long as they have not fallen below the minimum capital requirement threshold - or the other seven conditions set forth in HERA. This passage in HERA is responsible for the declaration of conservatorship in 2008 and represents a major hurdle to release, as market confidence in Fannie and Freddie's shares was severely shaken at that time and remains a risk for shareholders and even the safety and soundness of the enterprises up until today.

GLTY 😎