Replies to post #14152 on Fannie Mae Preferred S (FNMAS)

[Joe Stocks]

Dividends are paid out of excess capital. A company could have profits but if those profits are needed to build regulatory capital or for capital expenditures, then it may not have the excess capital to pay dividends. Of course profits build capital. So, I think we are saying about the same thing.

>>Plus, how do you know what the board of directors may decide once/if c-ship ends and the companies are returned to shareholders?<<

I only gave my opinion of what they would do. I am assuming that the immediate profits will be used to build regulatory capital.
Regulatory capital is the amount of capital a bank or other financial institution has to hold as required by its financial regulator. Therefor I assume that dividends will not be paid until the proper amount of regulatory capital is in place.

You are right, nobody knows. We don't even know if the government may succeed in this grand scale theft, but, one has to make their own assumptions. Yours may be different than mine. I respect that. I only shared my thinking and why.