Seeking Alpha

Fannie Mae (FNMA.OB) is working on an accounting change that could allow it to repay up to...

Fannie Mae (FNMA.OB) is working on an accounting change that could allow it to repay up to $61.5B of the $88B that it owes to the Treasury. Under the change, Fannie would reclaim tax benefits that were written down after the government took it over in 2008. The return of billions of dollars to the government "could have important repercussions for reform and other housing-finance discussions," says analyst Jim Vogel.
Comments (7)
  • What impact would this have on current shareholders of Fannie Mae's common stock. Also would this mean that Fannie would no longer have to pay all of it's earnings as interest?
    19 Mar 2013, 06:31 AM Reply Like
  • Question; I thought the Deferred tax assets (DTAs) were tax credits available to be used to offset future taxes. Many of the articles I read suggest that FNMA would be making a one time payment to the treasury with the DTAs. I can see how the DTAs would be a paper asset on the balance sheet and increase the shareholder net worth which would trigger and equal sum be forwarded to the treasury as a dividend under the senior preferred agreement. However, the increase is non-cash, no? Where does the cash come from to pay the dividend?
    19 Mar 2013, 07:50 AM Reply Like
  • Btw...FNMA owes the treasury $116.1 bil as the outstanding balance of the senior preferreds. To date they have paid approx $40.1 in dividends to the Treasury for the use of those funds. The dividends are onerous and unfair to the shareholders. Now the treasury takes all shareholder equity over $3bil this year as a dividend payment.That maximum shareholder equity of $3 bil gets reduced to zero by 2018, not allowing the shareholders the ability to build capital. The potential return on the taxpayer's investment could be 20% or more with the huge profits Fannie and Freddie are earning. This would make my local loan shark proud. But, should we expect the same from our government.
    19 Mar 2013, 08:03 AM Reply Like
  • does anybody appreciate the insanity of all of this?


    these gov sponsored enterprises were never businesses in the first place


    just another government conduit for the channeling
    19 Mar 2013, 09:23 AM Reply Like
  • So when Fannie Mae was bailed out by the feds, it didn't have to take responsibility for any of its losses and as a result lost (of course) any tax benefits it still had on the books. Now the feds want to give back the tax benefits but none of the losses, so that they can claim Fannie Mae paid back the bailout money? This would be an outrageous fraud on the public. Total fed cost: $88b bailout plus $61b tax benefit = $149 billion from taxpayers. No thanks.
    19 Mar 2013, 10:07 AM Reply Like
  • I've been holding 50,000 common shares at an average price of $0.52 per share. I'm not educated on accounting strategies, etc. Bottom line; How will the share price behave if FNMA continues to generate "profits" over the next six month? Any thoughts?
    19 Mar 2013, 11:22 PM Reply Like
  • I actually hold some FNMA common shares. Enjoy the ride up so far, but I have NO idea (nor any analyst, news media people who writes about this news) what is going on. No one offer the real picture.


    + 10% dividend rate is Robbery
    + Nationalize a private company is not capitalistic
    + As a new owner (Treasurer) they changes the dividend rules as they see fit, what is that!?
    + This DTA is totally new, it is not explained well
    + If the Government nationalized the company, why then they allow trading of preferred shares and common?
    + Now FNMA dominate the mortgage business, and will make tons of profits, they should buy all the Government owned preferred and get them out of the share holder seat.
    + Government sponsored company does not equal to Government owned before the conservatorship. Correct? I assume it was 100% private, Government backing does help, but they should take dividend and preferred shares for being a loan backer. But should have no ..... I don't know what I am talking, this is mixing up politics with business, and every ignorant politician wanting to shut down FNMA and FMCC, they don't even know the reason.


    20 Mar 2013, 12:05 PM Reply Like
DJIA (DIA) S&P 500 (SPY)