FNMFO - GSE's Net Worth Keep Agreement Means Major Equity Offerings

• Retained earnings alone are insufficient to adequately capitalize the Enterprises. Until the Enterprises can raise private capital, they are at risk of failing in the next housing crisis.
• Treasury will not be getting any dividends from Fannie and Freddie for 11 years unless they restructure the equity as part of their commitment to facilitate capital raises.
• The outcome I have been forecasting is the same, albeit delayed about six months, I will continue to own and recommend owning as many junior preferred as humanly possible.

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