There are specific regulations when it comes to tax losses carry forwards. If there is a privatization, merger or similar, the nols are worth nothing. IRS regulations are set to prevent tax relief trafficking. In order to activate them, profits must occur and they would be activated in the same proportion of net profits. Given the 10% senior dividend, the whole set up is for the GSEs to not record profits or minimally. It is a diabolic scheme and unless politicians throw jr. holders a bone things may take longer than we think.
Freddie already had a profit last quarter, let's see what this quarter brings. Fannie took a huge payment from gov't, almost too huge, so as not to need another payment. Let's see what they report this quarter.
i am not a CPA, nor do I understand the inner workings of the IRS and rulings on deferred tax assets. I understand how they operate in normal situations since I am an investement banker dealing only in non-distressed situations. The last point is correct in normal situations.
I might point out:
Treasury has to pay the bills. Treasury oversees FHFA which oversees F&F Treasury oversees the IRS. F&F are federally chartered companies by the US Congress, not Delaware, or what have you.
I don't suppose it would be impossible for the Treasury department to play with IRS rulings in special situations as long as it doesn't run counter to US Law?
I'm way out of bounds here with speculation...but I too have no idea where this $30bn is coming from through so called F&F reform?
Can anyone find a link that describes this more fully?