Geez....you're referencing the old Corker-Warner proposal which we all know is DOA...Its always been part of the August 2012 senior preferred stock agreement that any earnings above that required for capital reserves will be given to the treasury as "dividends". Please note that this agreement was executed in 2012, four years after conservatorship was implemented. I don't think the treasury or FHFA ever thought that Fannie would become highly profitable again, so they would sweep any excess earnings until it was liquidated or merged with Freddie into some other form. But they were wrong...Fannie's profitability is its strongest argument for its release from conservatoship. However, along with release from conservatorship, the August 2012 agreement will have to be changed. Fannie has to be allowed to keep its earning so it can build reserves to offset any future issues in the mortgage liquididity market. Assuming I'm wrong, the stock goes to zero...but if you're wrong, the stock goes much, much higher...its a bet I'm willing to take
there will be no liquidation. FHFA is trying to build a new infrastructure for the secondary mortgage market...that is all and there will be an exit strategy already. Please read the news release dated Feb. 21, 2012 to Congress.