Fannie Mae (FNMA)

[contrarian bull]

Warrants were issued as collateral just in case the bailout could not be paid.
That's the end of that.

I'm not sure why this belief that the warrants are some form of collateral persists. First of all - common sense says that if the bailed out company cannot pay back the senior preferred - then the company is bankrupt, worthless, and the warrants have no value.

But to quote one of the treasury documents about the TARP warrants:
As part of its investment, Treasury also
received warrants to purchase shares of common stock or other securities from the banks. The purpose of the
warrants was to provide taxpayers with an additional potential return on the government’s investment.

The purpose is to provide ADDITIONAL return on the gov't investment. The idea being that at the time of the bailout the common shares had little value. If the bailout increases the value of the company, the gov't - as a major investor (much larger investment than the shareholders had invested at that point) deserve to profit from those gains. The warrants are additional profit on top of paying back the loans.

Now - sure - the companies were not teetering on bankruptcy, and all that... but the purpose of the warrants was never as collateral.