Fannie Mae-No Politics (FNMA)

[kthomp19]

It's even worse for current common shareholders than what you say. As long as FnF have less core capital than Calabria's minimum capital standard (which will likely come in over $100B), Calabria gets to determine the form and amount of any capital raise. This is true even if FnF are out of conservatorship!

(a) Enterprises
For purposes of this subchapter, the Director shall classify the enterprises according to the following capital classifications:

(3) Significantly undercapitalized
An enterprise shall be classified as significantly undercapitalized if—
(A) the enterprise—
(ii) does not maintain an amount of core capital that is equal to or exceeds the minimum capital level established for the enterprise; and
(iii) maintains an amount of core capital that is equal to or exceeds the critical capital level established for the enterprise under section 4613 of this title;

12 U.S. Code §?4616. Supervisory actions applicable to significantly undercapitalized regulated entities

(b) Specific actionsIn addition to any other actions taken by the Director (including actions under subsection (a)), the Director shall carry out this section by taking, at any time, 1 or more of the following actions with respect to a regulated entity that is classified as significantly undercapitalized:

(3) Acquisition of new capital
Require the regulated entity to acquire new capital in a form and amount determined by the Director.

That means if Calabria says to issue $75B of new commons, FnF's boards will have no choice but to comply, even if they are not in conservatorship.

The idea that FnF's boards will have control of the capital raise and that they will try to minimize dilution while doing so is complete common nonsense. It ignores both Calabria's words and the rule of law (HERA).