Hello to everyone.
I'm new here on board, but I've been following the matter very closely for over 7 years.
Since Trump took office, it's all about wallstreet vs. mainstreet.
And the fact that Corker, Hensarling, Mayopoulos and Co. had voluntarily left the ship is a clear sign of a change of direction in our favour.
Now Watt is to be replaced by Calabria. In our context, this means that there will be movement. This can be seen from the fact that all the proposals Calabria has made in the past to handle the GSEs have been discussed before various Senate hearings. And the absolutely clear answer of the mainstreet was this:
- keep F+F alive
- strongly recap and release the GSEs
- no other guarantors needed; keep it manageable
- guarantors should not be originators
- maintain the cash window
If Trump meets the wishes of mainstreet, Recap and Release is the logical consequence. Not to mention that the only real alternative would be to maintain the current limbo state. And that's no longer sustainable. Ever since Trump took office, everyone has been saying that: even Powell of the FED.
Calabria is undoubtedly of the opinion that the Net Worth Sweep is illegal. The logical consequence is a 4th amendment, which will resolve the NWS retroactively. In this case all shareholders can be indifferent whether the companies are liquidated or not, as there would be enough value left for all shareholders if the assets were sold.
Fannie's balance sheet is a mess. As you can see from my second last post, not even the company itself is in a position to make reliable statements about the value of the company's assets in the event of a liquidation.
But according to my modest calculations, the preferred shareholders would definitely get their liquidation preference and the common shareholders would easily come in the teens despite the prior change of the warrant.
Don't worry, be happy and GLTA,
Fully
P.S.: Please stop this silly fight between commons and prefs. That doesn't make any sense at all. We are all definitely in the same boat. In the end, we will all be treated equally fairly:
covenant of good faith and fair dealing... there will be no conversion advantages. Expect Trump to do it right!