Interestingly enough, “liquidation preference” is not one of the (22) defined terms in the September 7, 2008 Senior Preferred Stock Agreement (SPSA). But section 3.3 of the SPSA states, “The aggregate liquidation preference of the outstanding shares of Senior Preferred Stock shall be automatically increased by an amount equal to the amount of each draw on the Commitment…”. In conjunction with the provision in the SPSA that draws by Fannie or Freddie taken under the Commitment only can be repaid with the consent of Treasury (which it has not given), the practical impact of the liquidation preference is that no matter what the dollar amount of payments to Treasury made by Fannie or Freddie under the net worth sweep, Treasury retains a senior claim on the companies’ assets (which is what the liquidation preference is) equal to the aggregate amount of draws made since day 1, which now total $191 billion. As long as Treasury’s liquidation preference remains in place, junior preferred shareholders would not receive anything from the companies in liquidation until Treasury had been paid $191 billion, and common shareholders would see no payments until Treasury had been paid AND the junior preferred holders received $33 billion. It’s for this reason that the liquidation preference must be eliminated—through a court judgment, settlement with plaintiffs, or voluntarily by the government—before any new money will be put into either Fannie or Freddie by investors. Tim Howard 9-26-2019