Fannie Mae Preferred S (FNMAS)

[thewhale]

The release of the GSE's would create a huge need for recapitalization. Even if the gov't does lose in court on the 3rd and has to return the extra ~$125B taken in the sweep, there's still a need for about $200B in incremental equity.

If anything, a warrant sale should be applied to this. It's where the money is needed so the GSE's are out of the woods with the Treasury commitment, having a 2.5% or more capital ratio.

Not all bad in terms of dilution for commons if it went to a rights offering. Unknown, but Pref's could be a part and maybe a conversion. Ackman discussed rights at Sohn and Berkowitz proposed something similar last year, but for NewCo.