Fannie Mae-No Politics (FNMA)

[jeddiemack]

Do you really honestly believe what you have written?

Its just so jaded and lemming like.

Can't you understand what occurred and how it occurred?

You set your self in a camp saying taking people's hard earned assets is both legal and appropriate. I just don't buy that argument as saying just because its done its okay. There are a whole host of things done that aren't right.

The dilution that would be caused by the warrant on Fannie and Freddie are devastating to the capital structure of the companies and in NO way if exercised would it "repay" the government - especially since its already been repaid. The warrants are crippling if exercised; to the existing shareholders who owned 100% of an entity one day and the next would own 20% for receipt of NO value. That is a taking, remember all the money crammed at Fannie and Freddie have been repaid at 10x interest rates. And to boot, the money was never really necessary (proven undeniable fact no one has legitimately disputed).

If the warrant were exercised that would mean F and F were to survive; which would be a good thing. But, the proceeds of the shares would go to the Treasury not Fannie and Freddie. So, assuming this happened and the Swipe ended; Fannie and Freddie would be 140% repaid the borrowed money; for Fannie have 5 billion shares outstanding, and no capital. So, it would need to raise it. In order to do any offering or a series of offerings it would need to raise say minimum $40 Billion. At this would sow 2 billion more shares outstanding and so now... those that had 100% ownership would now have 14%. And it gets far worse as it becomes a circular downward spiral.

Whereas... without the warrant and Fannie raises $40Billion it does so offering 250 Million shares; So it has around 1.4Billion outstanding and the old shares own 88% or so.

But, hey if that is what you are postulating for; great for you, you just don't understand the numbers.

Personally, I think you are incorrect.