Fannie Mae-No Politics (FNMA)

[mike_usa]

Warrants are invalid.

From the Ex.CFO Tim Howard comment:
http://howardonmortgagefinance.com/2016/02/23/the-takeover-and-the-terms/#comments

jtimothyhoward
FEBRUARY 24, 2016 AT 1:30 PM
It depends on what your goals are. If you want to have a reformulated version of Fannie and Freddie serve as the foundations of the future secondary market system, you wouldn’t concede the warrants. I think Treasury’s having given itself 79.9% of the companies in exchange for doing nothing (other than using them as instruments of public policy) is outrageous and can be successfully challenged in court. Also, if they emerge from conservatorship, Fannie and Freddie will need all the tools they can muster to sufficiently capitalize themselves. If Treasury exercises and sells the warrants, it takes capital out of the mortgage finance system (with the proceeds going to Treasury, for whatever purposes it chooses), leaving Fannie and Freddie with much less capital-raising power because of dilution from the warrant exercises. That’s the opposite of what we should want.

Liked by 3 people

Anonymous on February 25, 2016 at 12:25 am on www.timhoward717.com