Fannie Mae-No Politics (FNMA)

[Donotunderstand]

yes

preferred stock has priority over common

yes

preferred dividends must be paid before any dividends are paid to common

but
per the bill ? preferred are at par?

"... pays par on the jr. pfd's which is $19b"

my question

WHO pays that 19Billion

Fannie does not have that kind of money and more importantly - I assume (yes an assumption) that Fannie will not pay out anything to anyone - let alone 19B for the preferred at a par call - until they have X (?#$) in reserve

I do not disagree on priority - I just wonder where the money comes from to pay the preferred and call them in --- and I assume that will not happen -- but at some point - after x dollars of earnings KEPT - or Z shares common issued - Fannie will start paying the full dividend and that will drive the PPS up from 50% to par as it shows ability to pay for a CALL

again - I see Fannie husbanding cash for years .... with some value to the now free Fannie (10-20) and some value for preferred of the now free Fannie (40-60%)

If the GOV would sell a ton of shares - dilute common in ownership but put all those proceeds into Fannie - then Preferred is at par and common likely at Ackman number of 20 (diluted)