Fannie Mae-No Politics (FNMA)

[kthomp19]

P/E only means Price to Earnings; this doesn't include the redemption value of the junior preferreds.

Unless you mean that you expect FnF to redeem the junior preferreds at par as part of a settlement. I disagree with that: FnF will need capital badly and it is far cheaper in the short term to just turn the dividends back on, which costs far less than $19B per year. Heck, the dividends are non-cumulative so FnF could decide to wait a year or two before turning them back on. As long as a promise to do so exists, the junior preferreds will approach par, appeasing those plaintiffs (Berkowitz, etc).

Also, I don't see a scenario in which the extra $65B that FnF have paid over the senior preferred value gets kept by the government AND the warrants get exercised. Why would the plaintiffs as a whole agree to that? Getting the preferreds redeemed at par (or getting their dividends turned back on) won't satisfy common holders like Ackman.