Fannie Mae-No Politics (FNMA)

[Zaadx]

Exactly. Fannie and Freddie will be liquidated. Leftover assets will go to preferred shareholders....unfortunately, probably not at full PAR, but still something. Then the new entity will be released onto market via IPO to raise capital, and will probably carry an explicit government guarantee. Government will then have all of it's money back, and a stake in the new entity paying it money in g-fees.

Everyone wins but common.

The only scenario that will allow the common holders to "win" is the release and recap scenario.....but it's going to take some serious dilution to recap the entities....right?

Even if the warrants are cancelled (doubt it), the companies are going to have to dilute because now they have a ton of divs/interest to pay to preferred holders at average of what, 6%. On top of that they have to raise money for operations, capital buffers, and etc.

GSE's will have 0 capital by next year. If they wanted to raise enough money to redeem all the preferreds, AND still have a $20 Billion safety net left over, that's like $40 Billion in total to raise. 4 Bil shares issued at $10 will do. So who knows. Many ways to get this thing over with, but Gov is clearly leaning towards liquidation.