Fannie Mae-No Politics (FNMA)

[kthomp19]

1. accounting embezzlement to justify conversion of Jr-pref in commons while FnF are currently well capitalized except for the burden of NWS. There are no viable exit-plans without revoking NWS retroactively.

What does that bold part mean?

Junior pref holders (as opposed to common holders) are the ones who are paying for the lawsuits that are the government's main reason to pay any attention to shareholder rights at all.

2. Conversion of warrants and Jr.Pref in to commons and then raising 100s of billions from markets is unworkable, creates more risks and uncertainties. This may cause another major crisis.

FnF don't need hundreds of billions. $99B is enough according to FHFA's most recent stress tests. There is way more than enough money in the world's financial system to recap the companies.

And how exactly does your scenario cause a crisis? What risks and uncertainties are created that don't already exist?

3. The current court litigations are likely to continue and will adversely affect raising fresh capital from markets. In fact Moelis plan will create more legal challenges that will make raising fresh capital almost impossible.

I agree with the first sentence. The court cases will have to be settled as part of any reform going forward.

But what legal challenges would result from implementing the Moelis plan? Moelis is designed to offer an incentive for the litigants to settle, meaning fewer legal challenges and not more. Since the plaintiffs are junior pref holders, the plan considers what is good for them first. What exactly is wrong with that?

4. FHFA conservatorship through its lawlessness has destroyed investor's trust in Gov. Unless all lawless decisions are reversed investors will not trust any plans and invest.

I don't think this lack of trust will keep away enough money to make a recap impossible. It will just lower the share price; the risk of another NWS will be priced in.


Again, you and I find ourselves on opposite sides here despite the fact that we both own junior prefs and commons. It just seems to me that you are arguing about what should happen, when that is irrelevant compared to what is likely to happen. Concepts like "fairness" and "justice" have very little to do with the latter, I'm afraid.