Fannie Mae-No Politics (FNMA)

[Sogo]

I'm not sure investors would stay away. The world is starving for yield. There are still negative real interest rates in some major nations. And Chinese are still hoping to get their money out of China. In such an environment, I unfortunately think that even some institutional investors would flock to invest in the GSEs (or their replacement entities) even if the gvt ends up successfully completing its purely corrupt play here and screwing existing common shareholders. I just have a hard time believing the (yes, seemingly logical) idea that if the gvt succeeds in screwing current common shareholders, then that will scare away potential future investors. All the hype-machine/gvt-media-complex would have to say to convince capital to come to the new replacement entities is something like, "the extraordinary measures we took to protect taxpayers required a unique series of deals between Treasury and the entities, a unique series of legal settlements, and a unique series of supportive regulations and policies to get us through the last 10 yrs. With those problems behind us now, and with housing finance wonderfully reformed by congress, we can close the book on what happened and move forward knowing that it cannot happen again, due to the geniuses in Congress who passed this wonderful housing reform legislation." And Wall St institutions will be begging to invest again into the GSEs' replacements. There's no honor among thieves. Institutions will just say, "eh, we lost this round (as current common holders) and the gvt jackals won. But we still need to be in this space so let's just take our lumps here, and get in on the IPO of the replacement entities and move on." And the institutions will just build a small gvt risk premium into their models and invest anyway.