Fannie Mae-No Politics (FNMA)

[Donotunderstand]

Yanks

You noted

The day junior preferred shares are converted to common stock, the GSEs have a combined write-down of $35 B that gets removed from CASH,

I do not think so

1. Yes - when issued (sold to public) it was debit cash and credit preferred stock

2. Yes - if the preferred are CALLED in and cash is paid then debit preferred stock and credit (reduce cash)

HOWEVER

As no cash is involved when preferred stock (equity) is converted to common stock (equity) I assume a debit to preferred stock (down) and to offset that a credit to common stock which has grown by the new shares

No cash or assets need be touched and IMO none will be part of the accounting -- for a conversion