Fannie Mae-No Politics (FNMA)

[jeddiemack]

The concept of warrants are in themselves not bad. The problem here is that they are confiscatory, punitive, nasty and likely illegal.

Had the companies actually needed the money and been a true desperate state sure, a lender often puts money in extracts a return and includes things that secures its money. Warrants for some % is expected. But, I've been n corporate finance for a lot of years, raised some dough and never even contemplated warrants at 1/1,000,000,000th of the value of the underlying such as to ostensibly give 80% of the company away; especially when the company really didn't need the money.

Had the government given itself warrants for say 20% of the stock at a value of $45 or so a share which represented 30-40% discount to fair value at the time or set them equal to a price or % of some future economic value derived by Earnings / business then sure; I'd have had no problem with them. But to intentionally do harm. That was wrong.

As it was with the 80% control going over to government the fact they then charged itself 10% interest is as well 3x the cost of money that was borrowed and that too should have been problematic to sec and regulators.

So, argue whatever, you want readers, say what you will, but in my opinion, the warrants are garbage. Fruit of a poison tree and will ultimately be the subject of many more lawsuits if ever exercised. They are tainted.