Fannie Mae-No Politics (FNMA)

[kthomp19]

See page 16 and the paragraph beginning: "The treatment of private equity holders..."

Good find, thank you for posting it. I will need to look for more of Calabria's comments and papers to see if and how much he has changed his position in the 4+ years since this paper was written.

One potential source of comfort for junior pref shareholders is that Treasury (by the end of December) will have received around $15B in excess of the 10% moment. If the NWS is unwound and the past dividends (beyond the 10% interest) recharacterized as paying down the seniors, the seniors (and their massive liquidation preference) would be gone, and that $15B would flow to junior pref shareholders in a receivership/liquidation. That's just shy of half of par value, and every quarter's earnings would just add to that. If it takes another year to get receivership actually done, junior pref holders would see par. With the passage of enough extra time common shareholders would get money too, though I guess 79.9% of it would go to Treasury.