Fannie Mae-No Politics (FNMA)

[RockRoll]

The title is "Calabria Nomination As FHFA Director Good For GSE Preferreds"

I read the article, admittedly ala Evelyn Woods Speed-Reading style, and didn't see why it's [only] good for Preferreds. Did catch this:

I think it is impossible to raise new capital to exit conservatorship without respecting private property rights because if shareholder rights are ignored and assets are confiscated by the government this time, what prevents them from doing that again in the middle of a recapitalization or just after. As such, if you study all the lawsuits, they all go against the net worth sweep except Washington Federal which goes after the conservatorship for pre-conservatorship shareholders. At this point, the majority of the legal challenges would be resolved by declaring the net worth sweep paid off the majority of the principal balance of the SPSPA. The warrants can't really be challenged as they are beyond the statute of limitations, and whether the commons are aligned with the warrants or not depends entirely on the timing and conversion mechanics of the recapitalization. If the net worth sweep is stopped before the lawsuits are settled, this would bode well for common shareholders if it leads to the market bidding up their price making it less attractive to convert preferreds before the warrants are exercised.

and

Mark Calabria understands what a conservator is supposed to do, and that sets him apart from previous and current directors of FHFA if you ask me. The net worth sweep prevents the GSEs from being adequately capitalized and it also prevents the creation of capital restoration plans. It also prevents the stated goal of reprivatization of the GSEs. With Mark Calabria at the helm, the net worth sweep may be eliminated as part of implementing a capital restoration plan.

The one caveat, this article is from Seeking Alpha, I'm so-so on them, but this article was interesting.

https://seekingalpha.com/article/4228085-calabria-nomination-fhfa-director-good-gse-preferreds