Fannie Mae-No Politics (FNMA)

[kthomp19]

Fnma commons would not have gone to zero, however. We know the GSEs were not nearly insolvent, and that there were standing offers of money/capital injections from international sources (china). Plus there was the real possibility of injections via in-kind arrangements.

The problem here is that the same "slam-dunk" stuff was said about the NWS cases, and yet here we are. If the government has been able to get away with the NWS for this long, then there is a decidedly non-zero change that they will be able to talk judges into the "FnF shares would have gone to zero" trap, regardless of what the 11,000 documents say.

That's a hell of a risk to take, and a pretty shoddy backup plan for an investment.

But since FNMA and FMAC were not on their way to insolvency, the commons should get compensated / warrants canceled.

The warrants would never get cancelled here. Even if everything goes common shareholders' way in a warrant exercise lawsuit, they would only get money. The warrant shares would still exist, and would be long since sold off by the time a final ruling is made. Given the chance that a zero damages award could happen, even if it's inexplicable (see the Perry appeal opinion), I think the illegal exaction claims should not form much of a basis for investing in the common stock.