Fannie Mae-No Politics (FNMA)

[kthomp19]

have they won any yet?

By my count, they have won every case that has been dismissed. Put another way, they haven't lost one yet.

Of course, one loss, even with all the wins, could still be troublingly uncertain for them. I think the government will be willing to settle, because the recap/release plan can't be executed while the big lawsuits remain outstanding.

make room for more of the same, why bother?

It goes with reason #4. The new ones would have lower interest rates, too.

Also, Calabria has said that FnF's capital should largely be in the form of common equity, so FnF can't recap with too many prefs. Converting the existing ones creates room in the capital structure for issuing more. If FHFA and Treasury decide that FnF should have less than $33B in prefs on the balance sheet, they will need to redeem or convert existing ones. Redemption makes zero sense because it costs the companies cash money, and lowers core capital.

Having less than $33B in prefs makes a ton of sense. If the companies ever find themselves in need of quick capital (perhaps due to pro-cyclical capital requirements), they can issue new prefs, much like they did pre-conservatorship. Issuing new commons in a pinch is harder and creates a worse precedent.

or maybe preferreds think they deserve something they dont?

Pref holders have funded the vast majority of the lawsuits, including Collins (which so many here are hanging their hopes on). Of course they will think they deserve everything.

Notwithstanding that "deserve" has a different meaning for everyone who says it.