Fannie Mae-No Politics (FNMA)

[kthomp19]

Of course it makes total sense to raise $50B into a company that makes $15Billion a year.

I don't quite know what you're trying to say.

But in this post I pointed out that the law seems to mandate a minimum capital standard of $137.5B for FnF combined. If the seniors are cancelled, FnF will have around $12B in core capital. Thus they will need to raise $125B, not the $50B you claim.

These questions should form the basis of your common investment thesis:

1) How much capital do the companies need to raise?
2) How are they going to raise it?
3) How long do they have to do it?
4) What incentive do FHFA and Treasury have to implement these ideas?
5) How do these ideas conform with what we have heard from various officials, especially Calabria and Mnuchin?

I would like to know your answers to these.

The capital problem stems from the fact the government has SUCKED out ALL of the equity.

Of course. But if you're expecting Treasury to write a giant check to FnF to cure this, well, you'd be better off buying lottery tickets with your money.

No reasonable CFO would put 80% dilution on its ownership base when 15% does the same at proper valuations. I'd be laughed out of the board room for even suggesting that at my company.

Good thing that doesn't matter then!

As I just explained in this post, the entire recap will take place while the companies are still in conservatorship. The boards and CFO of FnF won't have any say in the process whatsoever.