Fannie Mae-No Politics (FNMA)

[kthomp19]

What should occur

Two words in and the problem is already apparent. Investing based on what you believe "should" happen is playing roulette, at best.

The question to ask about your proposal is: why would FHFA or Treasury be willing to go along? That's the first thing that must be answered in any proposal.

Voiding the Warrants (the Gov't will do just fine with the taxes off the later taxable income)

But Treasury gets even more money if they exercise the warrants and collect capital gains taxes from appreciated shares when they are sold. Again, any proposal that involves Treasury doing something that doesn't make sense (for them) is DOA.

Heretofore, most people forget that each will likely raise $20-$40Billion depending upon Retained Earnings and the amount given back to them from the government (whether its $0 or $20B)

$20-40B in retained earnings is surprisingly accurate. But even the Collins plaintiffs have not asked for the $16.1B to be given back to FnF in cash. It would be kept at Treasury as a credit against future money owed to Treasury, such as income taxes. Thus that money won't count towards capital requirements.

to push for 80-90% or more dilution is simply not right; because its not necessary

First, I'm not "pushing" for anything. I leave what I think should happen completely out of my investment thesis and posts, because it is irrelevant. I only talk about what I believe will happen.

Second, "not necessary" is only your opinion. Tell me this: what do you think the future combined market cap will be for FnF, and how much capital do they need to raise from the sale of common shares? From there you can get the minimum percentage of the companies that the new buyers will have to get, and the dilution factor follows from there.