Fannie Mae-No Politics (FNMA)

[Fully Diluted]

Hi folks,

perhaps there will be no SPO at all. Remember the interview with Ben Carson when he said that you need "some real creative financial thinking" to reach a backstop of 180 billion dollars?

What's about that?
1. final rule for capital requirements
2. treasury acquires SPS until minimum capital requirements are met
3. release from conservatorship
4. phased buyback of the SPS

The credit line of the treasury was originally created for such purposes. The implementation could be entirely administrative.

In this scenario, the commons and the JPS holders would not receive a dividend until the SPS is fully repurchased.
Yet the commons would be well off as the value of their shares would increase with each SPS buyback.

In this way an immediate release would be possible. No new shares would have to be issued. And treasury would make more money than in any other recap scenario. It would continue to receive all profits until the SPS is reacquired in 7-8 years.

The advantage for common shareholders:
no dilution
immediate certainty about the future of the investment
possible dividend in 8 years: up to 3 dollars per share

The advantage for treasury:
immediate and uncomplicated release
Maximum profit: standard market dividend paid to SPS alone; value maximization of warrant

I think this way $40-$50 per common share is possible - in under 10 years.
The market would start to respond today. And Fannie and Freddie could accelerate the process by raising capital outside their conservatorships to buy back the SPS faster.

If the focus is on maximum profit, this is the right way for treasury to release the companies. If Trump's maxim, no more bailouts, applies, you can issue JPS to private instead of SPS to treasury.

GLTY