Fannie Mae-No Politics (FNMA)

[kthomp19]

Any capital raise during conservatorship, meant to enrich Trump’s friends (Moelis), at the expense of the shareholders, would violate the law.

1) The updated Moelis plan has the commons going to around $15. They're at $2.75 right now. That does not fit any reasonable definition of "at the expense of the shareholders".

2) Trump's friends own prefs, and in the Moelis plan the commons outperform the prefs. If Moelis truly was meant to enrich Trump's friends, wouldn't do a better job of, uh, enriching Trump's friends?

3) I don't see how the prefs don't go to near par in a recap and release scenario anyway. Therefore any recap and release is enriching Trump's friends, and thus illegal.

4) You forget that the government, specifically Treasury, must be willing to play ball in order for any release to happen at all. The courts will not force a release. If Treasury does not want to provide a line of credit while FnF build capital (and why would they?), then Treasury will not approve release. They have no reason to allow release before recap anyway. Neither does FHFA.

5) You also haven't explained why a capital raise at $12, or whatever Moelis envisions, is illegal, when a capital raise at $30 per share would not be. Why does the share price matter? And at what point does it turn from being legal to being illegal?

6) Your statement also implies that if a capital raise is done during conservatorship, but it isn't done with the intent of enriching Trump's friends, it would be perfectly fine. In that case, Moelis is full steam ahead.