Fannie Mae-No Politics (FNMA)

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Interesting perspective. I think it is unlikely. In fact I actually think this En Banc win/remedy should scare the preferreds much more. Might be the best solution for the administration. Crazy talk? Let's play what if…. En Banc win.

1) The board (FHFA) gets a say. The money on the 'overpayments' would have to go back to the company. Look at it this way, if the NWS did not happen and 10% continued, what would the board (FHFA conservator) do with the additional $..... BUILD CAPITAL!

2) F&F are Capitalized. An en banc win, and all $ goes back to company. Fannie is capitalized as this money is retained earnings.

3) Gov Warrants and $120 B in Preferred shares exist, terms and conditions without third amendment.

4) Release from conservatorship. Yeah, why not? they would be capitalized. The gov senior preferred stock is not debt. Why not let the board of directors figure a way out of the senior preferred. Gov can sit on the warrants for another 10 years, maximizing value, and still get dividends/slow payoff. FHFA regulates, congress can reform.

5) Boards got to fix it. How? Use your imagination. Negotiate treasury reduced coupon/noncumulative? Issue new preferred, senior to jr. pref, cumulative?

6) Commons not an option. Why? warrants exist.

Bottom line, if F&F has capital no IPO or necessary. Change Senior preferreds to non-cumulative, coupon of 5%, eliminate line of credit, hold warrants, and walk away. slowly dispose of warrants....