Fannie Mae-No Politics (FNMA)

[kthomp19]

Why sticky this? It is flawed logic.

The conclusion, that "Treasury makes it clear that the warrants were merely a vehicle to recoup the investment into the entities", does not logically follow from the quoted statement of

“Probability of the Enterprises and the FHLBs fulfilling the terms of their obligations – The structure of the PSPAs, with their liquidation preference over all other equity, including preferred equity, combined with the PSPAs’ restrictions on debt issuance, enhance the probability of both Fannie Mae and Freddie Mac ultimately repaying amounts owed.

Need to maintain the Enterprises’ and the FHLBs’ status as private shareholder-owned companies – Fannie Mae and Freddie Mac may emerge from conservatorship to resume independent operations, or they may emerge in some other form reflecting legislative changes to their congressional charters. Conservatorship preserves the status and claims of the preferred and common shareholders. The value of the warrants issued to the government under the terms of the PSPAs could potentially increase, thereby providing enhanced value to the taxpayers. Upon the government’s exercise of the warrants, the GSEs would be required under the terms of the PSPAs to apply the net cash proceeds to pay-down the liquidation preference of the senior preferred stock.”

In fact, the bolded part directly contradicts the idea that the warrants are collateral.

At best the post in that link is a non sequitur. It's like me saying "the sky is blue, therefore the warrants won't be exercised".