Fannie Mae-No Politics (FNMA)

[kthomp19]

I believe the other preferreds are listed as a liability and deducted from net worth.

Wrong. The preferred shares, both junior and senior, are positive numbers in the equity portion of the balance sheet. Both of them are counted in net worth.

If you were to just delete the junior prefs from the balance sheet, FnF's combined net worth would go down by $33B. For the seniors it would also go down, this time by $187B.

Of course, double-entry accounting doesn't allow for single entries like that. Extinguishing the seniors would cause retained earnings to rise by the same amount, for a net zero effect on net worth (and a rise in core capital by $187B). Extinguishing the juniors isn't going to happen, though. Redeeming them at par would cause net worth to go down $33B again, because it would reduce assets by $33B (the cash needed to pay them off).

They are not an investment into the company.

Yes they are. The company received cash when it sold those shares. The junior pref shares are just as much an investment into the company that the common shares are.

They are loans so when you buy a preferred you are buying a share of debt.

Also false. The seniors are not debt at all. They might share some characteristics of debt, but they are listed as equity on the balance sheet which is what matters when calculating net worth. For example, see page 49 of Fannie Mae's Q1 2019 10-Q report. It's page 51 of the pdf.

The Senior preferred are basically illegal extraction of property from the owners that never solicited the loan.

Wrong yet again. First, they aren't illegal (and nobody has challenged them as illegal to try and get their issuance overturned). Second, FHFA stood in the shoes of the owners when the original SPSPAs were signed, so they did agree to it. It was not unsolicited.