Fannie Mae-No Politics (FNMA)

[bcde]

"No conversion. Companies will be released and resume operations. JPS will get their par value and resumption of dividends. Way too much emphasis on JPS. FnF is not in distress.

All this talk of conversion makes no sense now..."

Yes, All this talk of conversion makes no sense now.

Conversion of debt in to CS and then wiping out existing shareholders is long practiced sinister way of robbing the private shareholder companies. Wall street robbers look for vulnerable good companies then manipulate the liquidity so as to push them in to distress. Then use the conversion to wipe out existing shareholder and acquire the companies for pennies. Lehman, Bear stern, AIG are some of the examples where liquidity crisis caused them to sink.

But FnF are not regular private shareholder companies. FnF are public policy institutions of Gov. Gov policies will not allow any private investors to manipulate these companies. So FHFA has made it clear that it is up to FnF management decide on how to capitalize.

There is no way shareholder appointed BOD/CEO will go for wiping out existing shareholders and ruin any chances of recapitalization.

Why would any company go for converting JPS (at par value) in to CS at highly discounted price? Instead company can choose to buy back JPS and CS from market at discounted prices and save big money on redeeming JPS. Then stabilize the CS prices at reasonable market rates. When conditions are right then FnF can go for SPO and also sell new JPS.

The only reason for owning JPS was to protect investment in case of wind down and for good dividends (during Obama administration). Now with no wind down (during Trump administration), it makes no sense to own JPS with the false expectation of conversion. JPS holders can reasonably expect par value and dividends.