Fannie Mae-No Politics (FNMA)

[chessmaster315]

This is possible. (That prefereds become worthless).

As many know, a preferred share is a "hybrid"..that is, its somewhere in between a common stock and (debt).
Source: https://finance.zacks.com/preferred-stock-referred-hybrid-common-stock-debt-1540.html

In pertinet part:

Investors usually look for equity growth, income or a combination of the two. If you are trying to grow the value of your portfolio, odds are good you’ll include a selection of common stocks. Conversely, if you want current income you are more likely to invest in interest-bearing debt securities like bonds. Preferred stock is often referred to as a hybrid because preferred shares share characteristics of both common stock and the debt represented by bonds.

Of course, preferred investors seem to want the best of both worlds: They want growth, associated with stocks, and liquidation preference associated with bonds or debt. But, they cant have their cake and eat it too.

It reminds me years ago of a Yamaha 360 Enduro motorcycle. It was supposed to be a "street legal" dirt bike. Good for the street or on dirt trails. The trouble is, it did neither well.
It wasnt a good street bike, it rattled, made too much noise and did not ride smooth like a street bike.
As a dirt bike the turn signals got ripped off when you went between trees, and, well you need to chose whether you want a dirt bike or street bike. This happens frequently with other things, too. Yamaha learned from that mistake, and, today, you must choose whether you want a dirt bike or street bike and never the two shall meet.

Preferred shareholders want the courts to "forget" they are non cumulative preferred, and they gave up the right to preference on dividends in all but the current quarter.
They also want us to forget the preferreds are Non voting, and assume, instead, they can just "use their preferred status" and "vote out" the interests of common shareholders.
So, I ask you. When there are both preferreds and commons available, why would, say, Warren Buffet EVER opt for the commons if preferreds were so great?
Well, its because you "give up stuff" when you opt for the preferreds. You give up voting rights. You give up "special dividends". You give up growth. For all that, you gain liquidation preference, and gain dividend preference in the current quarter only (non cumulative preferreds).
Frankly, you give up a lot opting for preferreds. Just voting is a big deal, if you dont think so, move to a country where you are not allowed to vote.