Fannie Mae-No Politics (FNMA)

[kthomp19]

I'll be the first to admit that the Treasury doesn't even have that kind of coin to "give back."

We're talking about Treasury. They can create an unlimited number of dollars. And even if they're not willing to just print the money, they can offset the expense by converting the seniors to commons and selling them.

And even if they do, they'll likely maintain a Kung Fu grip on that $$. Perhaps even come up with a settlement that will include wiping out the dividend, SP, and warrants in return for having to payback less $$.

Paying $124B and converting the seniors to commons and selling them will net Treasury a profit. I don't think they will turn up their noses at that.

Either way, your conviction that the dividend will exist in perpetuity is quite ridiculous.

Treasury would get that dividend until they had a reason to convert the seniors. They won't just cancel them in the pay-back-$124B scenario. It's the monetization of the seniors that is of concern here. Treasury having the seniors intact gives them a ton of negotiating leverage.