Fannie Mae-No Politics (FNMA)

[FOFreddie]

Hi Kthompson

Regarding your other points why the UST may not care about the sanctity of public/private issuer debt - perhaps there are several pragmatic and philosophical reasons why.

Philosophically I believe Hamilton was right when the US Govt honored revolutionary war debt because the sanctity of contract law is paramont when it comes to the global debt markets. I would wonder if Moody's and Standard & Poors could justify rating public/private debt AAA if there was precendent for future politicans to screw debt investors by legislative action in time of a crisis.

Philosophically - I think Directory Calabria, Secretary Mcnuchin and Present Trump care about the rule of law and are much more sophicated and honorable that the likes of Geitner and Liew. Obama had no background in business or finance and frankly he probably didnt care if he his policy screwed investors.

Pragmatically - Mcnuchin and Trump have been and probably will be in the mortgage and real estate business. Public/Private partnerships are a corner of mortgage and large real estate and infrastructure projects and why would they want to hurt the financing options for these type of projects with wider risk spreads caused by political and legal uncertainy from a GSE prececent that screwed investors? Just look at some the announcements by FNMA and FMCC where they are financing projects around the country on behalf of real estat big wigs.

Pragmatically - I would suggest that the GSE equity is the fulcrum security in a restructuring and that the UST has the most to gain by maximizing the value of GSE common stock. Perhaps the value is more like $ 8 to $ 15 like AGC suggests but I dont see the upside in screwing common investors when the UST owns 80% of the common?

Pragmatically - the UST needs to settle the derivative shareholder suits and Ackman's suits - dont they or am I wrong about this? Why not come to a resolution that is good for the common security litigants and the UST warrant valuation?

Practically - why does the GFA continue to purchase common? Why does Nomura have a buy on the common? Why does ACG have a valuation of $8 to $15

Why would the UST go out if its way to screw the little guy when there is a golden win/win/win situation by a fair and expedient restructuring of the GSEs?