Fannie Mae-No Politics (FNMA)

[FOFreddie]

Thanks for the thoughtful reply Kthomp19

I think your points are fair regarding the likely treatment of the JPS but I dont understand how you can have such a strong opinion that the common shares are the lesser investment. Are there scenarios in your mind where the common shareholders will greater returns especially because you believe they have greater restructuring risks if I understand you correctly?

It may be a philosophical point about whether or not the sanctity of markets and the rule of law only apply to debt but not equity but since we are talking about public/private partnerships where future politicians and judges can bend rules dont you think the slippery slope of bad predecedent and political expediency is one the likes of Secretary Mcnuchin is wise enough to avoid? Personally I think it would be a sad legacy for the Secretary and President - there really isnt much difference between subordinated debt and equity.

You brought up the GM investment where the UST agreed to a deal where it would never make money but did so to save jobs and the auto industry even though ultimately they loss approximately $11 billion. Why not keep the value creation in the equity since the UST will retain 80% any way and preserve the sanctity of capital markets.

Finally why would the UST use there position in the Senior Preferred to creat value vs maximizing the value of the common and actually pull capital and cash out of the GSE's?

Dont you think Trump would like the headline - Obama lost $11 bn on bailing out GM but I made $50 bn for the US Taxpayer through common stock sales while making the US housing system safe and sound for future generations?

If the UST/FHFA comes up with a plan to maximize cash proceeds for UST via future stock sales - wont the existing common shareholders benifit accordingly?

Again - are you taking the position that common shareholders can not achieve equal or better returns than owning JPS at current market prices?