Fannie Mae-No Politics (FNMA)

[Louie_Louie]

Preferred stock issuances give companies a relatively cheap way to acquire additional capital. The preferred market is dominated by banks and related financial institutions, which are required by regulators to have adequate Tier 1 capital to support their liabilities. Tier 1 capital includes common equity, preferred equity and retained earnings. (Note that as per the recently passed Dodd-Frank Act, cumulative preferred and trust preferred securities will eventually be phased out of their Tier 1 capital status.[1]) Since issuing preferred shares is normally cheaper than issuing common shares and avoids common ownership dilution, banks issue preferred shares to meet the required capital ratio set by regulators.
This is why I am guessing prefferred's might be given par at max, and new prefferred's issued at lower interest payments, especially since rates are so low and bonds are paying very little. Converting pref's to commons dilutes, adds to common dividend and voting structure which will be a red flag for any new re-IPO share buyers. Government is not guaranteed to own the 79.9% of warrants for commons (courts), and the warrants will be possibly used to attract new money and probably to pay off old pref's in some sort of settlement. Just my GUESS