Fannie Mae-No Politics (FNMA)

[kthomp19]

If seniors represent 80% of the company valuation and commons are 20%

This is incorrect. The seniors don't represent any specific percentage of company valuation right now. It appears you are confusing the senior prefs with the warrants.

The seniors have a liquidation preference of around $200B right now. The market cap of the commons is around $3.5B. If the seniors are converted to commons at their liquidation preference, they would get 98.2% ($200B / $203.5B) of the total common equity.

Note how Treasury converted its AIG prefs into 92% of AIG's common equity. A senior-to-common conversion for FnF would result in devastating dilution to existing FnF common shareholders. And that's what a return of $125B from Treasury to FnF would entail.