Fannie Mae-No Politics (FNMA)

[YanksGhost]

Unless declared SIFI, CET1 only applies to depository institutions like banks as part of the Basel III Accords. Unless FSOC reverses course, which seems highly unlikely, this has no impact on Fannie Mae or Freddie Mac and confers no advantage to JPS holders seeking any conversion to commons.

I see the conversion concept largely as moot. As Guido pointed out the other day, the bank conversions were based on an average preceding 30 day share closing price and were, basically, no different that simply selling JPS and buying common shares on the open market.

I think the Moelis Blueprint concept is now dead and buried. That certainly includes any juicy conversion formula and likely includes a hefty walkback or cancellation of most taxpayer-friendly-SPSPA elements such as warrants. The GOV is not going to want any part of another bailout, and needs to get the open Treasury draw facility off the table, PRONTO.

JMO. A settlement, as Thompson has said seems very likely, will put both C & JPS camps into a conjoined winning position. The only question now, is WHEN and HOW MUCH the wins produce in the RRR endzone.