Fannie Mae-No Politics (FNMA)

[kthomp19]

A junior to pref conversion cannot happen

Nothing you have ever said proves this. All you have are vague threats of the lawsuits continuing and false legal theories.

so when the “for cause” is declared unconstitutional a lot of HERA needs to be changed as it is written in “independent” agency style, then there are 2 options:
1) FHFA will install a multimember board and lose all oversight and go even lower in enforcement and power as OFHEO had or
2) FHFA will keep the single director and agree FHFA now needs to obey the wishes of HUD, as it had become an dependent agency under the presidents control, that will be included in the appropriation act, and in that case the funds distributed so far under the then assessment clauses need to be returned in full

No, this is wrong. The Supreme Court has far more latitude than just the two options you suggest.

The most likely course of action, though, is that the Supreme Court upholds the Fifth Circuit en banc panel's decision, which leaves FHFA and all its past decisions intact, and only changes the director's removal clause from "for cause" to "at will".

Then not only HERA is changed but it(FHFA) never had the power to act the way they did
...

Garbage in, garbage out. Any conclusion based on your flawed "only two options" theory is invalid.

But to come back to the “Calabria and Mnuchin it is a possibility the junior could convert to common”, I really think they did look at that possibility, to soon find out it is impossible as it does not resolve a problem

It resolves two problems:

1) How to get FnF up to $76B in CET1 capital plus eating into the buffer as much as possible.
2) Conducting a re-IPO of common shares, where the investors have a direct monetary reason to insist that the existing juniors be converted to commons (and neither FHFA nor Treasury has reason to say no).

it solves 1 problem and creates another problem for the common holders

Nobody, and I mean nobody, in power cares one bit about current common shareholders. They have no power, no voice, and no vote in what happens.

Plaintiffs who hold common shares are small enough that they can easily be paid off individually.

the only logical solution is that Common and prefs (because of the lengthy procedure) will not give in a dime, as the end stage is already here, behind the closed doors they find a solution for Commons and prefs

Again, you act as if all current common shareholders have to be appeased. That's wrong. Only the plaintiffs do.

common holders want compensation for that wrongdoing

No, they just want money. Just like everyone else. Anyone who holds out on purely ideological grounds risks having their lawsuit mooted by FHFA and Treasury unwinding the NWS on their own.

the conversion rate flowing out of that settlement talk will be lower than the market value as the common and pref ones traded equal in price, then of course you can look at the price the prefs were bought for and convert then to current market value, but in the end I think this too difficult and raises more questions than answers

The price that the pref holders paid for their shares will not be part of the calculation because it's irrelevant, and also unnecessarily complicated.

Citi provided the blueprint: conversion at some set percentage of par at an average market price preceding the offer. Treasury allowed its Citi warrants to be diluted by this and is thus might be willing to let the same happen with FnF.

if a conversion is justifiable then there was a problem

The problem is that FnF need capital, and a conversion both adds directly to CET1 capital and paves the way for a re-IPO.

commons should not pay for the error the FHFA/Treasury made

Too bad. With no voice and no vote, current common shareholders will just have to accept what they get. No amount of whining or threats of lawsuits will change what's going to happen.