Fannie Mae-No Politics (FNMA)

[kthomp19]

Actually - forgiving the seniors is an obvious win for Treasury.

Um...

Before forgiveness, Treasury has $210B of liquidation preference, rights to the first $21B of income FnF make every year, and 79.9% warrants.

After forgiveness, they have 79.9% warrants.

That's no "win" for Treasury. The only reason for them to cancel the seniors is to get rid of the lawsuits and save $100B in payments.

Also, you miss the fact that Treasury converting the seniors to common is better for them than forgiving the seniors if all else is equal. Every argument you gave applies even more to the senior-to-common conversion scenario because they would own around 99% of the commons instead of 80%.