Fannie Mae-No Politics (FNMA)

[JOoa0ky]

The SPS Cramdown Plan might be the cleanest, fastest, and easiest way to recap the GSEs.

Especially if SCOTUS (Seila) rules FHFA Director Calabria is removable, then I don't see how we don't get a Sr. Preferred Cramdown Recap if Biden wins in November.

FNMA will absolutely get its knees cut off in this scenario, but that's the risk of investing in Common shares.

Even with Consent Decree, Biden may impose additional requirements which may make Recapitalization complicated, maybe even impossible.

SPS Cramdown makes the most sense and Morgan Stanley & JP Morgan will likely push for this since it's quick and easy. They want their pay day sooner rather than later!

Except it is illegal for the seniors to be exchanged for commons...

https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/Stock-Cert/Third-Amend-FNM-Stock-Cert-as-amended_09-30-2019.pdf

6. No Conversion or Exchange Rights
The holders of shares of the Senior Preferred Stock shall not have any right to convert such shares into or
exchange such shares for any other class or series of stock or obligations of the Company