Fannie Mae-No Politics (FNMA)

[kthomp19]

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

No, that's false for two reasons:

1) FHFA and Treasury plan to negotiate a 4th amendment to the SPSPAs, and they can easily agree to remove that no conversion clause.

2) All that clause means is that Treasury cannot unilaterally convert the seniors on its own. It doesn't stop FHFA from offering a conversion.

These things are true about a junior-to-common conversion as well.

Therefore the existence of that clause does not mean that the seniors cannot be converted.