Fannie Mae-No Politics (FNMA)

[kthomp19]

Not just that, there is nothing stopping FHFA from directing FnF to offer a conversion to junior pref holders. It is fully legal and would increase CET1 capital, which is the exact same reason Citi offered its prefs a conversion to common.

Citi's board of directors owed its common shareholders a fiduciary duty but it went ahead with the conversion offer anyway. It was not legally challenged to my knowledge. If such challenges happened, I don't see any sign they were successful.

Treasury's Citi warrants were diluted by the conversion offer, and yet they allowed it to proceed anyway.

There is clear precedent here. The writing is on the wall.

And to pre-emptively defeat a common nonsense argument that the juniors' "No Conversion" clause prevents one from ever happening, that clause only means that the junior pref holders cannot unilaterally force a conversion. It does not mean that one cannot ever be offered to them.