Fannie Mae-No Politics (FNMA)

[camaro4me]

The SEC has a say in the warrants.

I didn't post the document because it directly governs FnF. This is a document that governed TARP. However, it has language that explains the original motivation behind the government warrants during that "bailout era", and it can provide some insight into their motivation for the FnF warrants.

Much of this discussion of the government cancelling the warrants is grounded in a sense of "fairness." I agree, it would be "fair" for the government to cancel the warrants, since they have been more than repaid. However, it is not fairness that governs the warrants, but legal language of the PSPA's. So, even as a holder of commons, I do not hold out much hope that the warrants will be cancelled.

While I believe the original purpose of the warrants was to add insurance or leverage so that the government could recoup their investment in time, I think it would be very difficult politically for the government to not exercise the warrants now that they have them. There were major questions and concerns from Government Oversight groups about how the Treasury was disposing of warrants back in 2010 (https://www.reuters.com/article/financial-warrants-audit/update-1-us-audit-urges-controls-on-treasury-warrant-deals-idUSN1014485520100511?type=marketsNews)

There is a much, much higher probability that SCOTUS will rule FHFA unconstitutional, and either SCOTUS or Judge Atlas will award FnF a significant sum of money.