Fannie Mae-No Politics (FNMA)

[kthomp19]

From comments section from ROLG's latest work on SA!

That post is just a copy/paste that Green Jacket puts on every FnF article on SA. The request for likes shows the true motive: self-validation.

Many of his assumptions are way off:

1) Exchanging the juniors for cumulative prefs removes them from both Tier 1 and core capital, so both of those would instantly drop by $33B. It will never happen.
2) There absolutely will be other dilution. Calabria said it directly: "The shareholders will be heavily diluted when we raise capital."
3) There is no evidence that decision makers read message boards or forums.

And even if everything Green Jacket said came true, the commons wouldn't be worth anything close to $12-14 "very soon". They would be 15 years (!) away from getting any dividends, which is plenty of time for FHFA, Treasury, and/or Congress to step in and prevent what will look like a huge shareholder windfall.

Caveat emptor.