Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

With the Net Worth Swipe in place the common are worth essentially zero, the JPS are probably discounted slightly less because: (1) as some of the JPS holders have opined there could be some value in the event of receivership and (2) they eventually will have to be dealt with in the event the recapitalization occurs.

Investors like us perceive value in both common and JPS based solely on:

A favorable resolution via the courts and/or the administration that the NWS will in fact end, that the recapitalization is likely to go forward, and that the preconservatorship status quo will prevail.

How that plays out is constantly in flux.

The federal government decided in 1968 to sell stock in Fannie Mae and I believe Freddie Mac in 1972. This was done for federal budgetary reasons under the LBJ administration if I have my history correct.

This initiated the PRIVATE CAPITAL 1ST LOSS POSITION/PUBLIC MISSION (i.e., provide a robust Secondary Mortgage Market for low to moderate income Americans) PARTNERSHIP BETWEEN PRIVATE INVESTORS AND THE FEDERAL GOVERNMENT.

I think there is little question that the Federal Government, since 2008, has NOT had rehabilitation and restoration of the gses' to this previous status quo as a goal.

INSTEAD THEY HAVE BASICALLY STOLEN ALL THEIR CAPITAL, REFUSED TO FOLLOW HERA, AND CONTINUE TO DEFEND THE NET WORTH SWIPE IN COURT.

And you think that the investing public is going to say, "Sure, here's $200B, I am sure the government will preserve and conserve and allow me to profit from my investment in the gses', WHAT COULD POSSIBLY GO WRONG!"

That seems a little unrealistic to me and the other poster. Is your point that if they price a reipo at 1 penny a share people will buy it?