Fannie Mae-No Politics (FNMA)

[kthomp19]

Nothing to say about the other three points?

Nor did we say that they "endorse a retained earnings-only path."

I didn't say that you did.

You're reaching with these straw man arguments

And thus this accusation is meaningless.



The trap that RPS is falling into is desiring a long path, which would decrease the relative value of the juniors relative to the commons, then coming up with reasons why it might be plausible. Starting with the conclusion and then searching for evidence to support it is a classic, and all-too-common, fallacy.

The fact is that the final capital rule doesn't allow for the issuance of new prefs at all unless the juniors are converted or redeemed. And redemption costs $33B more than conversion. So unless FnF is willing to upsize the common-only capital raise by $33B for no reason, there will be a conversion offered to the juniors. One generous enough to get them to accept (else it would be pointless).