Fannie Mae-No Politics (FNMA)

[kthomp19]

Good post, thank you for posting it. There is one flaw, though. I fear you have fallen prey to some misinformation.

Finding that any action of a conservator can go unchallenged as long as it is taken as part of the management of the company simply ignores the basis of the conservatory's authority: fulfillment of a fiduciary duty to the corporation, and by implication, its as shareholders.

The bolded part is incorrect.

First, three different judges have said that FHFA has no fiduciary duty to shareholders while no judge has said the opposite. See this post for the relevant links and quotes.

Second, there are actions FHFA can take, such as a large dilutive equity raise, that both fulfill its safety and soundness mandate while also not being to the benefit of existing shareholders. This illustrates the difference between a fiduciary duty to the companies, which FHFA has, and one to shareholders, which FHFA doesn't have.

The more difficult question is what remedy is due shareholders.

Due to the companies, not the shareholders. The companies are the ones that paid the NWS dividends and are the ones who stand to get something back. The equity offering example shows that such a remedy does not have to be to the exclusive benefit of existing shareholders; it could be shared with new shareholders too.