Fannie Mae-No Politics (FNMA)

[kthomp19]

Nice thread. It's rare to see that much common nonsense all in one place.

When our federal government is allowed to expropriate the property of others it's bad news for ALL AMERICANS!

The fallacy here is acting like Treasury exercising the warrants is either theft or expropriation. It is neither, merely Treasury exercising a right that they paid for (via the funding commitment) in 2008. Anyone who bought shares after 2008 has no leg to stand on, either legally or morally, regarding the warrants.

Post-2008 shareholders crying about the warrants is one of the most hypocritically greedy things I have ever seen anyway. Washington Federal got it right: if the conservatorships, original SPSPAs, and/or warrants are deemed to be a takings or illegal exaction, the only ones eligible for an award are those who held shares on September 5 2008, even if they later sold.

It doesn't matter much in the end, though. Any attempt at a post-exercise injunction will be too late, and any takings/illegal exaction lawsuit against the warrants won't undo the dilution. The only real chance to prevent the dilution is to pre-emptively file an injunctive lawsuit right now. If Treasury really does have anything to fear from lawsuits over the warrants (which they clearly believe that they don't given the contents of the January letter agreement) then such a pre-emptive lawsuit would stay their hand.

Instead, all we hear from the lawsuit threateners are either crickets or "we have to wait until exercise", which as I showed above will be too late. Inactions speak louder than words.

Also keep in mind that both Bill Ackman and the Collins plaintiffs want Treasury to exercise the warrants. Let that sink in.

Bill Ackman (page 21):

Treasury has a unique opportunity to exercise its warrants in Fannie and Freddie and utilize over $150 billion of these profits to fund key government priorities

Collins plaintiffs (page 17):

What is more, under our preferred remedy Treasury would retain the nearly $240 billion in dividends it has been paid under the Net Worth Sweep—an amount much larger than it would have been had Plaintiffs sued immediately—and valuable financial rights including common-stock warrants worth tens if not hundreds of billions more.

And when something a plaintiff says on Twitter and what they said in a court filing conflict, guess which wins.