Fannie Mae-No Politics (FNMA)

[kthomp19]

declare the Liquidation preference amount - the SPS paid by the 300B paid so far

This is exactly what I think is off the table now. The Collins ruling basically closed the door on all relief other than damages, meaning that the seniors are only going to go away if Treasury voluntarily does so.

But Treasury isn't allowed to just give away something for nothing, especially when that "something" is worth hundreds of billions of dollars. Declaring the seniors repaid with no return consideration to Treasury sounds great to FnF shareholders, but why on earth would Treasury choose to do that? Senator Warner has already talked about making sure that the taxpayer is compensated were Treasury to give up the seniors, and a no-recompense writedown is now far more difficult to justify.

I think the Collins ruling means that an eventual senior-to-common conversion is quite likely to happen. The Lamberth plaintiffs don't seek to have the seniors cancelled, and the USCFC cannot do so.