Fannie Mae (FNMA)

[kthomp19]

“If the 5th Circuit converts the SPS to commons, I believe the claim will go up accordingly.”

Not if it's a derivative claim. Such a conversion would actually help the companies since it would instantly add $193B to all forms of regulatory capital (including core) and allow them to raise capital in the equity markets.

A takings claim based on a senior-to-common conversion could gain at most $2.1B for all common shareholders combined ($1.20 per share or so) if it were to happen today because the Supreme Court has said on several occasions that takings awards are based only on what the property owner lost, not on what the government subsequently gains.

For example, what would be the conversion ratio that would take a combined $2 million senior preferred shares with a stated value of approximately $193.5 billion and turn them into common shares worth the same amount?

Roughly eleventy billion to one.

And before anyone asks, it would be very easy for FHFA and Treasury to structure the conversion so that Treasury is never forced to consolidate FnF's books onto the government balance sheet. Piecemeal conversion, seniors become super-warrants, etc.

It’s impractical, and completely ignores the fact that the U.S. Treasury has been effectively repaid.

It is quite practical, actually. Very simple and clean. The takings liability would be minimal, and it wouldn't affect any of the derivative claims.

Treasury having been repaid means nothing anymore anyway. Treasury has no reason not to monetize the seniors, and billions of reasons ($$$) to do so.

Unwinding the net worth sweep is simply a return of approximately $26.9 billion to the companies and two journal entries to record the return of funds, the redemption of the senior preferred stock, and a corresponding credit to retained earnings.

So, at a minimum, we’re asking the court to order the return of approximately $220.4 billion in cash ($26.9 billion) and write-downs ($193.5 billion).

1) That's not a minimum, it's a maximum.
2) What makes you think the USCFC has the authority or jurisdiction to recharacterize past NWS payments as paying down the seniors, in contravention of the original SPSPAs (which your case does not challenge) which say that FnF never had the ability to pay down the seniors?