Fannie Mae-No Politics (FNMA)

[kthomp19]

once again peddling the dilution solution but where is the instant recap scenario

The existing commons will be extremely heavily diluted no matter how quick the recap is. FnF's capital requirements and Treasury's senior pref liquidation preference just keep going up over time. Even several more years of retained earnings would leave Treasury with just as much control over FnF's capital structure as they have today.

What is it about the 'fulcrum security' that you find most attractive, nonvoting, noncumulative, or non-convertible?

Please don't tell me you believe the falsehood that the "Non-Convertible" language in the junior prefs' contracts means that they can never be offered a conversion to common. That was proven false with Citi, who offered a conversion to common to preferred shareholders whose contracts had the same "Non-Convertible" language.

The juniors' ability to deny any adverse changes to their contracts unless 2/3 of the holders agree means that they actually have meaningful voting power right now. It's the existing commons that are non-voting at the moment.

At least you got the non-cumulative part right.