Fannie Mae-No Politics (FNMA)

[kthomp19]

So you are thinking 2023 is the earliest for your "instant recap" predictions?

Yes, that sounds about right.

I'm not sure why you keep using the word "instant", though. Do you use it in terms of time (sooner rather than later) or to say you think there will be multiple rounds of capital raises?

If it's time, I don't see the point; the existing commons will get diluted almost as much if capital is raised in 2028 compared to 2023. And multiple rounds of capital raises make little sense because you can't do the first round of common share sales without knowing the share count from all the other ones, at which point there's no reason to space them out.

What happens if either side appeals the trial courts decisions?

I don't think there's an "if" about it. I assume that all rulings will be appealed until every case either has a final judgment or has been settled.

I believe all the cases will be eventually settled, for the record.

Wouldn't that cloud the title of what exactly the rights are of the massive post "dilution solution" common shareholders who you envision are going to flood the gses' with new money?

Yes, which is why I think all the cases will be settled prior to the capital raise.

There will be some ideologically driven holdouts, but even they will (eventually) realize that gumming up the works won't serve anyone. Whichever administration is in power when FHFA and Treasury finally decide it's capital-raise time will still have to play ball to get FnF recapped and released; a courts-only solution is impossible right now. Holding out would only slow the process down, not make it better for existing shareholders.

The ideologue-sponsored lawsuits are not class actions anyway, so paying off just the named plaintiffs can get those cases gone cheaply and easily.