Fannie Mae-No Politics (FNMA)

[kthomp19]

Capital is building by billions each qtr (2-5) & capital rule will be lowered.

FnF are $301B short of the lowest possible capital requirement set forth by law. At $2-5B per quarter you're going to be waiting a very long time.

Note this assumes that the capital rule does get lowered. If it doesn't, that's another $35B (going from 2.5% to 3% of $7T) that would have be raised.

What's left to restructure?

The seniors. Those being present both requires FnF to retain/raise $193B more than if the seniors are gone and prevents new shares from being sold because those new shares would have no economic value.

They've been restructuring the businesses for 13 dam years!

The restructuring hasn't happened yet. It's Treasury cancelling/converting the seniors and FnF doing capital raises that will be the restructuring. Otherwise FnF will still be in conservatorship 20+ years from now.

Keep in mind that FHFA and Treasury can extend the warrants' expiration date at any time if they agree to it. So 2028 is not any sort of deadline.

So you're saying after FHFA supposedly fixing these companies for 13 years they're gonna release us and say ooops, we need to fix more stuff.

You're conflating GSE reform with a balance sheet restructuring.

they have said many times certain cap levels would need to be met BEFORE release, so were is the need to do anything at all with current commons or jps? It's only a matter of what government does with their holdings.

Again, the restructuring (which is when the decision for "what government does with their holdings" will be made) is what will "do anything at all with current commons or jps".

FnF's capital structure cannot remain the way it is if FnF are to exit conservatorship before the late 2040s.

If they decide to get greedy, we are all somewhat screwed, won't matter what you're holding. The goverment is an equal opportunity screwer.

That shows a fundamental misunderstanding of capital structures. The juniors rank above the commons, and that is of enormous importance here.

The only way FnF will be able to raise capital is with new common shares. That means Treasury, in order to monetize their stake, will have to acquire commons (either by converting the seniors or exercising the warrants). Doing so will place the juniors above Treasury's stake, ensuring that the juniors are money good.