Fannie Mae-No Politics (FNMA)

[The Man With No Name]

presumably the government would like to zero out all jr equity, if it could i presume it would want to zero out jps and commons and forego the capital structure and just keep 100% of the ipo proceeds for itself.

Well sure they would but their hands are somewhat tied in a conservatorship. In a conservatorship they can not eliminate any security (other than their own). They can, though, dilute the crap out of commons...they just can't eliminate the legacy shares completely.

They would have to put the GSEs in receivership to eliminate commons and JPS....which they won't do because of politics and a whole new round of lawsuits. In receivership, everyone has direct standing and can file any claim they wish.

Common sense says they will stay out of receivership and eliminate existing interests as best they can with dilution. This is also the most profitable resolution (on their part).