Fannie Mae-No Politics (FNMA)

[The Man With No Name]

To play devil's advocate, why would Treasury be charitable to the juniors but not the common?

They probably won't be or don't want to be, but juniors have contract protection and thus it's going to take a very amenable conversion rate to moot the lawsuits. So they may as well take care of juniors in the capital structure and then they can use their warrants however they please.

I agree with this, except perhaps the 8% part. I can't see the juniors agreeing to any conversion that gives them less than $33B of post-conversion value, which is 13.2% of an assumed market cap of $250B.

I clarified later the 8% was $32B of a $400B EV (both estimates as in the best case similar to the CBO estimate). I use Enterprise Value instead of Equity Value simply because there is so much 'dead money' in the capital buffer that it really (in my mind) doesn't count. I view it as overhead for lack of better words. But the market will view it as insurance (after release), and thus should result in a higher multiple.