Fannie Mae (FNMA)

[kthomp19]

Fannie and Freddie already have repaid their senior preferred stock, with 10 percent interest. I ask again, Is it ethical, morally good or correct, to make the companies’ repay their indebtedness to Treasury twice?

That depends on who you ask. But FnF's recap and release won't have anything to do with what any current shareholder thinks is "ethical", "morally good", "correct", "fair", "just", or any other purely subjective word you want to throw around.

And if you're referring to a senior-to-common conversion as the companies paying Treasury twice, you're completely wrong. Any money Treasury gets from selling its common shares (either from warrant exercise or senior conversion) won't come from the companies at all. That money will come from outside investors. So Treasury would get to, in effect, double-dip, but the companies won't be footing the second part of the bill.

The three equity owners that have rights to the Intrinsic Value of Fannie Mae are Treasury, JPS Holders and Common Shareholders.

You forgot a fourth group: new investors. A capital raise must happen if FnF are to exit conservatorship before 2028, and if it happens any time in the next two years it will have to be huge (at least $70B).

I have said all along the fight will be how much equity each owner will receive.

Exactly right.

But calling "JPS holders" greedy and not leveling the same accusation at common shareholders is hypocrisy of the highest order. In the end, everyone just wants money.

Will this be settled where all three owners are satisfied??

Only two need to be satisfied: Treasury and new investors. It should be abundantly clear by now that neither existing common nor existing junior pref shareholders have any influence or power in this process.