Fannie Mae-No Politics (FNMA)

[kthomp19]

I am just more and more annoyed that the government has gotten away with this for so long and i have a horrible feeling they will screw over current shareholders and do an IPO.

A massive equity offering is the only way to get FnF to hit their capital requirements before 2028, even if Treasury writes off the seniors or converts them to common. With the seniors in place as is, the timeline becomes 2038 to 2040.

No restructuring is needed.

If you want FnF out of conservatorship before the late 2030s then yes, it is.

They hold a profitable company hostage. Imagine if they did this to Nike, Apple, Google, etc.

Fannie and Freddie are subject to HERA. FHFA is only FnF's conservator because of HERA. HERA does not apply to those other companies.

FnF have hugely negative core capital right now; their profitability is irrelevant. If FnF were released from conservatorship today, FHFA would have to put them right back in because of that huge core capital hole.

If they do an IPO what does that do to current shares? does that make all current shares worthless? or devalue them?

Dilution. Not worthless, but certainly worth less.

Not sure what it means and im kind of scared the treasury is trying to finish what they started and put the fork in us.

If Treasury does convert their roughly $272B of senior pref liquidation preference into commons, the existing common won't go to zero but they'll get pretty close. Certainly under a dime and probably under a nickel.

I mean they would get away with it, in the end even if we win in court and its too late it would be like one of those things we get in the mail for a group lawsuit. We'd all end up with 25 dollars each in damages after lawyers take their cut.

That sounds about right.