Fannie Mae-No Politics (FNMA)

[kthomp19]

Again it does not matter they can be transferred to newco or the companies can stay the same and restructure using the same entities. Congress can issue charters .

I should have been more specific. Assuming that Congress does nothing, where will the charters end up?

Nobody said new companies would be without charters.

If Congress does nothing, there could only be two new companies and they would have to have Fannie and Freddie's charters in order to keep the housing finance system running smoothly. Is it possible to get to that state without Congressional action and without receivership?

That is false. A restructuring in a bankruptcy can absolutely impair what jps contractual rights. Treasury owns all the liquidation preference as it stands. They don't have to give you anything.

How often do restructurings happen that don't involve newcos? Isn't the whole point of newcos so that contractual rights bondholders and shareholders have with the old companies can be legally bypassed?

Don't remember 50/50 or 30/70. Either way the absolute priority rule was not absolute.

Understood. I will need to do more research to see what the total liquidation preference of the CBL preferreds were. I doubt it was anywhere close to FnF's $33B, but FnF themselves dwarf CBL in size anyway.

Given that there will be around 9B common shares once Treasury exercises the warrants (or far more if they convert the seniors to common), if the juniors take a 50% haircut on their stated value then the legacy common would be worth around $1.84 per share ($33.2B * 50% / 9B) if there is a 50/50 split.