Fannie Mae-No Politics (FNMA)

[The Man With No Name]

This is the crux of my misunderstanding. Outside of receivership, what mechanism is there to wipe the juniors? All the way to actual zero.

In fact, what mechanism (again outside of receivership) is there to force the juniors to take a haircut? I can see them voluntarily taking a small to medium one to get recap/release done; I'm just referring to a situation where they are forced to.

Agreed. If the commons are worth anything at all post-restructuring, the juniors should be money good.

That's certainly a risk here. Even if the juniors cannot go all the way to zero outside of receivership, nothing says they can't get close.

There is no way to wipe out juniors outside of receivership. None, nadda.

Juniors could agree to a haircut, though, as you know. The problem with a voluntary haircut is what to do with those who don't agree....more litigation or a pre-packed receivership with those remaining claims who want 100% of face value.

Commons can be wiped out 6 ways to Sunday. They can still retain their 100% interest and be worth sub-penny.

Ultimately who gets what will be determined by the Enterprise Value of the GSEs as valued by the market in a re-IPO.