Fannie Mae-No Politics (FNMA)

[kthomp19]

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

Just to clarify, outside of receivership or bankruptcy.

How would a bankruptcy work? Since FnF have positive net worth I would imagine that bondholders would not be part of the process at all. They will be 100% money good no matter what happens.

My main questions are: can the juniors' contracts be bypassed if FnF continue in their current corporate forms (i.e. no newcos)? And can newcos be formed that inherit FnF's charters without running them through receivership?

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.

I have been assuming that the juniors might be convinced to take a small to moderate haircut in order to actually unlock the value of their shares, but cannot be forced to take a large haircut. It's that assumption that I am trying to justify with these questions.