Fannie Mae-No Politics (FNMA)

[FOFreddie]

Hi No Name - the best analysis regarding the potential value of the commons going forward is the Congressional Budget Office. The CBO analysis will be the baseline for any restructuring since the GSE Equity is held by the UST.

https://www.cbo.gov/publication/56511

There are scenarios where common could be virtually worthless but there are many budgetary, administrative and political considerations that ultimately will lead to a scored budgetary impact
The CBO Paper should be the framework for the discussions regarding the future value of commons.

My question is what scenarios are there where common equity is retained but the UST Liquidation Preference is eliminated, frozen or reduced and what impact any UST may have on investor confidence and the required rate of return for new investors. My assumption is that the UST will find that there is less execution risk in relying on their warrants rather than wiping out commons because new investors will require a risk premium that will make a cramdown sub-optimal and make execution risk for a cramdown too high.