Fannie Mae-No Politics (FNMA)

[FOFreddie]

Exactly Robert - once the UST starts getting cash from IPO proceeds from a cramdown - a new takings cause of action is ripe. This may actually happen post conservatorship because we are talking about the UST selling its shares for payment directly to the UST coffers which assumes that the necessary outside capital raised on behalf of the GSE itself goes on the GSE balance sheet. In any case injunction or not - there will be another whole set of taking issues with real cash transferred ( taken) by the UST.

Then there are practical issues like Underwriters Liability, Special Committees, Fairness Opinions. It really is a pipe dream making a whole lot of assumptions. Lots of risks for the UST and FHFA to screw common shareholders for 10 to 19.5 % of equity.

Kthomp - you really need to think about the mechanics of a cramdown? When does the UST actually get the cash from the sale of stock? Before or after the GSEs get their regulatory capital? If it is after it is likely post Conservatorship - isnt it?

What about Underwriters liability for selling shares that are not legally owned by the UST post facto?

Will there be a Special Committee? Will the Underwriters require a Special Committee?

Will the Special Committee get a legal opinion that opines that the cramdown is legal?

What about a fairness opinion ?

How does Delaware and Virginia minority shareholder rights come into play pre and post conservatorship - especially if the UST sells their shares post Conservatorship?

Doesnt this seem like a whole lot for a bureaucrat who may loose their job in the next Administration?