Fannie Mae-No Politics (FNMA)

[kthomp19]

the 5th Circuit and possibly the 6th Circuit on Remand could make the SPS Void in Collins (5th) or Rop ( 6th on Remand).

Yes, depending on which remedy the plaintiffs get. My understanding is that in the Collins retrospective relief and Rop cases, the requested remedy is either to write the seniors off or convert them to commons. In the Collins Appropriations Clause and Bhatti cases, the requested remedy is to unwind the NWS (which, by the terms of the pre-NWS SPSPAs, would not void the seniors).

Perhaps none of this litigation will be successful or it will just be another pyrrhic victory but it needs to play out unless the USG settles which no one seems to believe will be the outcome.

I do think that a settlement is highly unlikely.

The USG did finally settle the All American case which was the predecessor appropriations case in the 5th Circuit.. The settlement was a stand still where no more enforcements actions would be taken but the fees and actions prior to the Court win remained in place. Even if the Liquidation Preference is frozen as part of a court outcome or settlement it is a win for common.

...at least I did. Thanks for this info, I didn't know that this case had been settled. Do you have a link with more details?

An analogous settlement for Collins might be to eliminate the liquidation preference ratchet going forward but keep all past actions as is. I don't think that would be enough for the plaintiffs. Perhaps they would accept an unwind of the ratcheted liquidation preference back to the September 2019 letter agreement, resetting it to $193B for FnF combined and preventing it from rising in the future due to FnF retaining earnings. That would put the juniors on a path to being money good around late 2027.