Fannie Mae-No Politics (FNMA)

[familymang]

This is an incorrect interpretation. The $224b is taken directly from UST's balance sheet, and you can see exactly how they breakup the $224b so its not a mystery.

https://fiscal.treasury.gov/files/reports-statements/financial-report/2022/02-16-2023-FR-%28Final%29.pdf

If you go to page 104, you will see the government values the GSEs combined senior preferred stock at $220b, and the warrants at $4b (based off current market value * 80%, pretty straight forward math), for a total value of $224b.

So everyone who thinks the government will just wipe down the senior preferreds value of $220b in exchange for nothing out of the goodness of their heart, is literally asking them to mark their GSE asset down by $220b. Why would they ever do that? That's why its much more likely they end up converting those to common shares to maximize as much value as possible for the taxpayers (absent a court ruling that says otherwise).

What's interesting in the WH budget is there is a footnote that the warrants expire in 2028, and that they are worth $4b, but starting in 2029 and beyond they don't adjust the valuation down from $224 to $220 as you would expect to reflex that footnote. Does that mean they plan on extending the life of the warrants or exercising the warrants prior to expiry (making the current expiration date meaningless).