Fannie Mae (FNMA)

[kthomp19]

Voiding the SPS is also bad for the JPS because it is bad precedent which could be used to turn the JPS into a zero coupon type of cash flow structure in a consent decree.

I can't make any sense of this. Zero dividends for the juniors means zero dividends for the commons. How can FnF raise capital, especially if they are going to be regulated like utilities, if they don't pay any dividends?

"Voiding the SPS", which I take to mean Treasury writing the liquidation preference down to $1B per company, would put the juniors at the top of the equity stack, making them money good. That certainly would not be bad for the juniors, which is why the Collins plaintiffs request it as a possible remedy for the removal clause violation that HERA had.

My fear is that FHFA and UST enter into a Utility Model focused Consent Decree and leave the JPS in place with no divs until ultimate exit many years forward. Do you think that is possible.

Let me put it in simple terms:

Anything that is bad for the juniors is at least as bad for the legacy common.
Anything that is good for the legacy common is at least as good for the juniors.

I do think your scenario is possible: the ERCF doesn't allow FnF to pay any dividends until the capital buffers reach certain levels. But to whatever extent that is bad for the juniors, it is worse for the legacy common.

If UST just has to rely on the warrants then it puts pressure on UST to honor the existing capital structure.

The existing capital structure is that Treasury gets everything and the juniors and legacy common get nothing. Treasury is already honoring that, and still would no matter what they end up doing with the seniors and warrants.

It seems like something is up as Glenn has mentioned but JPS keep on trading down? Thoughts?

There is a large holder of juniors that decided to sell. That's all. From what I understand the seller has no inside knowledge, they just don't want to own the shares anymore.

The Golden Rule is always best especially if you want a fair treatment for your self. JPS and Common should want fair treatment for both.

"Fair" has no place here. It hasn't mattered in the past and won't matter in the future, mainly because it's a subjective opinion that has as many different definitions as people that you ask.

Every single one of us is only in this for the money, regardless of what is said.

At one point I asked if anyone would accept a resolution to the conservatorships that greatly rewards all common shareholders other than themselves and anyone they knew. Nobody said yes.