Fannie Mae-No Politics (FNMA)

[kthomp19]

why would the JB Admin want to screw common?

Screwing the legacy common will be a consequence of Treasury's actions, not a motivator.

FnF's post-release equity will be divided among:

1) Treasury
2) New investors
3) Junior pref shareholders
4) Legacy common shareholders

It's a fixed pie. The purpose of Treasury converting the seniors to common, rather than writing them off, would be to get something for them rather than nothing (as Mnuchin said Treasury was legally obligated to do). The effect would be to transfer part of the pie from #4 above to #1.

Right now Treasury holds all the cards. Anything they allow the legacy common to retain will be out of the goodness of their own hearts. Or, more likely, just enough nuisance value to push things through, which could easily be $0.10 per share adjusted for reverse splits.

This is why we need to hope that the Mike Kelly suit proceeds and the Wazee Suit for Unjust Enrichment proceed.

Those cases are basically already dead. The corpses just happen to be twitching a bit.