Fannie Mae-No Politics (FNMA)

[Donotunderstand]

yes
this is the right way - IMO - to view a conversion and its futility to the final goal

capital is raised - (more capital via common - or simply less obligation on the other side) = higher NET capital level

but what price can GOV get per share of a new offering to gain the needed remainder when there a Gazillion common shares ?

copy and paste from TH

Bryndon—While you are correct that converting Treasury’s senior preferred stock to common “does absolutely nothing to resolve the negative balance in each company’s retained earnings,” it WOULD increase their regulatory capital by the amount of the converted senior preferred, thus bringing them much closer to their required capitalization (since common stock, even if owned by Treasury, is classified as regulatory capital by FHFA, whereas the Treasury senior preferred is not). But I agree with you that this conversion would very likely make it quite difficult, if not impossible, to attract new investor equity into the companies–or to allow Treasury to monetize the value of its virtually 100 percent ownership of Fannie and Freddie by selling its shares to third parties (while raising no net new capital).