Fannie Mae-No Politics (FNMA)

[kthomp19]

FHFA paying damages from GSE coffers = lawsuit. Warrants exercised = lawsuit. Attempted SPS cramdown = lawsuit. Having to pay down current LP of SPS based on NWS = lawsuit. GSEs reach capital requirements and not released = lawsuit.

Speaking of lost credibility, yours is completely gone after posting this list.

The only way you can know that lawsuits will result from these things is if you plan on filing them yourself. Do you?

1) It has been known for a long time that the damage award from the jury will be paid by FnF themselves. If there was going to be a lawsuit over that it would have been filed by now.
2) Anyone wanting to file an injunctive lawsuit regarding the warrants has no reason to wait, and has every incentive to have already filed it. The fact that it hasn't been filed yet means it never will. Such a lawsuit is almost certainly doomed to fail due to 4617(f) and the Supreme Court Collins ruling anyway.
3) Anyone wanting to file a takings or illegal exaction lawsuit regarding the warrants will only be able to recover their drop in share price: such lawsuits cannot undo the dilution.
4) #2 and #3 apply to a senior-to-common conversion too.
5) The seniors are non-repayable, so a lawsuit based on an impossible action is an absurdity.
6) FnF are 17+ years away from hitting even the lowest capital requirements in the ERCF if the senior prefs stay in place. This threatened lawsuit would fail anyway because there is nothing in HERA that requires FHFA to release them from conservatorship upon reaching their capital requirements. In fact, FHFA can just choose to inflate the capital requirements any time they want if FnF ever approach them: that authority is in 12 USC 4612(c).

A senior-to-common conversion nearly happened in late 2020. It is absolutely clear that Treasury does not fear any lawsuits over that. Consequently the same applies to the warrants, which would just be a lighter version of a senior-to-common conversion.