Fannie Mae-No Politics (FNMA)

[kthomp19]

Helpful if the goal is immediate release at shareholders expense.

Thinking that a senior-to-common conversion would be at the expense of shareholders is severely flawed.

Right now the existing common have no vote, no voice, no equity in the companies (FnF's net worth is far less than the senior pref liquidation preference), and no specific contract rights. The only thing a conversion would cost them is potential upside in the future, which by your logic can't be a consideration because none of us has a crystal ball.

You cannot compare Treasury converting the seniors to some hypothetical world where they write the seniors off and claim the difference as some sort of damages: only one of the two things will happen and the other will be only a hypothetical.

This whole thing happened with backdoor agreements.

Backdoor agreements that benefited Treasury.

The whole thing can end the same way.

With backdoor agreements that benefit Treasury.

Write down the ill-gotten LP.

That doesn't benefit Treasury.

I don't know why some people are stuck on the SPS conversion being necessary to unwind anything...

There are at least three reasons:

1) Treasury needs an incentive to allow FnF to be released
2) Treasury believes just writing off the seniors is illegal
3) Treasury believes just writing off the seniors would cause undesirable political blowback

What you should really be asking yourself is "why would Treasury choose to write off the seniors instead of converting them to commons?" I have already shown why lawsuit threats are not a valid answer (because Treasury was willing to go forward with the conversion in late 2020 anyway).