Fannie Mae-No Politics (FNMA)

[kthomp19]

Yes, existing common is very suppressed due to questionable if not completely illegal actions by FHFA and Treasury. If (and that's a big if) rectified, the common value will not be where it is today.

It could be lower! It all depends on how Treasury resolves the seniors.

Stated value of juniors, so not even a slight haircut eh? Sounds like wishful thinking.

The bigger the haircut that the juniors take, the less they will leave behind for the existing common. That "wishful thinking" is actually good for you and is something you should be hoping for yourself.

Yah, how can I forget - you keep bringing it up as if it means the future is set in stone. I recall lots of things that almost happened. Like when I almost won the lottery.

More false equivalence fallacy. A senior and junior-to-common conversion almost happening is nothing like the lottery. It shows the mindset of the DOJ (that they view Treasury writing off the seniors as illegal) and is direct evidence that informs future expectations.

And yet you seem to think that Treasury is more likely to do something they think is illegal (writing off the seniors) than something they think isn't (the conversion). I really don't get it.

Where does the $100B come from? That's a large offering.

It comes from investors who are looking to make a return. Saudi Aramco recently looked to do a $50B share offering, after actually doing one worth $30B a few years ago. Petrobras successfully raised $70B. Both of those companies are in countries where the rule of law is quite a bit weaker than it is in the US. If FnF want to raise $100B and are assured that they will exit conservatorship upon completion of the deal, finding the money will be easy.

In the meantime Treasury owns a majority stake? Taxpayers on the hook? Explicit guarantee?

1) Treasury's 92% stake in AIG wasn't a problem. They signed an agreement to vote their shares in proportion to all other shareholders' votes, effectively eliminating their voting power.
2) As long as the funding commitment in the SPSPAs exist taxpayers will be on a (limited) hook anyway.
3) An explicit guarantee can only happen if Congress passes a bill including it.

Those are not slam dunk selling points.

If those things are viewed as negatives by outside investors, all that will serve to do is lower the per-share price of the SPO, and thus what the existing commons are worth at that time.