Fannie Mae-No Politics (FNMA)

[DaJester]

"For each of these things, it is instructive to ask yourself whether FnF common shareholders will fare better or worse than AIG common shareholders as a result. I am struggling to think of anything in that list that would warrant an answer of "better"."

I don't know if it will be better or worse, it's a risk. But I can say it's more likely that the language in the contracts need to be edited because the NWS has been legally deemed unlawful. If the contracts need to be restructured, they may also correct the inability to redeem the SPS and some of the prior dividends could apply to reducing the LP. Clearly Treasury has received more from this bailout than any previous examples. Maybe they should amend to make the profit more in line with a "normal" return based on reasonable govt expectations, while allowing capital recapture that puts the GSEs on better footing for a much faster release.

Otherwise by the time the capital thresholds are reached the LP will be ridiculously huge. Why go through a common conversion process vs just saying - you owe us too much money, you can't even pay 10% on the LP so death spiral 2.0 is here... We're just going to rescind the entire operation. RECEIVERSHIP. Why would they care about saving the JPS and just wipe common? I agree with you and think receivership is highly unlikely (barring some unforeseen downturn in the housing market). So my theory is based on FHFA's best interest is to get the SPS LP lowered or zeroed by negotiating with Treasury and restructuring the poorly worded SPS contracts. I think both Common and JPS win in the long run. I own both.