Fannie Mae-No Politics (FNMA)

[kthomp19]

In complete agreement with you here.

Color me shocked. One of the biggest common nonsense talking points is that the warrants were collateral.

Vehemently disagree. Purpose of the warrants was to drive PPS toward zero. This post addresses that.

This would be a good time to channel DaJester and ask: was Werfel part of the Treasury Department at the time? How did he have the authority to speak for them?

The intent of Treasury is not to exercise the warrants
that provide 79.9% ownership. The purpose of the warrants was to drive the stock price
down to next to nothing. When the government steps in to aid a publicly traded entity it
does not invite fair trading.

By this token, the only way for Treasury to fulfill the purpose of the warrants is actually to cancel them and convert the seniors to commons instead. That would drive the stock price much further down than writing off the seniors and exercising the warrants.

Also, even if Treasury's intent in October 2008 really was to never exercise the warrants, that clearly changed by the time this report was released at which point Treasury said "The value of the warrants issued to the government under the terms of the PSPAs could potentially increase, thereby providing enhanced value to the taxpayers."