Fannie Mae-No Politics (FNMA)

[kthomp19]

Has anyone here ever considered that a decline in commons' stock price is in the government's best interest?

I don't see how this could be directly true, but if Treasury decides to go through with a senior-to-common conversion (FHFA would have no reason to say no) and it occurs at the then-prevailing market price (which doesn't have to happen), then a low price would be good for Treasury.

Some people, like Ackman, bought FnF commons because they believed Treasury would try to prop up the price of the commons to make the warrants more valuable; they would be on the same side. A senior-to-common conversion turns that prospect on its head because it would pit Treasury against current common shareholders. And we all know who would win that power struggle.