Fannie Mae-No Politics (FNMA)

[LuLeVan]

...nor is there any rational basis to expect that a public offering could be successful if it comes after such a cramdown.

I don't think the IPO (or SPO) comes after the cramdown decision.

I think the decision for or against a cramdown could be made in the course of the IPO negotiations. The parties involved in these negotiations are (in order of influence and importance)

1. the underwriters of the new shares (bringing $140 billion in fresh capital)
2. the government (holds SPS worth $191 billion and LP worth $300 billion)
3. the holders of JPS

So the question is whether the institutional underwriters of the new shares (e.g. large Middle Eastern sovereign wealth funds) will forgo a favorable IPO price in order to be "fair" to the legacy commons. Please decide for yourself whether you think this is likely or unlikely.