Fannie Mae-No Politics (FNMA)

[kthomp19]

Well I don't know if you realize, but you just gave a reason there doesn't need to be a SPS conversion.

I never said there needs to be a senior-to-common conversion. I just see it as far more likely than a writedown. If neither happens, then both the juniors and legacy common will be worth next to nothing as they are now.

They can just wait until the capital threshold is reached, then sit back and collect dividends that equal the NW in perpetuity.

That point is at least 13 years away. It's true that Treasury has been okay not getting any cash from FnF for the last 4+ years so maybe they would wait another 13+, but maybe they wouldn't want to.

The dividends on their SPS are the goose laying the golden eggs every quarter like clockwork. What is the incentive to convert to common and sell off for a one-time gain when they can just keep pillaging?

Some administration might think it's better to get the cash now and spend it rather than let someone 2-3 presidential terms ahead do it.