Fannie Mae-No Politics (FNMA)

[kthomp19]

There is no rational basis to assume that the UST has the expertise to execute on a cram down with such draconian consequences for common shareholders nor is there any rational basis to expect that a public offering could be successful if it comes after such a cramdown.

The AIG resolution refutes both of your points. Treasury did execute a preferred-to-common "cramdown" that resulted in them owning 92% of the common shares, and outside investors did later buy those shares from Treasury.

There will just be too much incentive for new lawsuits and perhaps push back by new institutional shareholders.

The most that legacy shareholders could obtain in a lawsuit is the drop in share price. They won't be able to undo the dilution; any injunctive relief request will run smack into the anti-injunction clause 4617(f).

Why on earth would new shareholders push back against this? If they have such a problem with the cramdown they wouldn't buy shares and thus wouldn't be shareholders at all.

For example, Investment Policy restrictions of prospective institutions again investing in companies which previously harmed or discriminated against common shareholders.

Do you have an example of an institution with such a clause in its bylaws? I could see something like this being an internal company policy (though not at enough places to prevent Treasury from selling its converted shares), but that would be difficult to impossible to prove.