Fannie Mae-No Politics (FNMA)

[LuLeVan]

“What will the argument be to challenge the warrants?”
NWS? Net Warrant Sweep!

The best option for commons would be to call for the warrants to be exercised, as Bill Ackman does. The government needs an incentive for recap/release. Without any additional "loot" it will keep the GSEs in perpetual conservatorship.

It would therefore be more intelligent and realistic to work towards the government writing off its SPS and settling for the exercise of the warrants (as Tim Howard does). In doing so, the government would give up about 20% of its potential "loot", but would still have sufficient incentive to initiate the release.

Unfortunately, this scenario, which would bring commons to around 10 to 14 dollars after recap/release, is not very realistic. In recent years, the government has shown itself to be a downright vicious enemy of existing shareholders - see the court cases and the brazen lies spread in them (DeMarco: "Death spiral"; Lamberth: "The GSEs were the cause of the 2008 financial crisis"). Betting on a return to honesty and decency here is illusory. The government even claims that the write-off of the SPS would be "illegal" (according to Calabria's book). I have no idea whether this is true. But it shows who you are dealing with.