Fannie Mae-No Politics (FNMA)

[LuLeVan]

Lol, sure,,sure....they have more than enough capital, and stress tests prove they are fine. ... They were tasked with releasing the GSE's safe and sound, that does not confer the task of enriching anyone off their backs.

You are confusing the financial health of the two companies, which is a serious concern for the government and the FHFA, with the financial health of the legacy shareholders.

At recap/release, Fannie and Freddie will be in great financial health, with more than enough equity. But there will be no more legacy commons, only new commons - presumably with the old tickers FNM and FMC - which will also be offered to the subscribers of the capital raise.

You can expect the legacy commons to be moderately to extremely diluted in the first step (up to 1 to 1000 in case of an SPS swap) and then converted to the new commons in the second step via a reverse split (e.g. 500 to 1).

For the health of Fannie and Freddie as companies, it is completely irrelevant how the old common shareholders fare and whether they make heavy losses in the course of the capital raise. Like it or not.