Fannie Mae-No Politics (FNMA)

[kthomp19]

And the USG still owned 92% of the commons. So you expect the USG to own less than 92% of FNF when they are insolvent according to federal laws?

It's interesting that you bring up AIG in this context, and while I have been posting about lawsuit fears.

According to this article about an interview with a Senior Treasury Officer (STO) regarding the AIG resolution:

So back to the topic of non-government equity holders getting any stake in the new company: he explained that this was a public company, with a new board instituted post-blowup that had duties under Delaware Corporate law. In short, Treasury wanted to avoid lawsuits from the equity holders if they were to get wiped out. By giving them a token (8%) piece of the company, the Board could satisfy its duties and placate the shareholders.

Treasury actually did fear lawsuits by shareholders, and that led them to "only" take a 92% stake in the conversion of their preferred shares to commons.

AIG's board of directors had a fiduciary duty to its shareholders. FnF's boards of directors don't, as three judges have ruled and as FnF have stated in their 10-K forms since conservatorship started.

That means the AIG precedent sets a ceiling on how much FnF common shareholders can hope to keep of the companies when it's all said and done. 8% of a roughly $250B market cap is $20B, which comes out to a little over $11 per share.

Since FnF shareholders are in a far worse position than AIG shareholders were (due to the lack of the boards' fiduciary duty to shareholders), there is ample reason to believe that they will fare worse and thus get (potentially much) less than $11 per share when all is said and done.