Fannie Mae-No Politics (FNMA)

[kthomp19]

On the one hand, the GSE's are considered "balance sheet insolvent,"

No. "Balance sheet insolvent" means that liabilities exceed assets, or put another way that shareholder equity is negative. FnF are not in that position at all. Their shareholder equity exceeds $110B.

but on the other hand the gov't is trying to figure out how to extract another $100 billion+ from the companies

No. Whatever money Treasury gets from either converting the seniors or exercising the warrants will come from outside investors, not the companies.

If the GSE's are considered "insolvent," then the Treasury should be happy to get $1 for the SPS-that's good faith and fair dealing to the companies.

If FnF really were insolvent for 60 straight days then they would have to be put into receivership by law, in particular 12 USC 4617(a)(4)(A)(i).

And if FnF really were insolvent to where Treasury could only realize $1 of value from the seniors, then all other shareholders (both junior pref and common) would get zero.