Fannie Mae-No Politics (FNMA)

[kthomp19]

Question 80: Because of the federal government’s bailout of Fannie and Freddie, the federal
government owns senior preferred shares in the GSEs.100 Should American taxpayers be
compensated for any reduction in their senior preferred shares?
Answer: Treasury should be compensated for its past support of the GSEs, and if confirmed I
look forward to exploring options for potentially dealing with this matter.

This was the most telling question and answer when it comes to getting a read on whether Treasury will convert or write off the seniors.

The most important word in Bessent's answer is "past". He evidently believes that Treasury has not been fully compensated for the support Treasury gave between 2008 and now.

That certainly doesn't sound like the stance of someone who would be willing to write off the seniors for nothing in return. I don't know if I will revise my estimate of there being a 85% chance of a senior-to-common conversion upward because of this, but I'm tempted.