Fannie Mae-No Politics (FNMA)

[kthomp19]

Why would any one wants to buy common shares of such companies?

Why would anyone want to buy them now? If people would be stupid to buy commons under those circumstances (post massive dilution), they would be even more stupid to own them right now.

The easy and simple way Gov can make money from FnF is to buy back warrants at good price without creating legal problems.

FnF need to be conserving and building capital, not wasting it buying back warrants that it has no use for. The same goes for redeeming the juniors for cash: converting them to common accomplishes the same capital stack-clearing goal but $33B cheaper.

Then using SPS as a back stop for FnF without Gov explicit guarantee helps to stabilize MBS market..

If the seniors stay in place, FnF can't hit their capital requirements until the late 2030s. The seniors don't count towards any form of regulatory capital.