Fannie Mae-No Politics (FNMA)

[DaJester]

But you have also used the idea that the LP ratchet was its own breach to contend that Treasury is likely to write down the seniors.

I'm just saying that any intentional thwarting of the shareholder's ability to realize their side of the contract is a breach of the implied covenant. You are correct, in that this is not an automatic thing - it would take a court to determine, or FHFA/Treasury may take proactive steps to avoid an obvious exposure of legal risk. This would be beneficial for them, especially if mitigating that risk serves to aid in the goal of releasing the GSEs in a timely fashion. There is more to investment than being technically correct about a legal theory.

Nobody had NWS on their bingo card in 2008, and many don't have SWF on their bingo card today. There is no technical reason for many of the steps that have occurred, yet here we are. Human nature, political shenanigans, and optics can lead to less than technically correct outcomes. That's exactly how we got into this situation to begin with, and it's likely to still show up in the resolution. I based my investment on the premise of continued flawed outcomes.

This is only an argument for why the shares still trade at above-zero prices. It doesn't refute the argument that since the NWS removed all economic rights, no further amendment or agreement can take anything more away.

You still don't understand the word "temporary?" If I remove your rights to drive your car by suspending your license, does that mean no further agreement or action could take anything more away? Of course it could. Perhaps I could throw you in jail for the rest of your life (permanent conservatorship), or give you the death penalty (receivership). Either of those would make permanent what is currently just temporary.

Just like you can get your license reinstated at some point, the shareholders are also merely suspended. The shares have not been taken away, killed off, nor has anyone said the Conservatorship will become permanent. The rights will be restored. If you don't believe that, then don't invest in common. Pretty simple.