Fannie Mae Preferred S (FNMAS)

[brandemarcus]

What happened on 8/17 ? Nationalization or something else?

1. Under the old plan -10% dividend , there was a danger that fnf would accumulate capital. This would be a problem politically, so use change the dividend to a net income dividend. You can use the excuse about ending the circular dividend if no income as a reason for the change.

2. The old agreement specifically stated no principal repayment was allowed. Tim was not going to add language changing the agreement to reward "speculators".

3. None of the other TARP preferred stock was redeemed a little at a time. The government didn't have a policy of wind down for aig , citi or bac. These corporations could keep capital and choose when and how they would pay-off(redeeem) the preferred.

4. So far they keep the stocks trading, keep the gse's off budget and keep filing sec reports. It's a little hard to see how long this goes on? (They are smart guys, so they must know what they are doing legally?)

5. At a some point 2017 they are going want to declare victory (General Motors???)Once you admit that the taxpayers have been paid back, how much longer do you keep them ? You may hate the gse's but it's a tougher political position once the taxpayers have been paid back plus 10%.

6. On 8/17/2012, what else could have Geithner done ? What else would have worked politically?