Fannie Mae Preferred S (FNMAS)

[Joe Stocks]

I think you are right about below 80% but Millstein shows the govt getting 85%. If the numbers get better to pay the govt back, then we can expect a bigger cut. I was just going with what his plan said.

2/3rds...somewhat moot point when the US govt has you by the balls. We are not in much of a position to play hardball. I think the best we can do is as//demand that we are not treated equal to the common shareholders. I always thought it was a bad rap for the preferreds to be lumped in with the common and not the bondholders. The preferred holders agreed to invest for set amount of return. The speculative nature of that agreement is that FnF would continue to pay dividends. For the risk we were taking to to get a dividend that was paying slightly higher than bond payments we accepted non-cumulative dividends and a lower ranking in case of BK. Obviously the implied govt guarantee did not extend to us but whoever thought that FnF would at some point not be able to honor this obligation.

On the otherhand, the common shareholders are the pure speculators. Get a dividend plus being able to expect some share price appreciation from the growth of the company in return for being last in ranking on a BK. I truly think that the common are in for a much bigger hit by dilution. I have a hard time seeing the senior preferred taking common without the junior preferred giving up theirs to the common as well.

Damn I hope it works out better for us than that but just trying to be realistic.