Fannie Mae Preferred S (FNMAS)

[jmbell42]

Blue,

Why would there be a 1:1 conversion for Preferred shares? I've never heard of this before, even in Receivership.

From recent experience in the WAMU BK, the preferred shares walked away with much more of the emerging WMIH company than common shareholders in WAMUQ did.

Since preferred shares are higher up the capital structure, why would they be treated like junior equity concerns? In fact, treating them as a 1:1 could constitute a fraudulent conveyance (not that this would apply to our current going concerns of FNMA and FMCC).

Still, I fail to countenance an instance where preferred shares are treated parri passu with junior equity. By definition they are treated with primacy over the commons... that's why they are considered preferred shares.

Best,

Jared