Fannie Mae Preferred S (FNMAS)

[rosen62]

Exercising the warrants carries risk. Although GSEs' debt may not go into federal books it gives the Treasury a "permanent, controlling stake" as a shareholder. This alone will be seen in courts as one feature of "nationalization". Even without Fannie and Freddie's debt as part of the government budget. It is a "conceptual" issue as per court past judgements. Judgements that held that Fannie and Freddie were and are private entities because of lack of permanent control by the government.

The court reasoned this way:

conservatorship = temporary
unexercised warrants = no controlling stake

Therefore, GSEs are not nationalized companies.

Unless there is an announcement of exercising warrants to later auction blocks, I would be worried.