Fannie Mae Preferred S (FNMAS)

[Joe Stocks]

The whole senior preferreds issuance amounts is based on how far FnF slips below zero net worth. There was a liquidity issue in that FnF could just not sell off assets profitability to raise cash. There was no third party ready to step in with additional capital. Without FnF there was no market to sell into. FnF more than likely had adequate cash flow to pay bills for a long time. Look at FHA, it just in the last year or so is calling for the need of additional capital. The difference is that they are allowed to run with negative net worth. However, like I said, Banking laws required it to liquidate if it showed negative net worth and no means to raise additional capital.