Fannie Mae Preferred S (FNMAS)

[rosen62]

If there is a real interest in relief and other social programs the media could be right in that the "wind down" will decelerate. One way to do this will be by amending the PSPA once again and eliminate the 5 year plan to reduce their net worth to zero. That simple change will also align the conservatorship with its true mission.

I am thinking one reform they do want and will push is to break up the duopoly. That is probably more important than a real wind down. A break up could be achieved via the creation of a coop, a partial privatization a-la-Berkowitz or both.

The elimination of the wind down feature embedded in the 3rd will not really benefit us. It will deflate one or both of Fairholme lawsuits. At least the wind down VS preserve/conserve controversy will disappear. Perry is a different story, I think. Even without that feature the companies will remain in the c-ship limbo so not great impact on pps.

A constructive path would be:

1st. Kill the sure path to receivership now in place. (one aspect of the 3rd).
2nd. Aid in recap the companies by applying the DTAs and any excess to the 10% div to pay off Srs. Nullify the warrants.
3rd. Reform by splitting functions and by breaking up the companies into a multi competitive market.
4th. Explicit gov. guarantees and other reforms to be executed later.