Replies to post #423902 on Fannie Mae-No Politics (FNMA)

[rekcusdo]

I see what you are saying now...

I wasn't really referring to the senior stock agreement itself...I was referring to the NWS amendment.

The senior stock agreement is part of the original contract, and, in my opinion, is completely valid.

I don't see any reason why Mnuchin would try to "settle away" the senior shares. I've never really considered the legal implications or Mnuchin's available avenues, because I never really considered it to be something within the realm of reasonable outcomes.

[contrarian bull]

Doesn't the restriction on liquidating or selling the senior preferred end on Jan 1st, 2018?

So a funny way to end the NWS without ending it would be to "sell" an amount of senior preferred back to f&f each quarter equal to their net worth... so over time it would get paid off and f&f still end up with zero net worth. Fun!

Remember - the amount owed to Treasury shows up on the f&f balance sheet as a debit... If a court somehow ordered Treasury to give f&f credit towards paying off the senior preferred based on what they already paid - their net worth would suddenly jump to like $180 billion with no cash changing hands.

This would raise the common stock to $100/share. Treasury could then sell their warrants and rake in an amount not much less than what just got forgiven.