Replies to post #438669 on Fannie Mae-No Politics (FNMA)

[kthomp19]

That would "equity" could trick you into thinking it's a positive thing for f&f. It's not. It's an equity stake in f&f that f&f sold to an outside investor. It is absolutely, positively a liability.

I never said it was a positive for FnF. I just pointed out that it's listed as equity and not a liability.

My point is that decreasing liabilities and increasing equity by the same amount keeps the A = L + E equation balanced and increases net worth.

Decreasing one part of equity (senior preferred) and increasing another (retained earnings/accumulated deficit) keeps net worth the same.

Thus cancelling the senior preferreds under the original SPSPA would not suddenly increase net worth relative to what it is now.