Replies to post #450309 on Fannie Mae-No Politics (FNMA)

[Mnemonic]

Of these, Jacobs-Hindes, Collins, Bhatti and Rop all challenge the legality of net worth sweep, and if successful would (or should) result in the net worth sweep being unwound. The Sweeney case and the Perry Capital remands would leave the net worth sweep intact but award shareholders damages, in amount to be determined by the court.

Not quite sure what he means about the NWS being left intact in the second part. If you award shareholders compensation but keep the NWS, you might as well cancel all shares and liquidate the preferreds, because they'll be worthless with NWS intact. The other option is paying down Treasury's liquidation on senior preferreds and letting the companies recapitalize. This eliminates the NWS by eliminating the dividend-paying senior preferreds.

Of the two scenarios, shareholders might as well take their money and run, because the government can still execute their warrants for 80% of common shares.