Replies to post #451069 on Fannie Mae-No Politics (FNMA)

[kthomp19]

GSE could issue. Cumulative PFD stock to raise money with a PIK or paid in kind dividend if the reserves are not enough.
GSE are successful and will continue to be successful. This option would make it safe for Big money to buy.
These would also be callable/redemable so the GSE could pay them off once reserves are in excess of requirments.
This is safe for new money/ invbestmemt grade. has a return

I really like this idea. Cumulative prefs would provide a strong disincentive for a repeat of what has already happened. If the current junior prefs were cumulative they would be trading around par for the higher dividend series. FNMAS would have accumulated nearly par in back dividends alone.

The easiest way to make the switch is to issue these cumulative prefs and use the proceeds to pay off the current juniors as a settlement for the outstanding lawsuits.

[DumbDumberDumbest]

1st Cumulative PFDs aren't accounted for in the Core Capital, under the definition of Core Capital in the FHEFSSA. Otherwise we would be Adequately Capitalized a long time ago with the Senior Preferred Stocks.
2nd.No profitable company raises Capital Reserve in one fell swoop. It must be done during good economic times, over a period of time, allocating funds into a Retained Earnings account.