Replies to post #505588 on Fannie Mae-No Politics (FNMA)

[shanon1]

Like it, good stuff.

[kthomp19]

The MINUTE warrants were to get exercised, damage claims from common shareholders become "ripe" and a surge of new lawsuits can be expected to stop the process dead in its tracks pending full judicial consideration.

Nope. There would be no damages because the hypothetical scenario of "what the commons would have been worth without warrant exercise" cannot exist. Treasury has veto power over release, so if Treasury wants to exercise the warrants there are only two scenarios:

1) The status quo (companies in conservatorship)
2) Companies are released and warrants are exercised

If Treasury exercises the warrants, and the share price exceeds today's, then there are no damages and thus no basis for a lawsuit.

And as I have said before, if you really don't want the warrants exercised, and you have 6 figures invested here, it would be well worth your money to write up (or hire lawyers to write up) a pre-emptive lawsuit. Then you can release it publicly and hold it over Treasury's head. The fact that you haven't done this means that I can't take your lawsuit threats seriously.

You are correct that the GOV may elect to exercise, anyway and let the shit hit the fan. But I'm afraid Mr. Cayne is downwind of the airflow, alongside Mr. Mnuchin.

It's pretty apparent that Treasury doesn't fear these threats anyway. They're lining up buyers for the warrant shares, and are vigorously (and mostly successfully) defending a far more egregious legal violation (the NWS).

The only prudent course for GOV with warrants is to defer any action until release and relist is complete and see what the landscape looks like after Congress decides whether to reform or roll-over-and-play-dead for another decade.

Absolutely not. There can be no secondary offering while the warrants exist: nobody will buy shares knowing that they can be diluted 5x later. The warrants will either have to be cancelled, sold back to FnF for a fixed sum, or exercised before the companies can be recapped.