Replies to post #508050 on Fannie Mae-No Politics (FNMA)

[kthomp19]

as I believe you would concur, that no Moelis-style recap can occur until the lawsuits are basically settled.

Yes, I agree with this. Well, mostly. I think the government will be willing to let the common-only lawsuits continue because they are small potatoes.

But, to date, I have yet to see where even ONE plaintiff team has indicated a willingness to give in and settle... even in principle.

The junior plaintiffs just want the NWS over and the seniors extinguished. Or, in the Collins case, the alternative of ending the NWS and Treasury sending $122B to FnF (leaving the 10%-dividend seniors intact). These things are basically essential for any recap anyway.

I do think that the plaintiffs will be quite resistant to a settlement. It will have to be pretty ironclad. But a conversion at a big enough ratio could help get the job done.

This, to me, favors a recap from organic growth (retained earnings) and a minimum of administrative action.

I just don't see why Treasury won't insist on a faster recap. They're the ones on the hook between now and when the companies are fully recapped. Minimizing taxpayer risk means minimizing that amount of time.

I would expect common shares to get a spike from the end of NWS

Only if it's announced in isolation. I don't think that's going to happen.