Replies to post #513313 on Fannie Mae-No Politics (FNMA)

[kthomp19]

1) As you mention correctly the government can put google as easy into conservatorship as FnF

No, I said that the government cannot put Google into conservatorship under existing law. FnF's conservatorship, on the other hand, was perfectly legal because it was authorized by HERA and FnF's boards agreed to it.

if there is even a little doubt their money can be confiscated in the next downturn, so they will not live with it, but choose not to invest in FnF

The new buyers will be in the same shoes as those who held shares pre-conservatorship. Thus it is the pre-conservatorship shareholders that must be "made whole" in order to reassure new investors. Giving money to current shareholders won't make the new buyers feel better at all.

Or, more realistically, neither pre-conservatorship shareholders nor current ones will be "made whole". Compensating the former doesn't really help anyone, and compensating the latter just takes money out of the new buyers' pockets.

4) Treasury indeed has no incentive to void the SPS and warrant, but most likely will be “forced” smile into it, by the courts, as the current catch 22 is unsustainable

There is no case out there seeking to cancel both the seniors and the warrants. In fact, there is no case seeking the cancel the warrants at all! Treasury cannot be forced to do something that no plaintiff has asked for, especially because, with one exception, no case at all challenges any events of 2008, only the NWS in 2012.

The exception is Washington Federal, but they are only seeking money damages. If they win their case, the warrants (and even the seniors and NWS) still exist.