Replies to post #535731 on Fannie Mae-No Politics (FNMA)

[Doc.007]

We principally have an interim time from in between Conservation until Release From Conservation. For this I'm expecting that the FHFA will create an Interim Consortium by UST, FHFA and F+F to negotiate and deciding step by steps. At last phone conversation with FM Investors Relation they confirmed a Partner like relation with US Gov by nearly daily phone contacts with them. That provides preconditions for any Consortium and confirms also that there is presently much more Ongoing than we publicly become to know.

Presently we have the Collateral SPS Promissory & CS Warrant which by The Laws need to be cancelled because there is No Outstanding- Credit or any Financial Obligations, contrary FHFA & UST have to return Overpaid Money !
For may possible Interim Degressive Credit Line at Recapitalization to Issue New Collateral Warrant.

If for Recapitalization is used the Upper Limit of Gov Watt Version 2 The Political Favorite as it Reasonable looks like, it means for Fannie $ 85 Bn and Freddie $ 55 Bn and for Fannie Cash of only $ 23.2 Bn Requested by the Rest of Securities they already have. It means also the as one of several opportunities mentioned Re-IPO Offering has effectively other Financial Reasons to Avoid Liabilities as From 2008. Where only politically declared for Recapitalization, but Strategic is only to avoid Liabilities by replacing Old JPS with New Kind of JPS maybe with better conditions, better conditions for Who ?

[kthomp19]

It would be alot easier to issue more JPS shares at a lower rate and use that to pay off jr. preferred shares slowly over the next 15-20 years.

Equity never gets "paid off". That's why the seniors still exist.

As to the form of recap:

1) Calabria wrote that FnF's capital "should also largely be in the form of common equity and calculated on a non-risk-adjusted basis."
2) Don Layton said that (start at 41:02) "the vast majority of that is going to be common equity". The "that" refers to Freddie's capital.

This idea of a recap that involves a lot of non-cumulative preferred shares is pure fantasy. It's going to be either mostly or completely composed of new commons. The new buyers will have a large chunk of the company, Treasury will have 79.9% of what's left, and current commons will be diluted down to 3-6%. Nothing else fits with everything that we have heard.

The problem is everyone wants paid "now".

Of course. The junior pref-holding plaintiffs have to agree to drop their lawsuits. They won't do that in the face of some plan that doesn't involve them getting their dividends restored immediately.

[HappyAlways]

Declare the bailout is fully repaid. Cancel the SPS. Stop the NWS. Return the excessive NWS payments by waiving the 79.9% warrants. Convert the JPS to Commons. Issue new perpetual bonds at 4.25% interest rate to recap $120B capital. Release from C-ship. Re-list in NYSE.

Can be done in 6 months. Quick and Easy. IMO.