Replies to post #589221 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Actually, if they did that and lost a takings case. Which they will lose if they do this, one fix ... would be require the government to repurchase ... on the open market and return the company the 8 billion shares they took.

Incorrect. In calculating the damages for a takings, only what the shareholders lost matters, not what the government gains. This is Supreme Court precedent (see this post for the citation and link). Also, the government would only be liable for money damages; they would not have to go purchase shares in the open market.

If the commons trade at $3 the day before the warrants are exercised and $2 the day a lawsuit is filed, Treasury's liability would only be $1.8B ($1 times 1.8B shares), perhaps with interest by the time a final verdict is reached. If the commons somehow go up in price when the warrants are exercised, shareholders would not have lost anything and thus the damages award would be zero.

reap 100Billion in value and then spend 300Billion repurchasing the warrant shares or more.

Change $300B to $8B and you're closer to the truth. This makes me think it is highly likely Treasury will exercise the warrants: their liability is unlikely to exceed $10B.

Keep in mind if they do this. And then the company's have to raise capital they may have to issue more shares at deflated prices than would have been necessary at normalized prices without the extra shares...

Thank you for outlining this highly plausible bear thesis for the commons. Since Treasury's liability will be far less than they will gain by selling the warrant shares, this scenario of yours is quite likely to come about.

This could further be a taking and thus result in more damages and losses.

Incorrect again. Existing common shareholders' loss in value per share due to the SPO cannot be challenged as a violation of the Fifth Amendment because the property in question, equity ownership in FnF, would not go to the government but instead to private investors. In other words, it would not be for public use.