Replies to post #589928 on Fannie Mae-No Politics (FNMA)

[Patswil]

administration HAS TO settle, and soon, if it wants to accomplish housing reform $fnma $fmcc #fanniegate why soon? much less politically risky now than close to election!

[kthomp19]

The companies can propose several methods of raising capital.

Yes. Each of these is subject to approval by Calabria. Also, since Calabria has the power to dictate the form and amount of capital that FnF raise while they are classified "significantly undercapitalized" (which they will be while they remain below Calabria's minimum capital standard, which will be either $103.5B or $139.5B if he uses ones of Watt's numbers), and FHFA has no fiduciary duty to shareholders, FnF's boards will have no power to protect common shareholders, even if they aren't in conservatorship! That's the whole point I'm making, which is backed up by both HERA and Calabria's words.

None of them may convert JPS to commons

This must be taken as false unless you have proof. A junior-to-common conversion is not illegal, and if it comes at the direction of FHFA then FnF's boards will have no choice but to comply, regardless of any fiduciary duties they have.

certainly the myriad of independent financial advisors on both sides of the regulatory environment - gov vs FnF - will not be proposing lopsided capital raise plans that disproportionately favor one shareholder class compared to another.

Again, unless there is proof to back this up it must be taken as false.

Incidentally, Ackman disagrees with this sentiment as well. If he thought that such disproportionate treatment was impossible, he would not have bought FnF prefs because "it hedges our risk of a restructuring that disproportionately benefits the preferred versus the common shares".

Bill Ackman himself, supposed hero of the common shareholder, not only believes that such a disproportinate treatment is possible, but he bought enough prefs to bring them to 38% of his FnF allocation for that reason (among others). Talk about putting his money where his mouth is!