Replies to post #598678 on Fannie Mae-No Politics (FNMA)

[action8101]

Amen!!

[Guido2]

7.3 million shares of FNMAS were sold today. There’s over $50 million ready for conversion.

[kthomp19]

A common to pref conversion still looks unrealistic to me, you didn’t convince me.

I'm not trying to convince you. I have stated why I think a conversion is likely, whether or not anyone here agrees or disagrees is immaterial to me.

The law says the current common holders are entitled to 20.1% of the companies

What law? Please cite a specific section.

nowhere in the laws says FHFA is authorized to add additional shares and let commons pay for it

FHFA is absolutely allowed to direct FnF to issue additional shares. But it isn't current common shareholders that would pay for these shares, but new investors.

because it would be a taking of property that belong to commons and will not settle a law suit

Again, what law does it break? Your use of the word "taking" implies that your answer would be the Fifth Amendment of the Constitution, but that only covers property taken for public use. New FnF common shares sold to private investors (or created by a junior-to-common conversion) would be for private use, not public, so the Fifth Amendment cannot be your answer.

The conversion is 100% legal I agree with you and you can do it tomorrow, but only at current market value, nothing more nothing less

How does the conversion ratio affect its legality?

Also, remember that the conversion has two variables: the percentage of par and the price per common share. The latter could very well be based on the market's common share price leading up to the conversion, as with Citi, but nothing is stopping FHFA from setting the former wherever it believes best.

so it will not be negative to prefs nor negative to commons, any other than market value conservation is not possible as the basics of the conversion rate cannot be determined due to the errors FHFA made

What errors are you referring to? Also, as I just said above, the conversion rate will be determined by FHFA as whatever they think is best. FHFA is allowed to act in its own interests, even if it is contrary to the interests of shareholders. Judge Sweeney said that.

a suspended dividend pref stock cannot ask the common suspended dividend stock to convert in a preferable rate at the cost of the common, it would not help anybody

Nobody will be asking current common shareholders anything because they have no voice and no power. Also, the conversion does help because it makes the SPO, which Calabria and Mnuchin say is necessary, much easier to conduct.