Replies to post #616442 on Fannie Mae-No Politics (FNMA)

[kthomp19]

on what basis does the Treasury have the right to convert its SPS to common

Because Treasury owns the seniors and they are equity that, in conjunction with an agreement with FHFA, can be converted to another form of equity.

You need to reverse the question: on what basis does Treasury not have the right to convert the seniors to common?

If Treasury returns $125B to FnF and ends the NWS once and for all, every single lawsuit other than Washington Federal instantly disappears (they would all be moot; the NWS would have been unwound at that point).

Treasury would then convert the seniors to recoup the $125B (and then some). They would convert specifically to commons because of CET1 capital requirements.

[Potty]

Donot, FHFA as concservator, and Treasury, will negotiate a new SPSA -- just like they negotiated the first one

This is not a question of Treasury's right, Treasury had no right to implement the NWS -- rather FHFA standing for companies agree to NWS in return for something in the amended SPSA

So, this time around, FHFA might agree to let Treasury convert senior to common, since it furthers RnR, and that would be formalized in another amendment to SPSA -- though obviously there are all kinds of permutations

Lots of posters here get all confused about what is in EARLIER SPSA -- but FHFA and Treasury are negotiating amended (ie new) agreements and they can agree to what they like (consistent on FHFA's side with its obligations as concervator which was not respected in third amendment imho)