Replies to post #638383 on Fannie Mae-No Politics (FNMA)

[TRCPA]

https://www.americanbanker.com/news/fannie-and-freddie-will-likely-exit-conservatorship-by-2024-calabria-says

Federal Housing Finance Agency Director Mark Calabria said Fannie Mae and Freddie Mac are expected to be out of government conservatorship by the time his term ends in 2024.

However, he said the U.S. takeover of the government-sponsored enterprises — which began more than a decade ago — will not end until Fannie and Freddie hold sufficient capital.

“I certainly hope and expect they will leave before I leave,” Calabria told reporters Wednesday. “If they’re not ready, they’re not ready. And I’m not going to force them out.”

[kthomp19]

Calabria didn't state that the process would be complete in the above timeframe. He did say that he expected the process to be complete by the end of his term in 2024.

It's the (first) capital raise that is going to affect the relative value of the prefs and commons, so that's the best event to focus on when deciding on allocations. Calabria clearly wants that to happen well before 2024.

Also, the article you linked to said "That could tee up a conservatorship exit around 2022 or 2023, he said.", which directly disproves your assertion that "the only real timetable Calabria has ever put forth was that he hoped and expected to have the process complete by the end of his term in 2024".

Never said this. What I said was that it was stated as a possiblity, but there was no specific follow-up to those comments.

This post appears to be the one you are referencing, and you absolutely did use the age of his comments as a disqualification of the possibility of a junior-to-common conversion. Otherwise there would be no need to include the "many moons ago" or "passing reference" parts.

Also, FnF both including Treasury's conversion possibility in their 2019 10-Ks certainly qualifies as a followup because Calabria, as conservator, has to approve everything that goes into the 10-K reports.

So certainly not a probability at that or this point.

Possibility can be inferred from Calabria and Mnuchin's comments, but not probability.

Probability, though, can be inferred from Calabria's capital rule that only allows for $25B worth of non-cumulative prefs in the capital structure. That means either the juniors will be offered a conversion or the capital raise(s) will be all common shares. There would be no point in conducting a capital raise that doesn't help FnF meet all its capital standards, including CET1.