Replies to post #660621 on Fannie Mae-No Politics (FNMA)

[GAK-]

That's the way I assumed you would answer

[Commons_Cancelled]

Correct. The Common shareholder plaintiffs are small in number and can easily be bought off or given a sweetheart deal to drop their cases.

And with the Statute of Limitations having passed, Treasury/FHFA really don't need to worry about new lawsuits any longer.

I'm sure if the Treasury/FHFA throws the Common plaintiffs a small bone (maybe a few thousand shares of FNMAS?), they'll settle and be on their merry way.

Commons are quite literally going to be buried under a mountain of Conversions and Capital Raises.

Today was the day that the Common trade died.

Most just haven't realized it yet.

[bathbombs]

Can you or anyone else answer the following questions I have?

Treasury will permit up to $70 billion in proceeds of stock issuances by each GSE to be used to build capital.

1. Does an equity raise also increase the liquidation preference?

Upon the capital reserve end date, the GSEs will resume quarterly dividend payments. The dividend amount at that time will be equal to the lesser of 10% of the liquidation preference of Treasury’s senior preferred stock, or the incremental increase in the GSE’s net worth in the prior quarter.

2. The liquidation preference now sits at 228B - I'm interpreting this meaning once we hit 198B in capital reserves, we begin to pay the 10% dividend, however that amounts to 22.8B (And will only increase). 22.8B is more than what the GSE's make annually, so upon capital reserve end date, this equates to a NWS correct?

3. If the warrants are exercised, does this make the 10% dividend and liquidation preference null?

4. If the answer is yes, I wonder if we see an exercise of the warrants, sooner than expected.

[Forrest Gump Luck]

Looks like Gov is holding cards for settlement. Warrants/liquid pref are bargaining chips and gov not going to just let them go.
There is going to be some BS offer, that reads as generous in a crappy news article. buyout at a “100% premium” (aka 4bucks).
My fear is that gov can excessive warrants, sell warrants on condition buyer agrees to 4$ then they have 80% of the shares voting for 4$.