Replies to post #660718 on Fannie Mae-No Politics (FNMA)

[kthomp19]

So under the assumption that everything remains the same, these are the order of events that would have to happen

1. Warrants are exercised
2. Lawsuits Settled
3.Raise 300B(capital requirements 300B - 45B) + 250B (Liquidation Preference) so a total of 550B (how they'll convince 550B i'm unsure.

But the caveat is they can only raise 140B so, essentially there is absolutely no way to exit conservatorship without something like eliminating the liquidation preference.

#1 and #2 are correct, that's in the agreement.

To exit conservatorship, though, FnF need 3% of CET1 capital, though that calculation doesn't include the seniors. Freddie could exit immediately with a $70B common raise and junior-to-common conversion, while Fannie would need 3 years of retained earnings to do the same. Nowhere close to $300B.