Replies to post #665479 on Fannie Mae-No Politics (FNMA)

[EternalPatience]

One can only take the horse to the water but cannot make it drink.. that's why dad's are for... For the otherwise purposes...

[RumplePigSkin]

Bradford, thank you for showing your true colors. You may want to try the conditional tense. This will not workout well for JPS. The market has spoken and you absolutely do not know more than the market as JPS has fallen a whopping %50+ relative to commons.

I hate to break it to you that no one in the JPS camp wants to admit, but if SCOTUS rules in favor of Ps, commons easily outperform and it won’t be close.

Stating the cap rule is set in stone as you do only sets you up for continual failure. There is at least a 50/50 chance the cap rule is updated to a more reasonable level, but that will take time and at historic low rates for the forseable future, commons continue to build capital. Also stating the letter agreement will continue to exist in its current form as a bedrock investment strategy is pure fantasy. Of all people you are conjuring scenarios in the JPS echo chamber to justify your positions.

Frankly I’m shocked and astounded you JPS guys had no clue Thompson was asking to have the liquidation Pref set to 0, deemed paid in full. Your twitter talisman was baffled by such a report which means most likely the rest of you in your echo chamber were unaware. If I thought all that was before Scotus was a request to end only the NWS, I would be 100% JPS also, but you guys made a spectacular mistake there. It is shocking ...

Why would Tim Howard call your JPS trade a quagmire? Most likely because it is true. If the opposite of everything you predict happens, doesn’t that tell you something? The first rule of getting out of a hole is to stop digging.

[Wingsjr]

Yeah and the government thought that FnF would never have the cash to exit CS with the 1st deal but they did and they did it in less than 4 years.

[kthomp19]

3. no lawsuit challenges the warrants directly

Well, Washington Federal "challenges" the warrants, but not in such a way as to have them overturned. WF only wants the USCFC to award pre-conservatorship shareholders damages, with the existence (and presumable later exercise) of the warrants merely being a factor in the calculation. WF getting a total win in its lawsuit wouldn't result in the conservatorships, SPSAs, or warrants being overturned at all.

the prevailing consensus these days is that the periodic commitment fee is the final cramdown to prevent commons from having too much upside

I would say it's instead the senior pref "NWS" that gives Treasury all FnF earnings once they hit full capitalization, after dividends are paid out to other shareholders. There is no reason to allow FnF to retain capital past full capitalization (otherwise the capital requirements would just need to be raised), so to prevent excessive dividends to shareholders, Treasury's seniors will help regulate shareholder returns.