Replies to post #682102 on Fannie Mae-No Politics (FNMA)

[Commons_Cancelled]

few investors will be interested in putting new money into a corporation where the UST has a warrant for 79.9%!

It would probably be best for the Treasury to exercise the Warrants prior to the capital raise. But I'm sure the GSEs will be able to raise capital regardless ;-)

What Bill Ackman said and the Collins Plaintiffs mentioned at one point in posturing during the initial stages of litigation can change during subsequent litigation proceedings, in final negotiations if any with the UST, during any trial, and what they ask the court for when it is drafting any final court orders.

Nope, that's incorrect. This is directly from the newest Collins' SCOTUS filing:

Many of our friends should seriously consider having 2 horses in this race NOT ONE!

Many of our friends realize the Jr. Preferreds will become Commons via a generous Conversion assuming Commons are going to have future value.

[kthomp19]

Their true purpose was crystallized in 2012, after the US Government realized that even a 10% annual dividend on the $187.5B was NOT ENOUGH TO SALT THE EARTH WITH THEIR CARCASSES, HENCE THE NWS.

That happened under a different Presidential administration, with a different FHFA director and a different Treasury Secretary than the original SPSPAs.

The NWS absolutely was designed to facilitate the wind-down of FnF. But that does not in any way prove that the original SPSPAs were also designed for that purpose.

MANY WILL CLEARLY BENEFIT FROM READING TIM HOWARDS AMICUS BRIEF IN THE COLLINS CASE.

The same Tim Howard who said both that one cannot prove that FnF never needed the bailout and that Treasury did not in fact direct FnF to purchase toxic mortgages?

What Bill Ackman said and the Collins Plaintiffs mentioned at one point in posturing during the initial stages of litigation can change during subsequent litigation proceedings, in final negotiations if any with the UST, during any trial, and what they ask the court for when it is drafting any final court orders.

Ackman's talk about the warrants was nothing even close to "posturing". He owns the commons because he thinks Treasury's interests are aligned with the existing commons. If Treasury were to not exercise the warrants, Ackman would likely sell his entire position. Be careful what you wish for.

Lastly, few investors will be interested in putting new money into a corporation where the UST has a warrant for 79.9%!

I agree. That's why Treasury will fully exercise the warrants before any capital raise.

Many of our friends should seriously consider having 2 horses in this race NOT ONE!

The juniors are basically an out-of-the-money call spread, and the commons are call options struck at the upper end of that call spread. Buying juniors to hedge a common position makes perfect sense. Buying common to hedge a junior pref position doesn't.

But why would you care about this? Current junior pref holders selling some of their position to buy commons would only push up the price of the commons, making it more expensive for those who want to own commons to build their position. Therefore your call seems self-defeating.

By contrast, I want current common shareholders to hold on to their shares rather than selling them to buy juniors because I want to accumulate the juniors more cheaply.