Replies to post #697165 on Fannie Mae-No Politics (FNMA)

[FOFreddie]

Thanks Clarence - the other point is that the settlement for the Derivative suit in CFC does not involve shareholders directly at all. It would be between the UST, FHFA and the GSEs - dont see why the UST would not agree to a Derivative settlement if it would help fund affordable housing?

The CBO on Table 2 has the Enterprise Value for the GSEs at $402 billion at the end of 2022. Assuming a net capital raise (after 2022 retain earnings of about $ 120 bn) the UST be over $ 300 bn. Any Derivative settlement would accrue 80 cents on the dollar to the UST warrant position and in reality just make there warrants more valuable. Rather than a $ 50 bn warrant valuation a $ 100 bn Derivative Settlement would make the warrants worth $ 130 bn with only an additional $ 20 bn to common . This is one of the reasons why someone may want to hold common if they believed a Derivative Settlement was possible.

[skeptic7]

According to board legal eagles the twins were also supposed to prevail in the high court.

Requesting a jury trial remains to be seen if there is any value to that, but I think it certainly extends the time frame as to when it actually sees the inside of a courtroom. Voir dire of the jury will take an incredible amount of time in an of itself.

Regardless, and again, this is my opinion only, I do NOT under any circumstances envision a settlement. Why would they? I'll accept any good reason why the Treasury/Government would settle.