Replies to post #697681 on Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

Your coins in a glass jar analogy reminded me to go check one of my brokerage accounts and I decided to go ahead and convert some loose change to shares. Although I am quite sure that we will continue our downward descent, the idea that 100% of the existing commons outstanding are "on sale by Mr. Market" for $2.5B in total seems compelling given that it represents about 45 days combined retained earnings. Likewise at approximately 7.5% of par, the outstanding jps are priced at around $2.5B.

Market also says obligations out-strip assets by a huge margin

Obligations? Do you mean the liquidation preference?

SCOTUS, have shown they do not want to reward hedge-fund vultures

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SCOTUS only ruled that under HERA the government as conservator can act in a manner that benefits the public it serves. Unconstitutional actions by the government were not given the green light.

On the other hand, JPS do have outstanding lawsuits -- in BK court you often see a payout to resolve nuisance issues hampering a resolution and I think JPS has a *chance* of that

Why do you think that the gses will go bankrupt? Why would the gses divert needed capital to make payments to nonvoting, noncumulative, non-convertible jps holders?

Noone knows exactly how this ends, but if the federal government and industry participants want to get out of owning and managing the Secondary Mortgage Market they will have to deal with the LP and warrants, in the meantime the gses will build capital.

I think both jps and common are going to do well as the dust settles from the litigation and the federal government gets out of running two of the largest financial intermediaries in the world.