Replies to post #706377 on Fannie Mae-No Politics (FNMA)

[Achilles deFlandres]

As was stated I think by Hamish Hume that the shareholders have the least rights under the conservatorship, receivership would have been better for them as they actually had right. It was interesting that it took SCOTUS after all tthose dismissed, lost and non win lawsuits to state that the shareholders have certain constitutional rights. People say that while actively destroying civil rights in the name of social rights.

[Louie_Louie]

You're missing quite a few steps and chronologically important steps, post and pre release. You seem to think this happens in a vacuum? AIG and GM are no where near the amount of capital required for the GSE's, so apples and oranges. I also live in Michigan where GM is called government motors and has recently lost their top spot to Toyota, imagine that.... Chrysler was another badly done government bailout.

The GSE's are in a totally different situation to AIG and worlds apart from what GM's was. We went through this years ago on the board. People with fruit salad (apples and oranges) comparisons. I posted a lengthy comparison of AIG/GSE differences long ago and am not going to do it again. If you can't see those major differences, then ask a friend, but please stop comparing this to "other" past re-orgs. Number one, it's conservatorship, where part of that definition is that the conservator assumes shareholders rights and priveleges temporarily, until such time they are reinstated. A very, very, very big legal difference in terms of chapter 11 and conservatorship. These facts must be taken into consideration when they decide what they are going to do, and can't be ignored legally.

[Donotunderstand]

heavy dilution

if WTS are used to raise 70-90Billion with 4B shares

I can be happy diluted to 20% as that 20% is worth what the 4B shares sold for - say 15-20

[kthomp19]

The "solution" will most likely be heavy dilution of the existing shares, however unfair this may seem to existing shareholders. After all, the less the old shareholders receive, the more is left for the government (SPS holder), the JPS (whose rights are contractually secured) and for subscribers to the new shares. The tone of the negotiations is set by those who invest the most money - i.e. the government as SPS holder and the new investors.

The government meets the interest of these new investors the most if it converts the SPS into commons, which leads to maximum dilution. This suits the government (it then gets about $100 billion for itself, which can be used for affordable housing), but it also suits the new investors, who want as much of the pie for as little money as possible. The losers are the old shareholders, because they are in the worst legal position and, on top of that, are the most dependent on the other parties providing the capital.

Couldn't have said it better myself. In the end this is what will dictate the per-share price of the common shares.

[EternalPatience]

works like this in venezuela not USA..

You can continue to confuse the investors as much as you want...

It is not so black and white as you think it is to be.. they could have done this a long back if it was such a simple internet message boarder solution...