Replies to post #707944 on Fannie Mae-No Politics (FNMA)

[The Man With No Name]

the reason would be because it maximizes the government's valuation of its equity.

Strange how some can't grasp this concept.

Treasury can go from 80% to 99.9% and the maximum liability from any lawsuit would be less than $2B. If that additional 19.9% is worth more than $2B, that's money in the bank.

At $8 bucks with 80% dilution, the government could net another $13B or so.

That's 13 billion reasons.

The thing about being on the bottom of the capital stack...you take the most risk for a chance to reap the most reward.

But it's obvious what will happen to commons.

[jeddiemack]

Which is the exact same reason... using your argument they can redeem your shares for mere pennies on the dollar... or covert 10 shares of pref for 1 share common.

Your argument against commons, cuts just as hard and just as fast against prefs.

Sorry, can't have it both ways.

If the government wants to put screws to prefs they can.

And according to the courts... since the have all the rights... as in all is all...

they can do it. and not 1 thing you can do about it; in fact the position is even worse than being a common holder... in that you thought you had a one up position... but, you don't.

Worse...

your up side is limited... where as your downside is the same as ours... 100%.