Replies to post #708746 on Fannie Mae-No Politics (FNMA)

[JOoa0ky]

You have to understand what the SPS are... its basically a line of credit. The current SPS has 254B in undrawn/unused credit remaining. If the **** hits the fan, FnF can instantly draw 254B to prevent insolvency...

There isn't anyone in the world that will buy all of the SPS and keep a 254B line of credit open for FnF.

Please correct me .... I haven't fully analyzed the agreements, but my quick read is that there aren't SPS transfer restrictions that pertain to Treasury. I think the Gov't could sell its SPS interest via secondary and then separately monetize the warrants ... but I think that strategy would be challenged on several levels -- legal, financial (why should new investors pay a fair yield / believe they won't suffer the same fate as JPS), logistical (what mechanism would be used to create a return on SPS) and eventually government actor / consolidation considerations. I feel like the Gov't is already dancing on the head of a pin (so to speak) ... trying to monetize SPS outside of common conversion would take it to an entirely new level.

[bradford86]

hard to meet capital requirements that way

[trunkmonk]

unfortunately some dont get it, they just create a theme out of what someone says and takes it out of context to fit their agenda. Gov gets nothing with pref liq other than trillions on their books. they cant really do it since GSEs are in conserve mode. its not gonna happen, its gonna be a while and commons will be just as well off as preferreds, in spite of what some think. its very obvious the focus has shifted to benefit both and the defendants only argument is plantiff has a new gig. things look better after oral, but there is no quick fix other than gov wins against shareholders but gets no one in markets to climb on board, some plainly cant see because of their agenda is so bias its missing points all along the way. anger is driving many.