Replies to post #711026 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Personally I think the JPS get paid out with divs from 2012 so 150 to 175% of PAR. What I think is dangerous is the slippery slope where it is ok where one class can get screwed where the other class gets what is fair.

You don't get to define "fair" here.

In terms of how restructurings actually work, every class above the one that's impaired gets paid in full. If the commons are worth even a penny then the juniors are worth 100% of par.

Conversely, the juniors being worth 100% of par doesn't mean the commons have to be worth anything more than a penny.

DJT will make any deal an issue and if the commons get screwed he will make political hay out of saying that JB is siding with the RINO and lib dem hedge fund guys.

A senior pref conversion helps the overall common equity value while obliterating holders of the existing common.

The warrants are the only way that Treasury will care about propping up the value of the existing common.

Also if they can screw the FMCC shareholders they can screw the Farmer Mac and other GSE entity investors in the future. Just a bad precedent - there is enough money here for the UST to make a humongous return and where all the shareholders are treated fairly.

Again with the word "fair". That word has as many definitions as people you ask.

And yes, the government can screw GSE investors in the future just as they did in 2008 and 2012. No amount of "fair" treatment of existing shareholders will change that fact or reassure future investors against that possibility.