right, i'm just saying that spspa conversion can be calculated in a way separate from current price, where common basically have limited to no upside --- and that solves that conundrum.
and i am hearing that this is most likely the path forward.. handing out $1-2B to existing common to help ensure that the value of the government's stake is maximized and put in a floor into the price --- paying the troll toll..
instead of like 99% dilution down to $0.10.. you end up with like 97-98% dilution for $1-2 or whatever it ends up being.
but yeah overall i agree that for the most part common have no security and are not worth my money.
Tim Howard was Vice Chairman of FNMA and has been proposing a restructuring of the GSEs for years. Here is what he said nearly 6 years ago - you should ask him why he would say something different today than what he said 6 years ago rather than just state something that is contrary to the public record. Also Check out who also made statements at this Urban Institute event.
This is the excerpt from the lower part of the link-
Affordable housing. Fannie and Freddie’s role in supporting affordable housing is limited by the fact that they only can purchase or guarantee the loans lenders originate. Despite this, FHFA should set affordable housing goals for the companies. FHFA also should have the power to impose penalties for failing to meet those goals, but only if the percentage of affordable business Fannie or Freddie does fall short of the percentage originated by lenders that year. FHFA should not increase the amount it requires Fannie and Freddie to contribute to affording housing funds beyond the 4.2 basis points mandated by legislation. Fees for affordable housing imposed only on the companies are an excise tax on the secondary market. Should Congress wish to increase support for affordable housing through additional fees, it should levy them on all mortgages. This would raise more money—or raise the same amount at a lower fee rate—and not favor primary market over secondary market financing.
Implementation. The above changes could be effectuated through administrative action, as were the 2008 Preferred Stock Purchase Agreement and its amendments. With the written consent of the boards of directors of Fannie and Freddie, FHFA as conservator would make binding commitments on behalf of the companies, and Treasury and FHFA would make binding commitments on behalf of the government. Before these reforms could take effect, the government would need to settle all of the lawsuits against it for its treatment of Fannie and Freddie before and during the conservatorships. It likely will take rulings adverse to the government’s current position to trigger that settlement. Assuming such rulings are forthcoming, Treasury should cancel the warrants it holds for 79.9 percent of the companies’ common stock, allow them to use proceeds from the reversal of the net worth sweep to repay their senior preferred stock, and retroactively replace the 10 percent dividend on that stock with a more reasonable 1 percent markup over the cost of the funds Treasury borrowed to give the companies the $187 billion they did not need. Treasury is prohibited by the “Jumpstart GSE” legislation from liquidating Fannie and Freddie’s senior preferred stock before January 2018. Until then, FHFA should stop paying dividends on it, and notionally credit the companies with the amount of capital they will have when the stock is repaid, to assist them in planning for their recapitalization.
________________________________________ Timothy Howard is former vice chairman and chief financial officer at Fannie Mae. After six years as senior financial economist for Wells Fargo Bank in San Francisco, Howard joined Fannie Mae as chief economist in 1982 and soon became involved with the financial management of the company. He was given responsibility for Fannie Mae’s largest business in 1987 and became the company’s chief financial officer in 1990. He became chief risk officer in 2000 and was named vice chairman of the board in 2003. When he left Fannie Mae in 2004, it was safely and profitably financing more than 25 percent of all US home loans.
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