Replies to post #715032 on Fannie Mae-No Politics (FNMA)

[JOoa0ky]

Or they could just do a senior cram down and own 99.7% of FnF without paying a single penny?

I myself do not see how they can legally and morally degrade or dilute 20.1% without shooting themselves in their 79.9% foot. So if they want to maximize that 79.9, then so goes the 20.1.

I've always thought that if the companies were never released as is, and any spin off or re-ipo plan, that it would be a better plan to let the companies buy out all shares and prefs of all classes by doing a grand bargain. They could simplify and gain more by doing this, in my opinion. You (meaning the companies with current capital) buy out prefs at say 65 or 70% of par, and the 20.1 of commons at about $20-25 a share. Everyone takes a hair cut in that situation as far as fair value. Then the companies do 2-3 offerings over about a 2 year period. I bet this would bring them far closer to the capital requirement than any other plan, even though they'd have to spend some to get there. It's the governments lone greed factor that keeps standing in the way of any common sense resolution.

[FOFreddie]

I agree with you Louie and I think Tim Howard has it right regarding the cramdown but the question is what path this takes. It may take a couple a years to get there and that in itself is better than no action by the UST and FHFA - hence we are sitting at $.80 right now.

I think familymang has it right regarding the CBO model. The CBO obviously has this modeled and the question is what is going on with MS and JPM and what they will propose. It is kind of not worth speculating too much because if the Calhoun Utility model is going to be viable the UST will have to move in the next few months because it will take time.

Our big lost is it seems a large derivative claim is now not possible with the US Court of Appeals decision. Guido was right about the potential for the Kelly cased due to the fact pattern.

Lets see what develops. Both commons and JPS have a lot of potential - the road for JPS is much clearer but commons have more potential if the SPS is written down. The commons dont have the derivative suit any more and recovery for lost dividends will be hard to prove. We have to bank on the 20/80 split of the whole UST stake to get a fair deal in my opinion.

The fair deal will come either from a write down of the SPS by a Court order, pressure from Congress because it is a socialist scam or negotiation to get a deal done in time before DJT II takes over and/or DJT II himself. Unfortunately I dont have a lot of hope that the JB Admin will propose a fair deal but hopefully we will see soon.