Replies to post #716898 on Fannie Mae-No Politics (FNMA)

[Guido2]

Once again, that's not the law. Just a fraudulent agreement between the Treasury and FHFA. The same two parties can undo the agreement or the law will.

[Donotunderstand]

yup

If Conservatorship is to end


the GOV needs to either

1. Admit the SP is already paid for and more and kill it 100%

or

2. Create a new owner class of common equity where we may or may not have 20% and may have 1% via massive and then some dilution. There are methods (debatable in court!!) where GOV issues so many "current shares for the SP" that our 20% becomes 1% or whatever. There are methods (debatable in court !!) where no matter what GOV does, we (current 1B worth 20%) stay 20% despite number count

Everyone knows I favor #1.
Then GOV reduces level of needed capital
GOV continues to buffer or reinsure for a while
F and F cannot pay a dime in dividends until.

And in my fantasy the GOV exercises its warrants and sells those shares to the public. We own 20% - the public (newbies) own 80% - and GOV pockets the money from that SPO. It then (as Treasury) decides what to do with that 100B plus. Congress gets involved THEN.

[MoneyRobot]

I think we called it the modified NWS. Yes, we get to keep some buffers in RE but, it also increases the SPS "liquidation value". The difference is we just get to hold the cash.

I agree it will not look good for JP and commons if they exercise the warrants. If they do, it means we can't payoff the amount we owe. Warrants will eat up 79.9% and SPS, JPS and commons will divy up the rest of the 20.1%. And the 20.1% goes my priorty. Commons will likely not see any monies at that point.

Exercising the warrants will likely reduce the 20.1% for JPS and Commons.

I hope my visual lines up right. It basically shows exercising the warrants will eat into the 20.1%. If it does not line up correctly, ignore the visual.

A-----------------------------------------------------B 100% of Equity

C----------------------------------------------D 79.9% Warrants

..........................................................E------F 20.1%

F-------------------------------------------------G 220+B of SPS
.............................................................H---I left for JPS and


SO, if they exercise the warrants, commons might be in bad shape. I only see them exercising the warrants if we cant pay back what we owe. I think we can and in a very slight chance they might be even willing to reduce it to make things work for all parties because we are more than net 0. That may or may not happen but a possibility since we are net 0. That is the flexibility the gov has with net 0 and still be able to satisfy the public with a huge profit.

[FFFacts]

Funny the highest court in the land couldn't even figure that out but a bystander could.