Replies to post #728008 on Fannie Mae-No Politics (FNMA)

[kthomp19]

I'm saying in this case I believe it to be different. It is unlike any previous ruling of fair value that I'm aware of.

If Wheeler had cited just one Supreme Court case, I might agree. But with four different cases that all say the same thing, I don't see why any case could overcome that precedent.

$41 Billion price you mention makes the most sense only if what I'm speaking of is overlooked. It would then be the best indicator.

It's what the Washington Federal plaintiffs, the only ones to bring direct takings claims over FnF's entry into conservatorship, used in their complaint. It's hard to argue for anything else, in my opinion.

I don't believe, again my opinion, that the outcome, if it comes to a warrant exercise and taking claim, is based off of these prices. They are not the true value of the companies. Where the gov and new investors plan to cash in $300B + from companies not worth $1Billion Market Cap combined. Not seeing this to come true.
These numbers are manipulated.

The Supreme Court already said, several times, that how much the government later makes is irrelevant in a takings award calculation. I don't see any reason to believe that precedent wouldn't be followed in a warrant takings case.

Remember that in a takings case regarding the warrants (or a senior-to-common conversion), it would be shareholders bringing the claims. That means the value of the companies is not what's important, it's the value of the shares. Those are usually tied together, but when it comes to FnF there can be a big disconnect. An example of this is a senior-to-common conversion, which would harm existing common shareholders but would be an immense benefit to the companies.

You seem to be saying that in a warrants or senior conversion case, the plaintiffs would argue that their shares would have been worth more had Treasury not exercised the warrants or converted the seniors. But the shares are only worth around 60 cents right now, and Treasury hasn't taken either of those actions. How can plaintiffs argue for a higher value, and on what basis would that value be calculated?

Either warrant exercise or senior conversion has to happen before recap and release, so these plaintiffs can't use post-recap/release price estimations because there future dilution and implied company valuation from capital raises won't be known at the time Treasury takes its challenged action(s).

Unless you are telling me it is totally legal for some politician to say negative comments about the companies, get the price to drop, which has happened before, and then say "okay we'll cash in warrants at 0.20 cents /pps." Then they drop to 10 cents. And the gov just owes 10 cents pps drop? If that's what you are saying. I understand you, but don't believe it will work that way when it all ends.

Yes, that's exactly what I'm saying. It sucks, and even to me seems unfair, but that's how things work to the best of my knowledge. This is a case where I hope I'm wrong, but am afraid I'm right.

It hasn't taken any direct negative comments by politicians to bring the commons to 60 cents, though, and Treasury stands rather little to gain by directly trying to manipulate them down further - not even a billion dollars at this point.