Replies to post #741078 on Fannie Mae-No Politics (FNMA)

[HappyAlways]

That’s cheating. SCOTUS was told that NWS was already stopped. In Amendment 5, it is clearly stated that the amount retained is added into the Liquidation Preference dollar-by-dollar. Upon resume of capital, Fannie and Freddie will continue to repay 10% interest of the Liquidation Preference. Mnuchin is a snack. Wish him bad luck all his life.

[Donotunderstand]

start with I hate the SP and the LP

but

it is equity

As constructed - it does not list on any exchange -
As such its per share value - AS INTENDED - never changes and the number of shares never change ----- JUST IS AS CONSTRUCTED

(there are many "sub classes of equity" - often permanent ownership to some family --- that are constructed exactly like this)

Here - the GOV in HERA (I believe or in regs for HERA) constructed a measuring device called the LP ---- the amount Treasury is entitled to - PER THEM !!!

So they decide dividends do not count as any sort of reduction
So they decide any quarter - originally constructed - where F and F could not pay the 2.5% in dividend - the missing amount ACCRUED
etc.
etc.

Bottom line - with out the shares trading or changing in volume - the LP is the measure the GOV created to measure how much equity they have in F and F
Not saying I agree with that - just noting that the TREASURY had all the cards (and that is also why I have said that Treasury ALONE (no need for FHFA) could have made things far better for us - any day - say in the last 10 years ----- but did not. We do not need FHFA when it is TREASURY (here Mnuchiin and now Yellen) hold 100% of the cards.)