Replies to post #743325 on Fannie Mae-No Politics (FNMA)

[kthomp19]

If the Charter is hard to change and you are saying that the USG will dilute common equity to "zilch" - how can the USG sell new common equity under the same Charters?

With a re-IPO.

The "zilch" you refer to is near zero, not absolute zero. There's not much of a difference in absolute terms, but when it comes to the capital stack there is a huge difference.

Why would new investors take the risk that they could be the next victims of a future USG nationalization under HERA as interpreted by Collins?

Because that risk exists regardless of whether or not Treasury converts the seniors to commons. Nothing FHFA or Treasury say now can bind future administrations, especially now that the President can fire the FHFA Director at will.

These fears will only serve to drive the per-share price of the re-IPO down. If those fears are too great then a re-IPO can't happen and FnF have no shot of escaping conservatorship before 2028 (if Treasury converts or writes off the seniors) or 2038 (if Treasury leaves the seniors as is).