Replies to post #755036 on Fannie Mae-No Politics (FNMA)

[LuLeVan]

The "sweetheart deal on prefs" will not be done by Warren Buffett, but by the U.S. government, using the existing Senior Preferred Shares, which will most likely be converted into commons.

This "sweetheart deal" gets value from the fact that this transaction removes the SPS from the balance sheet and enables a capital raise. The new investors will buy new common shares, which will greatly increase the value of the legacy commons, of which the government holds 99.5% (due to heavy dilution). The crumbs of 0.5% remain with the legacy shareholders.