Replies to post #756306 on Fannie Mae-No Politics (FNMA)

[familymang]

By the way, that's what happened with AIG.

Yep people pointing to the PSPA language saying the government cant convert its senior preferred shares to common shares are missing the fact that the governments senior preferred shares in AIG had the same exact language, and guess what happened there? You guessed it, the government converted its senior preferred AIG shares to common shares which caused >92% dilution.

"The plan, which won the blessing of major credit-ratings firms before it was announced on Thursday, involves converting $49.1 billion of preferred shares that the Treasury holds in AIG into common shares and increasing the government's ownership stake in the company to 92.1% from 79.8% currently."

Source: https://www.wsj.com/articles/SB10001424052748704483004575523261932975260

Sound familiar? But let's pretend that didnt happen and cant happen again (it most likely will).

[MannSinger]

JPS-100% for redemption or 80% to convert to new JPS

JPS holders have to decide if they want 100% redemption then pay 20% capital gain or they want to convert to New JPS with 20% haircut.

[JOoa0ky]

If JPS get a 20 % haircut, commons would become worthless because they rank lower in the capital stack.

So anyone who says JPS will get a haircut is simultaneously accepting that commons will fall to zero. By the way, that's what happened with AIG.

I must confess.

Waiting for my JPS to reach PAR isn't nearly as exciting as watching the commons get diluted to oblivion upon restructuring.