Replies to post #756527 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Again, the Treasury’s liquidation preference is greater than the Net Worth of the business. That means the company doesn’t have enough money to pay off the Treasury! Therefore there is no money to pay the JPS!

Again, this only applies if FnF are put into receivership.

You are wiped out with your JPS and I am wiped out with my Common Stock if the Treasury doesn’t cancel the LP and declare the SPS paid in full.

Half right. What you said is only true for your legacy commons.

A senior-to-common conversion wipes the legacy common to near zero while keeping the juniors high and dry. That gives the juniors a path to a recovery (not to full stated value, but far higher than prices are now) that is not available to the legacy common.