Replies to post #757253 on Fannie Mae-No Politics (FNMA)

[Donotunderstand]

With SPS "written off for free" --- common goes to 7 ?

What math shows that?

Others have shown $20-$25 even with WTS exercised

? 7 with SPS gone

(and some of us would not quite agree with --- "for free" as 190B went in and 300B has gone out. Yes it was dividends and not repayment but still 50% more went to Treasury than came out --- so "for free" seems a little one sided type description of GOV agreeing to reduce to zero

[FOFreddie]

Thanks for your analysis LuLeVan

Regarding the write down of the SPS this is footnote No. 30 of the CBO Restructuring Paper:

"Section 902.2 of title 31 of the Code of Federal Regulations sets forth standards for the “compromise of debts” by the Administration. On the basis of its review of those standards, CBO believes that a reduction in the value of the Treasury’s preferred shares could be undertaken as part of the recapitalization of the GSEs."

One of the basis for "reduction of value " under CFR 31 902.2 is litigation risks. It would seem that if the UST wanted to exit prior to final resolution of all the litigation around the SPS they would compromise because they can under CFR 31 902.2.

[The Man With No Name]

I'll be glad when all this is over...and Ackman loses his ass.