Replies to post #757400 on Fannie Mae-No Politics (FNMA)

[JOoa0ky]

The US Govt is screwing themselves?

Let's put YOU in the govt's shoes.

What you have: (2) options
Option A: Exercise warrants to obtain 79.9% of the commons.
Option B: Convert your seniors to commons and dilute your warrants BUT you obtain 99.99% of the commons at the end of the day.

Would you take the lesser option A?

Never understood why the US Govt would screw themselves owning 79.9% of the common stock…. Huge frickin windfall to USG…. I own both, but Jesus, Joseph, and Mary…. Doesn’t make sense….

[FOFreddie]

Totally agree with you tuzedaze - why would the JB Admin want to screw common? Especially when they intentionally had a plan to screw JPS and Common as early as March of 2008. The GSES sold billions of JPS in the Spring of 2008 to stabilize the GSEs while the GWB NEC and the UST stood by with a plan to Nationalize the GSEs and wipe out all of the existing investors and the new investors that were purchasing JPS at $ 25.

Here is the summary of the capital raise for FNMAT on May 13, 2008 as disclosed in the 8-K filing on May 13, 2008:

On May 13, 2008, Fannie Mae (formally known as the Federal National Mortgage Association) agreed to sell 80,000,000 shares of 8.25% Non-Cumulative
Preferred Stock, Series T (the "Series T Preferred Stock"), plus an option to purchase up to an additional 12,000,000 shares to cover over-allotments that is
exercisable until June 12, 2008. The Series T Preferred Stock was sold through a syndicate of underwriters led by Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Citigroup Global Markets Inc., Morgan Stanley & Co. Incorporated, UBS Securities LLC and Wachovia Capital Markets, LLC.
The initial public offering price for the Series T Preferred Stock was $25 per share, with the total proceeds to Fannie Mae for the offering of the Series T Preferred
Stock (after application of the underwriting discount of $0.7875 per share of Series T Preferred Stock sold to non-institutional investors and $0.50 per share of
Series T Preferred Stock sold to institutional investors, for an aggregate underwriting discoun t of $53,128,343, and exclusive of the expenses of the offering and
any advisory fees) being $1,946,871,658.

https://fanniemae.gcs-web.com/static-files/d2ff8e7f-ff59-479f-ad54-fe135914569c

FNMAT raised $ 2bn and this offering was only one of several offers for Fannie and Freddie at the same time.

Two months earlier Jason Thomas who was Special Advisor to GWB at the NEC sent a "For your Eyes Only" Memo the Robert Steel who was the Under Secretary of the UST laying out the plan to Nationalize the GSEs and wiping out Shareholders which came to include the billions raised from retail investors and institutional investors like The Growth Fund of America.

Here is what the For Your Eyes Only March 8, 2008 Memo stated:

As shareholder capital gets wiped, the government will have no choice but to seize the company and
place it in conservatorship or receivership. Importantly, mortgage-backed security holders guaranteed
by Fannie Mae will see no losses. The government will likely allow debt holders to fare okay, with either
no or token losses, perhaps 1%.
Shareholders, both common and preferred, are likely to be left with nothing. However, these
shareholder losses have already been locked in by the company's credit decisions over the past few
years and cannot be helped. It must be remembered that Fannie is the biggest mortgage risk holder in
the biggest mortgage crisis.

https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf

This is why we need to hope that the Mike Kelly suit proceeds and the Wazee Suit for Unjust Enrichment proceed.

[jog49]

"Never understood why the US Govt would screw themselves owning 79.9% of the common stock"

It was tactical and thus, done on purpose so as to be deceitful. 80% would have put the $Trillions as debt on the federal books. More obscene that that though was the option price of 100,000 shares of common for $1 when the stock was still trading in the $dollars/share.
The cherry on this government sundae is, because of total government control, maintaining a share price of less than 50¢/share on two stocks churning out $10-12 Billion every 90 days, consistently, while denying the owners of 20.1% of the corporations not one red cent over the past 15 years, come September 2023.