Replies to post #766133 on Fannie Mae-No Politics (FNMA)

[kthomp19]

In essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred.

Who on earth would contribute capital to FnF just to watch it disappear into Treasury's bank account rather than improve FnF's capital position?

If new investors were willing to contribute that much capital to kill off the seniors and finally let FnF out of conservatorship, they would demand so much equity in return that it would still crush the existing common to almost nothing anyway. See part A in your quote that requires FnF to issue additional shares or obligations in an equivalent amount.

Your cure is just as bad as the disease!