Replies to post #768398 on Fannie Mae-No Politics (FNMA)

[LuLeVan]

"They are completely different circumstances."

I don't think so - at least not politically. Both, AIG and FnF, were sacrificed for the welfare or the TBTF banks.

[kthomp19]

There aren't any. They are completely different circumstances. The comparisons are moot.

They are not at all completely different situations. There are plenty of comparisons.

1) Treasury owned preferred shares in AIG with a 10% cash dividend rate.
2) AIG couldn't recapitalize until Treasury restructured its equity stake.
3) Treasury took actions to maintain or increase the value of their equity stake.
4) AIG wasn't allowed to pay down Treasury's preferred stock until Treasury allowed it.

All of those are also true of FnF. And most of the differences between the situations are worse for FnF, and thus worse for FnF's shareholders, which reinforces my point.

Of course the two situations are not identical in all aspects, but the argument that the existence of any differences at all implies that no comparisons can be drawn whatsoever is logically bankrupt.

You're focusing on the wrong things anyway. The relevant points of comparison are those regarding Treasury's exit from its AIG equity stake, not its entry.