Replies to post #774157 on Fannie Mae-No Politics (FNMA)

[LuLeVan]

2. If so - how do you reconcile what Calabria said vs what DJT stated in his Letter to Senator Rand Paul?

Trump wrote in this letter that he would have released the GSE from conservatorship and sold the government's investment at a large profit for taxpayers. He did not say how these large profits would be generated. What is certain is that there would have to be at least a warrant exercise to accomplish this, otherwise the government would not earn anything from recap/release. But Trump could also convert the SPS into common stock, which would increase the "profit for the taxpayers" by another 20%. He didn't give details. So I see no contradiction to what I posted - and to what Calabria wrote (SPS write-off being "illegal").

[LuLeVan]

5. It is your opinion that ... Mr. Market is rational when it comes to the JPS but Mr. Market is wildly irrational when it comes to the current price of Common?

No. I think Mr. Market is wrong about both the JPS and the commons. Commons are still too expensive even at current prices due to the high dilution risk, while the JPS are priced irrationally low given the fact that they will reach near par value once the GSEs are released.