Replies to post #778012 on Fannie Mae-No Politics (FNMA)

[Stern is Bald]

You 2 dip-craps arguing?

[bradford86]

You assume they just ignore the face value and the liq pref of their spspa.

I dont make that assumption. That is the difference

[kthomp19]

They can be diluted, but I do not believe they can be wiped out after continuing to trade the last 15 years during conservatorship.

I agree, though I think you are greatly underestimating just how much they can be diluted. Treasury ended up owning 92% of AIG commons, and if there ends up being a junior-to-common conversion too then FnF legacy commons wouldn't even own all of the 8% that remains.

Speaking towards dilution in my mind the worst case scenario is warrants getting exercised and in a deal to keep future C-suite from suing the government for illegal taking

This makes no sense to me at all.

1) Takings are by definition legal.
2) Why on earth would the C-suite sue the government over warrant exercise? It doesn't hurt the companies at all.
3) The C-suite members were handpicked by FHFA. I don't think they would want to bite the hand that fed them.

As we all know there is a lot of intricacy with how the money was moved and if part is found to be illegal it all becomes null and void at which point all money taken from NWS would then have to be returned which would be a disaster for treasury/FHFA.

Please, please don't tell me you got this idea from ano. If you haven't done so yet, do yourself a favor and block him so that you don't have to read any of his nonsense anymore.

The part of your quote I bolded is 100% wrong. Section 6.12 of the SPSPAs reads (emphasis added):

6.12. Non-Severability. Each of the provisions of this Agreement is integrated with and integral to the whole and shall not be
severable from the remainder of the Agreement. In the event that any provision of this Agreement, the Senior Preferred Stock or the
Warrant is determined to be illegal or unenforceable, then Purchaser may, in its sole discretion, by written notice to Conservator and
Seller, declare this Agreement null and void, whereupon all transfers hereunder (including the issuance of the Senior Preferred Stock
and the Warrant and any funding of the Commitment) shall be rescinded and unwound and all obligations of the parties (other than to
effectuate such rescission and unwind) shall immediately and automatically terminate.

The part I bolded says that Treasury may unwind the SPSPAs if any part is found to be illegal or unenforceable, but the unwinding is not at all automatic like you said.