Replies to post #784533 on Fannie Mae-No Politics (FNMA)

[NeoSunTzu]

The Fed still has $2.4 T in agency MBS on their books. I hate to say it but I don’t think we’re going anywhere no matter what the talking heads in dc say until the Fed has a plan for that. How Treasury treats this and when will largely be decided by what the Fed dictates behind the scenes.

[blownaccount9]

Sad part is the deal wouldn’t even have to be “awesome” for JPS shareholders just better than whatever is coming for commons. People expecting 100x or greater gains are likely to be disappointed. Expecting a nice 10-20x is easily achievable and leaves plenty of room for excitement later on.

[kthomp19]

However, the SPS/LP could be used to wipe everything and neither common nor JPS get squat.

No, that isn't possible. The juniors have contractual rights with the companies that cannot be bypassed. I have been through this argument before, albeit not with you.

I think this is mostly a political decision since the Treasury is not in the business of profiteering.

It certainly will be a political decision, but a senior-to-common conversion would be much more about Treasury realizing value from assets they value at $220B (the seniors) instead of throwing them in the trash can rather than profiteering.

The shareholder theft is optional not mandatory.

There are plenty of other things along the way that have been optional and not mandatory.

1) 10% dividend rate when big banks got 5%
2) Non-repayability of the seniors
3) The NWS
4) The LP ratchets in the last two letter agreements

Once is happenstance. Twice is a coincidence. Three times is enemy action.

Could Treasury change its stripes? I suppose it's possible. But I can't put a probability of more than 25% on that given all the evidence.