Replies to post #785184 on Fannie Mae-No Politics (FNMA)

[blownaccount9]

I disagree with your last point that we are in worse shape. Far from it. We didn’t get taken over because our business was insolvent and have to sell off half our assets to pay government and be refocused into something smaller. They didn’t even have the $$ to pay the government. GSEs paid $300b. I think the expectation should be comparable government profit for comparable investment. If that was agreed upon then the simple $300b paid should make the GSEs free and clear. As it is, I am inpatient and I would even accept the warrant exercise to get them out and immediately push my accounts into the 7 figures. GSEs business hasn’t changed because there is no alternative. They didn’t downsize and in fact have gotten bigger. There is plenty of fat to trim once they stop paying the credit risk swap and cut down the insane expenses of FHFA lawyers and staff.

I agree we all need to recognize the full range of release possibilities and assign probabilities of each event happening but id say changes of senior prefs + warrants destroying commons is incredibly low <5% chance. The more I dig into outcomes from other businesses that took government money at the time and the more I look into what past leadership said about their tenure and their plans the more I think there is a greater than 80% chance of SPSA write down and exercise of warrants to send them back free and clear. Small chance <5%that they manage to get seniors written down and then manage to buy warrants from government at fair market value based on historical trading value. At which point shares are $100 easy. 10% they do something else which would most likely screw all investors over.


Regardless of what happens and our opinions I appreciate your well thought out posts and the research you do along the way.

[DaJester]

"Treasury actually did fear lawsuits by shareholders, and that led them to "only" take a 92% stake in the conversion of their preferred shares to commons."

So it's feasible for Treasury to fear lawsuits in the AIG takeover, but not FnF? Got it. Just trying to keep up with your nonsense.

The next thing I expect is for you to tell me that the AIG situation is different than the FnF situation so it doesn't apply. Go ahead and cherry pick to fit your narrative. I'll wait.