Replies to post #837736 on Fannie Mae-No Politics (FNMA)

[bradford86]

In my opinion; maximizing value is the same as maximizing percent ownership post restructuring. No hallucinations there. That said; commons have been mistreated as the government usurped the spirit of the law when arranging the nws. There is a coin flip of a chance that Trump leads a spspa writedown to undo the scam transaction, Bill Ackman style— but I am not gambling on it and wish good luck to those that do

[DaJester]

I fully expect this to be true:

The gov maximizing its value may not look a thing like you expect.

Various people will be partially correct in how this is resolved, but I think there will be some surprises that nobody is predicting. Could it be the SWF? Maybe. Could it be a spinoff of Fintech? Maybe. Could there be a writedown? Maybe. Could there be warrants exercised? Maybe. Could there be SPS cramdown? Maybe. Could nothing happen until 2028? Maybe.

What if... Treasury takes a partial stake - either through SPS or Warrants, to own 51% (arbitrary number, use whatever you like). Then there is a spin-off of Fintech, which Treasury now owns 51% of due to common ownership. Fintech gets put into the SWF. Treasury then sells any remaining warrants back to the GSEs for a nominal cost. GSEs can issue those shares to cover any small remaining gap in the capital requirements. Treasury sells off it's 51% stake in the GSEs over the next 10 years at a huge profit, or puts them into the SWF for future dividends and the implicit guarantee.

There are several ways Treasury can make more money over 10 years than wiping out commons from an SPS cram-down. Of course, "maximizing profit" is not a mission of Treasury to begin with. We are just projecting our expected values on them.