Replies to post #853808 on Fannie Mae-No Politics (FNMA)

[juicyjuice10002]

Thanks for clear explanation why we have no choice but to accept the Ackman deal. It is a good deal for those who took the risk and bought at low prices and waited for years. The old shareholders unfortunately were cheated. I doubt if they had enough funds to buy more at lower prices and wait for 18 years. There should be no congressional opposition to the deal offered by Ackman as it is more like surrendering against corrupt US government. Democrats will love the deal, but it will affect the investment in USA stocks in long run. Trump should be happy with taking 51% in warrants and take it fast while the shareholders are in mood of giving during this holiday season.

[Rodney5]

Based on the terms of the Senior Preferred Stock Purchase Agreements (PSPAs) as originally and subsequently written, the senior preferred stock is considered non-convertible preferred stock. Therefore, the U.S. Treasury cannot unilaterally convert it into common stock based on the existing contract. The PSPAs do not include a specific clause for such a conversion.

Here's a deeper look at why this is the case and how it relates to conservatorship exit strategies:

Non-Convertible by Contract: The SPS was designed as a non-convertible security to provide the GSEs with financial support during the 2008 crisis. It is a debt-like instrument that provides priority for dividend payments and claims in the event of liquidation, but offers no pathway to become common equity under its original terms.

If and when the warrants are exercised all or in part this is considered a new injury and the clock starts ticking again on Statute of Limitations.