Replies to post #12722 on Fannie Mae Preferred S (FNMAS)

[5bagger]

Jr preferreds (white knights) got jr. pfd. and money to sue govt. Not worth trouble to un-do the c-ship for the common.

Plan strips away the jr. pfd. level to NewCo and leaves the common with EVERYBODY'S X-out scenario (wind-down, sell-off, run-off).

Issues that I see:
1, Biforcation of bonds - not so easy to startup

2. Common has no voice, so the FHFA 'voice' speaking for them will NEED to give them *some* value. Will they be happy? Who knows, but they better end up with something. More headaches and lawsuits.

3. CSS may not be ready for a while. End-game for jr. pfds. may also be a year away.... don't spend the profits, yet. No dancing.

4. Congress / FHFA / Obama / Press may scoff (some are already) at HF trying to make some coin.

I DO believe this places the honus on FHFA / TSY / Congress to create $34B in value for the jr. pfd.

I ALSO believe, as the proposal states, that there IS considerable value in the run-off. Recall jr. pfd. seem to be leaving the $9B capital behind for 80-20 split by govt. and common. Also, lawsuits would accrue (25 to 40B may be coming).

They state that it does need to go back to 10% dividend for the plan to work.

Whether it 'takes' or not, both the $34B is a baseline and return to 10% are good negotiating points for quietly calling off the dogs in court cases.

Go Bruce & Fairholme!

[stockanalyze]

12000 employees have common stock options. you think they will agree to say goodbye to value of commons? berkowitz has lost his brain. the employees holding common stock was the reason i piled up on some. the companies are tightly controlled by fhfa, tresaury and the companies themsleves, let's not forget and berkowitz is despised in dc.