When you pay back more than you borrow and the government confiscates either 100% or 80%, what’s the difference and where do you draw the line? What exactly is the point of even trying to draw a line when two federally appointed government agencies can create and change agreements amongst themselves that expropriate any and all of your assets without just compensation?

What happens if the third amendment is repealed and then Fannie Mae and Freddie Mac go into receivership?

Would the warrants be exercisable? I would suppose not.

In this event, what are the common shares worth?

Well, according to the White House Budget analysts, Fannie Mae and Freddie Mac could return $191.2B in the next 10 years alone, the question is, “To whom?”

Well, suppose they reverse the third and put the companies into receivership thereby cancelling the warrants. If you assume that the government takes the first $50B and the junior preferreds take the next $35B, that leaves $106.2B left for common shareholders and at 1.81B shares outstanding that is $58.62 of value per share that will eventually be distributed in cash to Fannie Mae and Freddie Mac shareholders. That’s a lot better than what Bill Ackman is forecasting.

When you pay back more than you borrow, how much is in it for you? Thousands of years ago, this is how you bought your way out of slavery. When you don’t own your own time, you are a slave, in case you didn’t know. How can you own your own time when you think you own things that you spend it on, but the government can arbitrarily and capriciously say differently?

Is it any surprise that the government took the most profitable company in the world, out of all of them? Fannie Mae made $84B in 2013.

Is it any surprise that the government is fighting tooth and nail to try to keep this from becoming mainstream knowledge?

Either Fannie Mae and Freddie Mac are solvent and can be released from conservatorship or I demand a receivership. So far, a receivership would have been far better for shareholders than a conservatorship where the government takes 100% of everything forever, leapfrogging any bankruptcy solvency laws. Apparently the best I can hope for according to premier hedge fund managers who beat everyone else last year is 20% on the dollar for my company back.

Give me liberty or give me death. There are those of us who will see each other to one or the other. In the meanwhile what I am asking for is the birth of Fannie and Freddie out of conservatorship, by either cancelling the entire SPSPA post-court order or a fourth amendment where you get to steal at least some of my money, right now you’re handing yourself a nice in excess of 5% annualized return, which is more than you would have made on anything of comparable risk characteristics. You might say that is out of character or out of line and I simply point you to what time has shown and confirm that you should take a peek at delinquency rates.

There is no reason to set an 80% or 100% markdown precedent for government run and funded conservatorships. Seeing no reason, ’tis the season.

By admin