Re: Fannie/Freddie-Why I Think A Restructuring Path Is More Likely. Mkt seems to be pricing in a multi-year retain/recap scenario. Why I think that won't be the preferred path by Mnuchin/FAs is that that path seems fraught with risks: economic downturns, hostile Admins, etc.

The argument that they can take their sweet time flies in the face of Calabria's view (shared by me) that the time to raise capital is when the sun is shining, and given how late we are into the economic cycle, who knows when the next cyclical downturn will be?

To me, they need to raise a lot of capital fast, and the surest way to do that is to follow a restructuring path that clears the decks and incentivizes a big anchor. The multi-year recap exposes half-baked companies to a severe downturn and possible return to conservatorship.

Finally, there is not one stakeholder besides legacy common that benefits from a slow path of retain/recap. And to me that path is fraught with minefields. And by "stakeholder," I include not just the cap stack but all the players involved including Mnuchin/FHFA/JPM/MS.

But the most important stakeholder in all this is he who writes the biggest new money check.

My view is that IF Mnuchin/Calabria want to bake an omelette that's tough to unscramble, the surefire way to do it is via a restructuring process followed by a blitzkrieg raise. Retain/recap would be easy to reverse imho.