Fannie Mae-No Politics (FNMA)

[kthomp19]

All they have to do is propose it and agree to it on behalf of all the jps shareholders... and there is nothing anyone can do about it....

You say this as if it's fact, but it's really just wishful thinking on your part.

1) This would reduce FnF's capital (of all forms: core, Tier 1, CET1) by $33B. That puts them even farther away from exiting conservatorship and serves no real purpose. FnF would be far better off just leaving the juniors alone.
2) This would be a direct breach of contract, which would entitle junior pref shareholders to a total of $33B in cash if they win (reducing FnF's capital by yet another $33B for a total of $66B). That's a much stronger claim than the breach of implied covenant of good faith and fair dealing that is currently awaiting a re-trial in the DC district court.
3) This would effectively repudiate the juniors' contracts, and FHFA's authority to repudiate contracts in 12 USC 4617(d)(1) only extends to "a reasonable period following such appointment [as conservator]" in (2), to which 14+ years certainly doesn't apply.

Face it: if FHFA crushing the juniors was truly possible it would have been done a long time ago. Treasury would have included it as a possibility in their 2019 Housing Reform Plan, Don Layton wouldn't have talked about how he and his team tried and repeatedly failed to find ways to bypass the juniors' claims, etc.

The only way to do what you suggest to the juniors is running FnF through receivership. The CBO said exactly that on page 13 of its August 2020 report:

it recognizes that changing the GSEs’ commitments to junior preferred shareholders would be difficult outside a receivership scenario

And on page 14:

If, however, the Treasury wanted to raise capital through the sale of new common shares without resorting to receivership for the GSEs, the claims of junior preferred shareholders would have to be addressed.