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"Breach of good faith and fair dealings" in the JPS contract is, precisely, what the FHFA-C's Incidental Power is for ("Take any action..."), and you can't complain about it, as long as it doesn't violate the mandate "put FnF in a sound and solvent conditon", that is, the follow-up: "...authorized by this section", concealed by judge Sweeney in her ruling when she just read "Take any action", but judge Willett (5th Cir.) rebuffed her, stressing: "any action within the enumerated powers" in his half-baked ruling because he didn't specify the powers, which was left to Justice Alito (both synced in), who started out his sentence with "Rehabilitate FnF" (from day one. Not now forgiving the SPS debentures accumulated), knowing that, the FHFA-C's Power, with soundness and solvency in a financial company, it refers to the Capital levels, as per the definitions in the Basel-framework chosen (Basel Committee on Supervision, adopted by the U.S. banks too) and in the FHEFSSA.
It doesn't refer to the Net Worth, otherwise you would see low profile officials handing out SPS LP for free to the government, for every dollar of increase in their quarterly Net Worth, which would raise the eyebrows even in China, which is what is happening.
Therefore, the FHFA can carry out a Separate Account plan in bad faith and unfair dealing, that is, lying about it. But, instead of spotting this Incidental Power and the exceptions to the Restriction on Capital Distributions, that would unveil a Separate Account plan similar to the one already carried out with the FHLBanks in 1989, with a statutory provision entitled SEPARATE ACCOUNT FOR THE REPAYMENT OF PRINCIPAL OF THE OBLIGATION RefCorp, along with the fact that the JPS contract or prospectus shown in the image below (at the BOD's discretion) and the law (Restriction on Capital Distributions) allow the suspension of the dividend payments (for the recapitalization, not on a whim), the Fanniegate scammers rose the flag of a breach of "implied in fact contract", just because they are annoyed with the fact that their dividend is kept by FnF for their recapitalization and that's Common Equity.
A dividend suspension clearing explained by the FHFA in the 2011 Final Rule "for the transparency of the conservatorships",
Where now, it must be added a 25% of the Prescribed Capital Buffer for the resumption of dividend payments, with the Table 8: Payout ratio, enacted in the Capital Rule.
First, they must learn that "Payout ratio" refers to the percentage of the Net Income that can be distributed to the Equity holders as dividend.
BECAUSE DIVIDEND PAYMENTS ARE NOT INTEREST PAYMENTS. And there is no such thing as "Mandatory dividends" or "dividend obligation", as stated by the Wall Street law firm representing the FHFA, but the DOJ is behind moving the threads.
Let's pretend. All fake.
Questions Questions Questons!
Quote:
Short version: I think the juniors will end up with somewhere between 50% and 100% of par (stated) value via a conversion to common. Not converting the juniors makes no sense due to the CET1 capital requirement in the ERCF.
Answer:
I agree with you there. I don't see JPS getting 100%. But I do not understand how and why a write down from 100% due to a conversion when JPS holders have to vote on it and it clearly states in the contract ( non convertible) so either they change the contracts or offer JPS holders a carrot or cream pie or something! I really don't know how the Gov can wingle that one? Do you have any insight on what it might look like or offer JPS holders?
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I think the commons are worth about $8 at the most when FnF are recapped and released, and that's only if Treasury chooses to write down the seniors entirely. If they convert those seniors to commons instead, as Mark Calabria wants them to do and as KBW expects, they will be worth somewhere between $0.25 and $2.00 per share, depending on how FHFA and Treasury structure the transaction. Probably towards the lower end of that range since there is no reason for either FHFA or Treasury to fear any lawsuits and that the situation for FnF common shareholders is far worse than that of AIG common shareholders, who got diluted down to 8%.
Answer:
I agree with you there also. However $0.25 is on the very low end if the greedy Gov does convert everything however more likely between $.70 to $2.25. If they don't convert the warrants then yes maybe just maybe around $8 to $12.
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I expect the commons to rise and fall roughly in line with the juniors until recap/release time so I wouldn't short them, at least not for more than very short periods as an attempt at statistical arbitrage, but I avoid them entirely.
Answer:
It sure is going to be a rough ride ! Buckle up cup cake and hang on!!
Moelis made a useless plan to end C-ship, benefiting the government.
It did not gain any traction, but they must know what it is going on.
So, for them to upgrade maybe something is going to happen.
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