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My point is that the LP is not connected to the jury verdict at all.
The verdict said the companies violated the implied covenant and have to pay money to the shareholders. Nothing else.
FHFA has a connection to this because it made the decision to sign the NWS, so it was a defendant in the lawsuit.
Treasury has no connection to this at all because Treasury only offered a deal that is bad for the companies and shareholders. It was the companies accepting that offer that violated the implied covenant.
That, in turn, means that the verdict should not in any way affect your expected probability that Treasury converts the seniors to commons.
That probability matters because it is a key component of a future share price estimate for the commons.
And that estimate is the only basis on which to judge whether or not buying, holding, or selling the common at current prices is a good idea. Which is the entire purpose of investing, and of discussions on message boards like these.
One thing to keep in mind is that FnF overpaid the amount of money they drew from Treasury by $110B. That is far, far less than the current liquidation preference of $293B. Why would Treasury deem the seniors "repaid" when they haven't been to the tune of $183B (and counting)?
I already know the counterargument here, that if the NWS had never happened then FnF would have paid off the seniors. But that is incorrect for two reasons:
1) FnF never had the ability to repay the seniors (outside of certain circumstances that, as Lamberth correctly pointed out, have never occurred)
2) Who's to say that even if FnF could have repaid the seniors at any time, they would have used every available penny of net worth to do so? As opposed to, say, actually holding it on the balance sheet in case of another housing downturn?