Someone please kindly correct me if I'm wrong on any of the following things I mention below. :)
So a government bails out a company by providing it $187 Billion Dollars.
-In return the company issues the government senior preferred stock and warrants(79.9%) as collateral.
-Four years after agreeing to this deal, this government amends the terms so that it can take all of this company's profits.
-In addition to taking all of this company's profits, the government as part of this amended deal, takes all of the settlement money this company received from banks who committed fraud against it.
-This company has paid nearly $100 billion dollars extra back to this government on top of the loan they originally received.
As some of you can tell, there is many details I neglected to mention. I was being very generous in the above.
Knowing all of that however, why the heck would someone like Berkowitz or Ackman or even Paulson be so stupid enough to go with the moelis proposal which would:
1.) Not have the government pay back a single penny.
2.) Have additional capital raises and dilute the shares of common even more.
3.) Have the government exercise the warrants further giving profits to themselves while diluting the common shareholders even more.
4.) Not eliminating the senior preferred?
Lastly why in the world would berkowitz of fairholme come out with a statement saying their confident the government would settle and the case won't have to goto the Supreme Court if the above was the "blueprint"? If that's the blueprint why not take it to the Supreme Court?
Nobody in their right mind, neither commons nor preferred would ever settle for that plan. It makes absolutely no sense whatsoever.
If the preferred hedge funds plan is to make the maximum profit possible they sure as heck wouldn't go for that plan.
