"that the Treasury can generate an estimated $100 billion in additional cash profits by monetizing its warrants for 79.9% of each company’s
common stock;"
Brad, Thanks,
Making 100s of billions from warrants has been suggested by many pref-holders for some time. So it may not be from Moelis.
RNC resolution suggests that Gov can benefit from warrants, in addition to $80B (even though number should have been $136 on original investment of $140B)) on its $187.5B SPS investment.
But in reality only simple, viable and practical solution is to revoke NWS retroactively and let FnF buyback warrants at Gov set standards that were used for wall street banks.
Any other plans involving conversion of warrants in to stocks and selling in markets and then also raising fresh capital from markets create lots of risks and uncertainties. Besides the FHFA conservatorship's accounting embezzlement to impose SPS itself makes warrants legally questionable. So the common stocks issued in place of warrants also carry the same legality question.
Moeli Plans's major flaws are:
1. accounting embezzlement to justify conversion of Jr-pref in commons while FnF are currently well capitalized except for the burden of NWS. There are no viable exit-plans without revoking NWS retroactively.
2. Conversion of warrants and Jr.Pref in to commons and then raising 100s of billions from markets is unworkable, creates more risks and uncertainties. This may cause another major crisis.
3. The current court litigations are likely to continue and will adversely affect raising fresh capital from markets. In fact Moeli plan will create more legal challenges that will make raising fresh capital almost impossible.
4. FHFA conservatorship through its lawlessness has destroyed investor's trust in Gov. Unless all lawless decisions are reversed investors will not trust any plans and invest.
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