The liquidation pref going to 0 makes the outcome unchangeable. Politicians can regulate and curb excess but government interference is all but over until congress acts, which is doubtful.
The key point related to the “amendment” is it, at its core, is contradictory to itself in that it is impossible to raise capital without exiting conservatorship. There can only be one reason for that, and it is to demonstrate to Scotus, even with the NWS de facto cancelled per the prospective remedy endorsed by the fifth circuit, that the PSPA will keep the GSEs in conservatorship indefinitely, at least for decades as the FHFA stated.
Scotus IMO is almost forced to rule that not allowing the NWS to have paid down the liquidation preference is not “good faith” dealings, and will need to grant Collins’ request on remedy = liquidation pref down to 0.
IMO, there is no other logical conclusion. The contract is so onerous that it is laughable and shows the huge contrast in how the PSPA would’ve been paid down and what happens if it basically never can be.
The government before Scotus is not challenging the fact, as they did in lower courts, that the gov loaned $180 billion to the GSEs and received over $300 billion in return to net a profit of $124 billion = %70 profit for the government. The gov is only challenging the right to even challenge the NWS by Collins.
All Collins is asking for is the liquidation preference be deemed paid. Collins isn’t even asking for the $124 billion be repaid, but as stated in oral arguments, Collins isn’t opposed to having a significant portion, or all, of the $124 billion repaid. As stated during oral arguments, the real request by Collins is as simple as an accounting adjustment and comes at no expense from the gov given the gov made $124 billion.
I’ll post later on why I think the gov can’t write off the liquidation pref given the DOJ could sue on behalf of taxpayers ...
