Thursday, July 22, 2021 10:27:13 AM
Correct.
Not really. The Supreme Court used the fact that the 4th amendment stopped the NWS to deny prospective relief.
By doing so, however, they did give their implicit blessing to the "above full capitalization NWS" in the 4th amendment. That means that common shareholders are essentially guaranteed to never receive a special dividend in the future.
You have hit on a very important point here. It is very possible for the companies to gain from winning a derivative suit while existing shareholders lose due to subsequent dilution.
The lowest core capital standard allowed by HERA is 2.5% of balance sheet assets. By contrast, Calabria's rule called for core capital of adjusted total assets (historically around 4% higher than balance sheet assets). Right now that's roughly $180B. Meanwhile, core capital stands at -$144B, for a deficit of $324B.
Treasury returning $125B only closes that gap by just more than 1/3. FnF would still need to raise $200B, providing the dilution I talked about above. Once thing the Collins ruling essentially guaranteed is that the seniors will be converted rather than cancelled; Treasury has no reason to give up the seniors for nothing and isn't allowed to do so anyway.
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