Does not imply a loan but just the mechanics of one. Same thing as the net worth sweep cumulative dividend preference. Technically it is a loan because the principal still has to be paid back and the dividends are just payments for the loan.
They had already thought of a graduated release based on capital mile markers being raised.
Convert to what?
Likely common but it doesn't matter too much right now.
The conversion builds regulatory capital, but Treasury doesn't get any money from it until FnF are recapped/released so that the converted shares actually have value to outside investors.
That is not correct. They can sell their stake just like they did in graduated phases with the banks that they held a stake in.
I can see why Treasury would unwind its converted stake slowly (most likely so as not to depress market prices with a fire sale), but I don't see why the conversion would be anything other than all at once.
1. It would be the largest sale in the history of capital markets 2. It ain't gonna happen all at once.
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