FHFA considers the existing FnF Equity holder a captive.
The expulsion of the unwanted shareholders is a longstanding goal by the FHFA with regard to the FHLBanks, enacted in a 2016 Final Rule, but it was an idea first floated in 2010 and the Proposed Rule came out in 2014.
The FHFA called those shareholders unrelated to housing finance "captives".
It gives the FHLBanks a grace period of 5 years to expel any captive from the membership ("Wind down the business with them". It could have kick-started the politicians' and officials' wind-down rhetoric with FnF, meaning the expulsion of the retail investor from the ownership of FnF and from the "other ownership interest" in the case of the JPS holders, with psychological warfare, including the utilization of the U.S. courts and social media)
It would explain why it was postponed through 2016.
2021 is when FnF became Adequately Capitalized under the Separate Account plan, as explained in the comment that I'm replying to.
But they realized that the existing Equity holder kept captive, bothers (unless you are a Community Bank holding JPSs: one-third of them owned JPSs in 2008), as the UST can't exercise its Warrant as scheme for the assault on the FnF ownership by the Industry, as first thought by FHFA and GS's Paulson (covenant 2.1. The shares after exercising the Warrant at $0.00001ps, can be assigned to any Person: BKT, GS, MS, JPM, FHLBanks, etc)
Then, the Supreme Court was activated, in yet another attempt to legalize all the illegal actions and as a way to get rid of the captives paying nothing. It didn't work either.
But we have reached the milestone that corresponds to a recapitalization of FnF to perfection. Under the Separate Account plan, the JPS could be redeemed at their fair value of par value, and FnF remain Adequately Capitalized afterwards.
This recapitalization needs all the capital generated during conservatorship. So, to the Separate Account plan, we have to add the sum from the PLMBS lawsuit settlement, a case brought by the FHFA as conservator on behalf of FnF, net of attorney fees and a refund of the CRT expenses, net (barred in the Credit Enhancement clause. Likely a backdoor Commitment Fee, barred too in the PROHIBITION clause)
The way to get rid of the common shareholders, is to buy the Cs out at their adjusted fair value, that, in the case of a Takings, it's the Common Equity or Book Value.
Adjusted BVPS as of end of June, 2023:
$FNMA = $108
$FMCC = $159
"We can't blame them for trying", you may say.
The reality is that both counterparties in the Fanniegate scandal: the DOJ-peddlers of the government theft story, will have to pay us the same penalty: $4.8B each, for Punitive damages and an all-in settlement of the 9 Securities Law violations during conservatorship (SPS increased instead of issued, to evade the 2009 deadline on purchases; Financial Statement fraud; flawed accounting standard with the Deferred Income, etc), one of them is stock price manipulation, which is what the government theft story was all about.
A voluntary payment in the case of the DOJ, that is compelled to advance the payments of its counterparty and then, figure out how it'll be broken down among the plotters.
