There are many scenarios that support my view, But let's just stick with the obvious one. Let's assume that some litigation bombshell emerges from the courtroom murk, and either the Delaware Hindes crap or the appeal of Judge Lamberth's decision prevails and the government senses a big money showdown to its detriment.
If you are the Feds, you have two choices, simply put. Pay out the WAZOO for a bunch of nonsense that enriches Wall Street pigs and does absolutely nothing for affordable housing initiatives... or... you exercise the Congressional rights authorized under The Housing & Economic Recovery Act passed by Congress and decide to close down the GSEs, once and for all.
Paybacks can be hell.
Junior and Senior Preferred Shares enjoy hierarchical rank in such a scenario compared to common shareholders who likely get ZIPPO. So, IMO, if Ackman wins in court, Ackman is the eventual biggest loser. Perry and Berkowitz outsmarted Wild Bill and Carl Icantwin with PFD holdings and head-of-the-line priority at the feeding station at the corner of Wall & Chambers Streets.
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