Not quite sure what he means about the NWS being left intact in the second part. If you award shareholders compensation but keep the NWS, you might as well cancel all shares and liquidate the preferreds, because they'll be worthless with NWS intact. The other option is paying down Treasury's liquidation on senior preferreds and letting the companies recapitalize. This eliminates the NWS by eliminating the dividend-paying senior preferreds.
Of the two scenarios, shareholders might as well take their money and run, because the government can still execute their warrants for 80% of common shares.