What's the difference in "market spook factor" between 2 companies with $5 T in loan assets being in receiver ship vs. sitting with only $6 B in capital? I can tell you... NOT VERY MUCH.
The rumor this weekend was that Calabria would be chosen to head FHFA, would strike a deal to settle with JPS shareholders and await a recession where the GSEs could be wound down over a 5 year period and zero out common shareholders because they dared resist the "generosity" of the Moelis Plan.
A wind own plan that transferred the MBS process to other major financial houses with proper capitalization levels in place, especially if spread among a number of them, would be greeted with great enthusiasm both in markets and on Capital Hill where the risk to taxpayers of having to fund another bailout would become largely non-problematic.
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