Mr. @bcde, I take a moment at the 2/3 point through my journey through "The Greatest Day of Racing." (Don't worry, fellow motor racing fans, I won't leak any spoilers in case you have DVRed Monaco, Indy and/or the World 600, or whatever sponsor bought from NASCAR the rights to name the Monster Energy NASCAR Cup 600 mile race at Charlotte this year.)
So I think I see now why we are not having a meeting of the minds here. You are discussing "equity" in the context of ownership rights and control of the companies, while I mean "equity" in terms of accepted accounting definitions. I believe this also means we are coming from different "millieu" (pardon my French :-)) with regards to "right and wrong" per se. (Egad, now I have even used Latin!)
In many, (most, I believe,) cases, preferred shares really are what you seem to want the FnF seniors to be, a purely financial instrument that grants the holder rights to a periodic dividend as a percentage of the liquidation preference, and in the case of the FnF senior preferred shares, liquidation PRECEDENCE. I.e., give me your money and I will share with you my profits commensurate to the amount which you invested. That is, to my mind, in general, a good thing upon which people should be able to agree, if they are honest with each other and obey the laws of the land, etc. (Bear with me for a moment, please.)
Unfortunately, the FnF seniors come along with the nefarious (IMO) "Senior Preferred Share Purchase Agreement." (I am quite sure I am saying things you already know, @bcde; this is more for those bystanders who might be new to this whole bizarre, nearly criminal [or based on how some clearly feel, literally criminal,] hi-jack of two Fortune 50 companies which provide the lion's share of the crucial, critical, life-impacting service of mortgage market liquidity, perpetrated by the GOVERNMENT OF THE UNITED STATES OF AMERICA.) (Yikes, I know it is best to avoid nesting parentheticals but, eff me over and over until I squeal like a pig, THAT is the scumbaggery that agents of the US gov have perpetrated here.)
[Rhetorical] When was the last time you went to buy some stock in a company and they said, okay, but, just a sec, I need you to agree to some other terms here... (In real life, maybe in a private placement for some startup company, okay, I could reasonably see some kind of Non-Disclosure Agreement, maybe I will agree to hold onto the shares for at least X amount of time, that could be fair as long as everybody were being honest with one another.)
But along with the purchase of the FnF Senior Preferred Shares came the Senior Preferred Share Purchase Agreements. Said agreements added some terms beyond the share certificates, (mentioned earlier,) way beyond what a "normal" company would add to their prospectus(es) [or is it prosecti?] and certificate(s) for "normal" preferred shares in a "normal" company. (Hah, how many times I just had to put "quotes" on "normal" shows just how "effed up" this whole "situation" "is.")
Let's see, you know what, we'll only invest if you promise you'll never try to pay us back. And, um, oh, if you try to find anybody else to invest in your company, you gotta give us every dollar they give you. And, let's see, oh, yeah, these "conservator" guys that are running your company, well, we like it that way, so we get to say whether you ever get out out from under their thumbs. That is surreally bad enough as it is, but then a few years later: Oh, sheez, this is silly embarassing, but, um, well, we forgot to tell ya this, but, um, you have to give us every single dime you earn.
Again, I want to reiterate that I am not talking about right or wrong in a moral sense, or what is right or wrong from a shareholder perspective, or whether the investment makes them "owners" with "owners rights" in the companies, but what is legally defined as equity in terms of GAAP makes the Seniors hold the majority of "financial equity" in FnF.
The purchase of the Seniors, (as opposed to a loan,) infused FnF with assets that did not have to be offset by liabilities, (as opposed to a loan,) which increased their respective net worths to positive. (I admit I am reaching a bit to recall whether it was $6B each at the beginning in 2012 before decreasing each year and eventually down to zero before Mr. Watt [are you kidding me?!?] pumped them back up to $3 billion each. But I am in no mood to look that up at the moment because it is mere detail in this discussion. And because I admit to having a couple or four or five Voodoo Ranger Imperial IPAs to toast, on this solemn weekend, those who have gone before in defense of our rights to argue over whether the politicians have screwed us over.)
Anyway, @bcde, I think we were arguing over different things, which differences in the grand seem are essentially irrelevant, so I wish you, and all, an enjoyable long weekend.
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