This is why a tender offer for existing common shares @$10.00, or thereabouts, clears the decks for a subsequent and "clean" IPO for core recap. The offer if made as a share "retirement" deal would be within FHFA authority as conservator seeking a pathway for recap and release.
Such an offer would probably have to be made alongside the IPO to preserve the companies' status as shareholder-owned companies.
Where do you get $10, though? Why not $20, or $4, or $100?
Maybe one of you accountancy experts could clarify if buyback shares returned to Treasury stock are still eligible as core capital. Anyone?
FnF do count treasury stock as core capital; their core capital calculations in the 10-K forms include all equity other than the senior prefs and AOCI. I'm not sure why it counts, perhaps they classify it as additional paid-in capital.
What I have yet to figure out is exactly how to account for a common stock buyback. All I have found so far is that you reduce cash and reduce treasury stock, but that would make treasury stock go (more) negative, reducing core capital. It makes sense; redeeming the existing junior prefs would also reduce core capital. If this is correct, a common stock buyback won't happen for the same reason a redemption of the juniors won't: it reduces core capital at a time that it needs to be built. Far better to just leave the shares as they are.