That's 100% correct and MC is on record stating the GSEs will be responsible to raise their own capital to meet the new capital rule after release from Conservatorship under consent decree. Right now the GSEs are retaining capital toward that goal. This next month we'll get the new capital rule proposal. MC hired Houlihan lokey to help advise FHFA on the capital rule proposal. ACG thinks it will be lower than the numbers previously tossed around because that's what Houlihan Lokey will advise. Milbank will advise FnF on a plan to meet the capital rule overtime under consent decree post conservatorship. All of the above know there will be no successful secondary IPO or new preferred issues with the SPS and warrants in place and since they're already overpaid they will be extinguished with the stroke of a pen once the plans are solidified. The only reason this hasn't already happened is they serve to keep the GSEs in conservatorship until they're done reforming them. All of this is set to happen without the courts. So at any point post conservatorship under consent decree we may see courts awarding the GSEs enough to meet the new capital rule voiding necessity to execute a capital raise. The proposed Capital rule and SCOTUS CFPB decision coming May 2020 is going to pave the path ahead with yellow bricks for GSEs. :-)
No way JPS are getting cancelled because any such move would impair capital needed for release from C-ship. That also is a reason why no conversion from JPS to common shares makes any sense at all... any such move makes an IPO for commons more diluted and, thus, less desirable than just keeping JPS alive but dividendless until the recap process concludes in a few years.
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