The "guarantee" of JPS conversion is nonsensical bullshit. The conversion only accomplishes two things. It eliminates the coupon future dividend drag on earnings when/if eventually declared. And it increases CET1 capital by approximately $33 B (combined) but does not increase Tier 1 capital by even a dime. The rulemaking comments already signal a fight on both the amount of and type of capital proposed in the Capital Rule put forth by Calabria.
So let's just lay the truth out on the table on the motive behing the Moelis conversion scam. Any conversion requires consent by a super-majority of JPS holders. They will want a conversion at or as close to par value as possible. Then the conversion would be priced, historically for such equity swaps, on a trailing 30 day common share prive average basis. So the simple math is that the trailing average, at present, would be about $2. So to convert $33 B in JPS (at par) into common, the deal would require about 16.5 B common shares. There are only 1.8 B total FnF shares in the float, now. So JPS holders would net about 90% equity ownership of the GSEs, leaving existing shareholders with less than 10%.
Talk about a wrest of control.
Nice try, but this is NEVER gonna fly. JPS needs to stop trying to steal the company as it approaches the brink of restored value once conservatorship ends. The combined total of a released/recapitalized/relisted FnF is somewhere between 5X and 10X multiples of $33 B in JPS par.
We have gone through nearly 13 years of government stealing everything from shareholders. It is unacceptable to contemplate some new SCAM where JPS follow the government theft with a continued 90% stealing of everything belonging to the emaciated common masses, going forward.
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