If Recap & Release is going forward, outside of Lamberth, which is a long-shot, JPS don't have much of a legal leg to stand on. Not to mention direct claims that would've provided a windfall to JPS plaintiffs have all but been dismissed. Legacy JPS can be bought out at, say, 80% par via the return of the excess overpayment plus the warrants would be cancelled due to return of the $35 billion overpayment.
JPS get their 80%, which is over a 100% return from where they are today.
The unwavering fact that is apparently brushed aside over and over again by JPS is that FnF received $180 billion from Treasury and Treasury, in return, received over $300 billion from FnF, equating to a net profit to Treasury of over $120 billion. This is stated fact in the 5th circuit and the Court of Claims. It will certainly persist at SCOTUS.
Even if the 10% mob-like funding were to hold up in Sweeney or SCOTUS, if the cases get that far, there is still a $35 billion overpayment that needs to be returned to FnF. That $35 billion can be used to pay off JPS at 80% par (their haircut) and the warrants are considered null and void, or repurchased with the remaining delta - $5 to $10 billion. Not to mention the Sr Preferreds are cancelled as the 10% dividend payments never applied to the principal (you can't make this stuff up), and they need to be cancelled so further capital can be raised to meet the soon to be amended down cap-rule.
All negotiations must start from the $180 billion "loan" to $300+ billion "repayment" netting $120 billion in profits to treasury. That is an indisputable fact, although I'm positive some will continue to try and dispute this fact.
Whether you deem 10% dividend payments in the SPSA as reasonable when all other TBTF banks received a 5% dividend agreement is actually besides the point. The major JPS hedgefund players bought the safety of preferred shares when receivership was a legitimate possibility. They bought JPS for true single digit pennies on the dollar.
They will get their 80% par via a payment and commons will be allowed to trade at a reasonable value without the government overhang. Then MS and JPM can raise capital via a re-IPO, which will create dilution but not remotely to the extent some want common shareholders and prospective common shareholders to believe.
Even at 1 billion shares, adding another 3 to 4 billion shares still provides for a legitimate PE multiple stated by the recent CBO report at an average of 15. Fannie making 10 to 15 billion a year with 5 billion outstanding still provides for a solid appreciation.
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