Thinking for a moment about the scenario where SPS could be converted to non-cumulative senior preferred ranking above JPS ... I see that as an unlikely outcome (without resolving JPS) because:
1. Legally, it wouldn't moot anything and may trigger new challenges
2. It's difficult to see a new investor buying non-cumulative SPS at a reasonable yield with JPS lawsuits outstanding and without resolution to the conservatorship -- which would force resolution of existing JPS
3. In order to avoid debt consolidation and other government actor issues (e.g. challenges to foreclosure), FnF need to be private companies (at least nominally). As such, they'll want to have material common shares (e.g. 19.9%) controlled outside of the Government .... which would be hard to accomplish outside of conservatorship without FnF independence (which implies some value to JPS given necessary value of common shares beneath).
4. Economically, the government controls the vast majority of the economics at FnF via its SPS and warrant interests. The best way for them to maximize the "size of the pie" (overall FnF valuation) is via a utility model where FnF have strong equity capitalization and a rules-based approach to their governance. This implies a thick common portion of the capital stack (which again gives JPS value).
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