CBO’s model incorporates the judgment that in scenarios in which the GSEs’ common-stock sale did not raise enough funds to redeem the full face value of both the senior preferred and junior preferred shares, the Treasury would take a reduction (known as a haircut) in the value of its senior preferred stake before requiring junior preferred shareholders to do so. 30 That outcome would be inconsistent with the priority of interest between junior and senior preferred shares. But it recognizes that changing the GSEs’ commitments to junior preferred shareholders would be difficult outside a receivership scenario, in which the Treasury, as owner of the senior preferred shares, also owned the GSEs’ common stock (through its warrants).
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I wonder how this reconciles with your equal haircut/equal conversion calculations for JPS and SPS here:
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