If there is a release, there will be a conversion. The usual investment banks/funds/etc will line up to backstop a release because they will be guaranteed a significant windfall.....just like in any restructuring and/or IPO scenario.
[Fisher] completely ignores three facts about a senior-to-common conversion: 1) It is far better for the companies than the NWS was.
It is good for the companies (increasing their regulatory capital), but the top priority of all investors is capital preservation. If - as in the case of the GSEs - the government takes arbitrary action, depriving shareholders of their investment, the "justification" that the actions were good for the companies but unfortunately bad for the shareholders convinces no one, and certainly not any new investors. And it's even worse if the government controls all actions that happen in conservatorship.
Using the same logic, one could say: "It is much better to die in an earthquake than in a nuclear bombing"
As a JPS holder, I would benefit from a SPS-to-common-conversion. But money will only be made if enough investors subscribe to the new shares in the capital raise that follows this conversion. And it is on that point that I, like Howard, worry.