In general, the government cannot be sued unless they let you. So yes, FHFA and Treasury have operated with impunity and the GSEs as private entities are the ones that have been targeted. This shines the light on the behavior of the FHFA acting on behalf of the GSEs. It's not complicated.
"I will put it bluntly: do you think a senior-to-common exchange negotiated by FHFA and Treasury would be challenged in court? What court, and what would the requested remedy be?"
Only if it's challenged proactively, which I think is very remote. Requested remedy would be preliminary injunction so that the ownership of the equity could be challenged prior to new shares being created and possibly sold to other owners.
Now a blunt question for you: What difference does it make to Treasury to take 92%, 22% or 2% of the GSE equity? What motivation do they have to engage in profiteering on the GSE draws that the taxpayer has already received a +10% return on?
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