Instead of retaining earnings, you want FnF to increase the SPS LP for free and then, convert these SPS to common stocks, so that FnF post the Retained Earnings that they should have posted in the first place for the rehabilitation of FnF at that point in time, and with your stance, it's posted a lower amount because they would have to pay Income Tax, as it's a debenture (SPS, obligations in respect of Capital Stock) that disappears.
In this image, you see the step 1 (Net Worth increase = Net Income + OCI are Tier 1 Capital) and the step 2 (the effect of the SPS LP increased for free on the Net Worth). You want a step 3 to return to the step 1 (Retained Earnings is Tier 1 Capital).
Let alone all the statutory prohibitions, as a compensation with SPS is considered a capital distribution, restricted. Besides a breach of the FHFA-C's Rehab power, that refers to Rehabilitate FnF with the initial action, not a breach and then, years later try to rehabilitate FnF.
Your stance is beyond shenanigans. Everything is unwound and the reality is that the FHFA used its Incidental Power for this joke: "Zing!". Humiliating indeed.
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