The Senior Preferreds that constitute the bailout have option to convert to commons so talk of cancellation under any senario other than a straight BK is ludicrous IMO and they can't do that now anyway... they could have done it on front end of the conservatorship/bailout but chose not to and made the commons a part of the long term plan.
If FNMA is privatised then commons would be diluted by Senior Preferred coversion then spun off into numerous private pieces or the company could straight up prearrange to buyback all the shares issued to satisfy the Senior Preferred conversion.
The only thing holding FNMA back now is the fact that the company is not allowed to make decisions for itself regarding its future however I believe that is about to change very quickly... with the amount of profits, assetts resurrected, and forthcoming claims to be collected, there is enough for FNMA to have it's cake and Obama can eat it too.
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