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Last night’s NBA Finals between the Golden State Warriors and the Cavaliers was so exciting.  James and Curry battled it out and Steph Curry and the Warriors came on top leading by a 3 to 2 wins so far.

This morning, AIG’s opinion and order was announced and Starr International came out on top but the game continues. Judge Wheeler made it clear that the government “illegally” took from AIG but awarded no compensation.  Is this right or wrong you might ask?  Judge Wheeler is correct.  It turns out that Starr’s prayer for relief for shareholders’ loss was on the premise of AIG’s stock price on September 24, 2008 as oppose to any disgorgement of “illegally” obtained revenue from the sales of stock in the open market. One can only assume that Starr will refile a claim for relief to get the proper award.

Judge Wheeler’s quote:

Turning to the issue of damages, there are a few relevant data points that should be noted.  First, the Government profited from the shares of stock that it ILLEGALLY TOOK from AIG and then sold on the open market.  One could assert that the revenue from these unauthorized transactions, approximately $22.7 billion, should be returned to the rightful owners, AIG shareholders.  Starr’s claim, however, is not based upon any disgorgement of illegally obtained revenue.  Instead, Starr’s claim for shareholder loss is premised upon AIG’s stock price on September 24, 2008, which is the first stock trading day when the public learned all of the material terms of the FRBNY/AIG Credit Agreement.  The September 24, 2008 closing price of $3.31 per share also is a conservative choice because it represents the lowest AIG stock price during the period September 22-24, 2008.  Yet, this stock price irrefutably is influenced by the $85 billion cash infusion made possible by the Government’s credit facility.  To award damages on this basis would be to force the Government to pay on a propped-up stock price that it helped create with an $85 billion loan.

How is this relevant to GSEs cases?  Here are some clear findings of facts.

  • The Government ILLEGALLY took
  • The Government ILLEGALLY took
  • The Government ILLEGALLY took
  • Starr’s made the wrong prayer for relief
  • Judge Wheeler provided clues to correct the prayer for relief

Reading between the lines, it is clear that GSEs plaintiffs should be able to prove the ILLEGAL physical taking given the amount of evidence from discovery and current and future depositions.  Not to mention that the Starr’s case was significantly weaker, according to Professor Richard Epstein.  Fairholme, Washington Federal, Ackman, Saxton and Perry seem to be on target with their claims and prayer for relief.

Unlike the one and only AIG plaintiff, Starr International vs USA, GSEs plaintiffs have five Stephen Curry vs one James.  One can only imagine all five Steph Curry hitting 3 point shots.

It’s only a matter of time.  Go Steph Curry!  Go Warriors!  The 2015 NBA Champs!

Updated: June 17, 2015

Financial Stability Oversight Council 2015 Report

Secretary Jack Lew testified at a hearing on the Financial Stability Oversight Council’s (FSOC) annual report. The report includes information on financial regulatory developments and potential threats to the U.S. financial system.

Michael Capuano, U.S. Representative [D] Massachusetts talking to Jack Lew, Secretary, Department of the Treasury about Fannie and Freddie. 

Very Important white paper titled:

A Forensic Look at the Fannie Mae Bailout Parts I II III and Final Dated June 16, 2015