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The Novel Procedural Complexities in Perry Capital v. Lew
6/30/2016
Richard Epstein
On April 15, 2015, the Court of Appeals for the District of Columbia Circuit heard oral argument in Perry Capital LLC v. Lew, in which Perry Capital challenged the Net Worth Sweep (NWS) put into place by the Third Amendment to the Senior Preferred Stock Purchase Agreements (SPSPA) of August 17, 2012. Those agreements were made between the Federal Housing Financial Agency (FHFA) and the Department of the Treasury. On September 30, 2014, District Court Judge Royce Lamberth roiled the market when, unexpectedly, he granted FHFA and Treasury’s motion for summary judgment on the merits. In anticipation that the Circuit Court would soon decide the case, I published on June 15, 2016, an analysis of the oral argument, intended to explain why the Net Worth Sweep (NWS) gave the government a huge windfall that under every conceivable future scenario sucked dry all the value in the junior preferred and common stock held by the private shareholders in two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac.
The D.C. Circuit’s Questions
During the oral argument before Judge Lamberth, the lawyers for both sides addressed only the substantive issues in the case. Then, without warning, on June 21, 2016, the Circuit Court on its own motion issued an order addressing key issues of subject-matter jurisdiction and sovereign immunity that had previously been glossed over in the case. The order reads as follows:
The D.C. Circuit seeks supplemental briefing on the following questions:
(i) Regarding the ‘class plaintiffs’ claim against Treasury for breach of fiduciary duty, is there a grant of subject matter jurisdiction and a waiver of sovereign immunity that is not the Federal Tort Claims Act?
(ii) Regarding all the class plaintiffs’ other claims:
- Is each defendant subject to suit absent a waiver of sovereign immunity and, if not, is there such a waiver? The answer to this question should include a discussion of whether the FHFA’s challenged actions were taken solely in the agency’s capacity as conservator for Fannie Mae and Freddie Mac, or whether they were taken in whole or in part in a regulatory capacity
- What is the source of subject matter jurisdiction over the claims?
Before turning to these specific queries, we should ask, why this order at this time? Clearly, Judges Millett and Brown and Senior Judge Ginsburg had ample time to moot the underlying substantive questions. If they thought that Judge Lamberth was correct, they could have issued an opinion that tracked his reasoning without further briefing. The surprise request from the panel suggests, at the very least, that the judges do not think that the substantive issues are cut and dry in favor of the government. So what should the answers be to their queries?
As usual, I answer these questions in my role as an advisor to several institutional investors. The simplest way to deal with this question is to start with the jurisdictional issues; thereafter I shall turn to the sovereign immunity questions, which pose greater difficulties, and finally to the question of whether any judicial deference is owed FHFA and Treasury in this contractual dispute. The basic inquiry must take into account that FHFA is an independent agency, while the Department of the Treasury is part of the United States to which different rules apply. The matter is still more complex because the correct answers depend in part on the underlying nature of the claim: what relief is sought, and for what reason.
Subject matter jurisdiction
Subject matter jurisdiction is governed in part by 28 U.S.C. § 1331, which provides simply that:
The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.
It is hard to think of any reason why the action for breach of duty against FHFA does not fall under this provision. In each case, the plaintiffs rely on the substantive provisions of the Housing and Economic Recovery Act of 2008 (HERA) to advance claims that FHFA entered into agreements in violation of its duties as conservators of the Enterprises, which required it to uphold its fiduciary responsibilities to preserve and conserve assets, to allow the GSEs to return in sound and solvent condition into the private marketplace. 12 U.S.C. § 4617(b)(2)(D). Any cause of action that pursues this claim arises under the laws of the United States. The plaintiffs further allege that FHFA was in violation of its duties as trustee when it entered into the Third Amendment after December 31, 2009, when it had no power to give away the assets of the private GSE shareholders under 12 U.S.C. §§ 1455 (l)(1(A), 1719(g)(1)(B). Section 6.4 of each SPSPA contains an explicit reference to federal law as the primary source of authority: “This Agreement and the Warrant shall be governed by, and construed in accordance with, the federal law of the United States of America if and to the extent such federal law is applicable, and otherwise in accordance with the laws of the State of New York.” Similarly, the stock certificates for the senior preferred stock provide, in the case of Fannie Mae, that “the respective rights and obligations of the Company and the holders of the Senior Preferred Stock with respect to such Senior Preferred Stock shall be construed in accordance with and government by the laws of the United States, provide that the law of the State of Delaware shall serve as the federal rule of decision in all instances except where such law is inconsistent with the Company’s enabling legislation, its public purposes and any provision of this Certificate.” The analogous provisions for Freddie Mac specify the laws of Virginia instead of Delaware. In both cases, the content of state law is adopted as part of federal law, which again shows how this dispute necessarily arises under the laws of the United States.
As noted in my June 15, 2016 column—but not addressed by the Circuit Court in its question—the duties imposed by HERA on FHFA are distinct from those that are imposed on Treasury. The fiduciary duties against FHFA rest securely upon the duties that HERA imposes on it. The situation with respect to Treasury is distinguishable, however, because at no time has it explicitly taken on the role of manager of the Fannie and Freddie obligations. More specifically, the Certificates for both Fannie and Freddie contain the following provision: “Except as set forth in this Certificate or otherwise required by law, the shares of the Senior Preferred Stock shall not have any voting powers, either general or special.” There are no voting rights that would allow the holders of the senior preferred stock to vote on the terms of the Third Amendment as contracted between Treasury as the purchaser of the senior preferred stock, and FHFA and the GSEs as sellers of the senior preferred stock. Nor has Treasury exercised its warrants to acquire voting common shares. Nonetheless, the trustee relationship could be established in two other ways. The first is that the Treasury assumed the role of a de facto trustee by acting in concert with FHFA in making all of these decisions. All the evidence suggests that neither FHFA nor Treasury respected any of the differences between them, but acted as if a single entity.
In addition, the standard principles of equitable jurisdiction are sufficient to impose trust obligations on Treasury as a constructive trustee when it received the funds from the two GSEs. This remedy is well known and its basic outline is the same in virtually all jurisdictions. “A constructive trust is not an actual trust by the traditional definition. It is a legal fiction that is used as a remedy for unjust enrichment. Hence, there is no trustee, but the constructive trust orders the person who would otherwise be unjustly enriched to transfer the property to the intended party.” The principle dates back to Roman times: “He also who received something that was not due from a person who paid him through mistake, is liable under a contract of this description. . . This species of obligation does not, however, appear to arise from a contract, for a party who gives with the intention of paying a debt, rather desires to discharge an obligation than to incur one.” Gaius Institutes Book III.91. Similarly, under the Restatement of Restitution, “Legal rules that give the property to the wrongdoer cannot simply be ignored, but they can be accommodate to the doctrine prohibiting unjust enrichment by a simple, equitable device: a decree that the wrongdoer holds the property as constructive trustee for someone else.” Restatement (Third) of Restitution and Unjust Enrichment, Chapter 5, Topic 2, Introductory Note (2011). The constructive trust does not create a full-blown trust under which the trustee has the usual duties of management and loyalty. The trust is imposed solely to make sure that the trustee, so called, carries out his or her legal duty to convey the property to its proper owner. The limited nature of the duty makes it easy to enforce by equitable decree. All that is asked in Perry is to impose a constructive trust on Treasury to return the money to which it had no right to receive in the first place.
The remedy is the same whether the plaintiffs win because the basic transaction was corrupt under a breach of trust theory or because it was entered into after the December 31, 2009 date for bailout transactions. In each case, the correct form of equitable relief is to impose a constructive trust on Treasury to return the money, which it had no right to receive in the first place. Under this theory, there is subject-matter jurisdiction over Treasury in the federal district courts under 28 U.S.C. § 1346(b) given that the United States (including the Department of the Treasury) is a party to the suit. The action for breach of fiduciary duty under any of the above theories is therefore rightly brought in federal court.
Sovereign Immunity
The question of immunity from suit based on the sovereign status of the United States is much more difficult to answer. The principle of sovereign immunity applies both to the federal government and to the states. In Block v. North Dakota, the Supreme Court wrote that “[t]he basic rule of federal sovereign immunity is that the United States cannot be sued at all without the consent of Congress.” 461 U.S. 273 (1983). In Lane v. Pena, the Court added that “waiver of the Federal Government’s sovereign immunity must be unequivocally expressed in statutory text.” 518 U.S. 187 (1996). As stated, the rule applies to all forms of legal relief, including money damages, and all forms of equitable relief, including the issuance of an injunction.
Stated in this form, sovereign immunity has always been the source of deep intellectual discomfort because of the enormous leeway it gives to the federal government to disregard its contracts and to seize private property with impunity unless it explicitly consents to be sued. Indeed, this principle is in sharp tension with the common public understanding that the Constitution is intended to protect individuals from the very forms of abusive government conduct that the principle of sovereign immunity shields. In response to these insistent and justifiable demands, Congress has passed legislation under which it explicitly supplies consent in general form to much litigation against the United States. At this point the grounds for subject matter jurisdiction differ from FHFA and Treasury. As the first question indicates, the waiver of sovereign immunity in this instance cannot rest on the Federal Torts Claims Act (FTCA), which in 28 U.S.C. § 2674 provides a general waiver “relating to tort claims to the same extent as a private individual under like circumstances.” This waiver is subject to a long list of exceptions found in § 2680, including suits that arise out of the performance of, or any failure to perform, any “discretionary function.” That exception has been read so broadly in earlier cases that Perry Capital cannot be successfully maintained under the waiver contained in the FTCA, which is why the Circuit Court explicitly puts it aside as a possible source of jurisdiction.
Nonetheless, sovereign immunity is clearly waived with respect to FHFA under 12 U.S.C. § 1723(a), which authorizes the GSE “to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal.” The Supreme Court has held that “a congressional charter’s ‘sue and be sued’ provision may be read to confer federal court jurisdiction if, but only if, it specifically mentions the federal courts.” American National Red Cross v. S.G., 505 U.S. 247 (1992). The provision in 12 U.S.C. § 1723(a) surely satisfies this test, because there is no ambiguity in this waiver of jurisdiction. That waiver applies, moreover, to any and all theory of relief, be it legal or equitable. Hence a money damage action against FHFA, including a suit for restitution based on a theory of unjust enrichment, is permissible. So too is any action for injunctive relief that seeks to prohibit any further payments to Treasury under the NWS, and so too is any request for specific performance of other obligations that FHFA might have incurred under HERA.
It should also be evident that FHFA does not have the resources to pay any judgment lodged against it for breach of the fiduciary duty for the NWS, given that all the free cash has already been paid over to Treasury. The question then is whether it is possible to force FHFA to recover the money from Treasury on behalf of the private shareholders of the GSEs, or, in the alternative, to treat these excess sums paid over as a de facto redemption of the senior preferred stock. The last point is critical because each reduction in the amount of outstanding senior preferred stock reduces the interest burden on the remaining outstanding stock, which means that the cash position of the GSEs improves with each overpayment.
Bringing these theories against FHFA, however, would amount to an end run around sovereign immunity if the GSEs could not sue Treasury directly. Suit against Treasury, however, is not authorized under the “sue and be sued” clause, which is applicable only to the GSEs. But it is possible to establish subject-matter jurisdiction over Treasury under 5 U.S.C. § 702, part of the Administrative Procedure Act, which contains a waiver of sovereign immunity as to actions “seeking relief other than money damages . . . Provided, That any mandatory or injunctive decree shall specify the Federal officer or officers (by name or by title), and their successors in office, personally responsible for compliance.”
As is evident from this section, a court can order specific officers not to do specific acts by issuing an injunction. A court can also order specific officers to do something by way of a mandatory decree. The term “decree” in this passage refers to judgments issued by a court sitting in its equitable capacity. Therefore, it is evident that nothing in Section 702(a) prohibits an order that the government not receive further money from FHFA, and it is arguable—this is a controversial point developed below—that under a constructive trust theory a court can mandate that the government return the money that it has illegally received as well. The proposition here covers cases of payment of money, but extends beyond that to the transfer of any other form of property to the plaintiff. In all cases, the defendant is only asked to disgorge what he has improperly received. There is no claim for the payment of independent funds held by Treasury.
In this case, given the illegal NWS, the plaintiffs only request a return of the money that has been paid over—ideally with interest, in order to neutralize the risk that the defendant will stonewall the plaintiff, trying to secure what is tantamount to an interest-free loan. The constructive trust theory is fully applicable under standard equitable principles for two reasons. First, Treasury, which organized this transaction, knows that FHFA paid them over in breach of its fiduciary duties to the private GSE shareholders. Indeed, Treasury here is not even a bad-faith purchaser, since it gave no consideration of any kind (not even the release of some antecedent debt) in exchange for the money that it received. In essence, it was a bad-faith donee. Second, it is clear that these new transactions took place after the December 31, 2009 cutoff date.
Thus, the overall situation looks like this. If FHFA had turned over all the shares of junior preferred and common stock to Treasury, then the duty of restitution would require that those shares be returned. If the money that had been paid over in gold bullion, then Treasury would have had to return it as well. If the money paid over was segregated into a separate account, then those dollars would have to returned too. In all of these cases, the restitution remedy permits a general raid on the Treasury because the relief only undoes ill-gotten gains. It does not impose a fresh liability on the Treasury.
Accordingly, this case falls clearly on the equitable side of the line. As an initial premise, the Supreme Court, citing Joseph Story, held in Teamsters v. Terry that actions against a trustee for breach of fiduciary duty “were within the exclusive jurisdiction of the courts of equity,” which meant in that context that the beneficiaries under a trust were not entitled to a jury trial because they were not “suits at common law,” for which the right to a jury trial is preserved under the Seventh Amendment to the Constitution. 494 U.S. 558 (1990). As the Supreme Court noted in Bowen v. Massachusetts,
The term ‘money damages,’ 5 U. S. C. § 702, we think, normally refers to a sum of money used as compensatory relief. Damages are given to the plaintiff to substitute for a suffered loss, whereas specific remedies `are not substitute remedies at all, but attempt to give the plaintiff the very thing to which he was entitled.’ D. Dobbs, Handbook on the Law of Remedies 135 (1973). Thus, while in many instances an award of money is an award of damages, ‘[o]ccasionally a money award is also a specie remedy.’ Id. Courts frequently describe equitable actions for monetary relief under a contract in exactly those terms. 487 U.S. 879, 895 (1988).
Bowen’s test would be too broad if it allowed every action for contract or tort damages to be recharacterized as a claim for specific relief that falls outside the scope of Section 702. Thus, in Hubbard v. Administrator, E.P.A., the D.C. Circuit held that the United States had not “waived sovereign immunity for a back pay award to an individual denied federal employment in violation of his constitutional rights.” 982 F.2d 531 (D.C. Cir. 1992) (en banc). That claim could not be for restitution, correctly understood, because there were no goods or services delivered to the defendant that had to be restored. The claim was really for payment of full wages for services never rendered, best understood as a disguised claim for expectation damages, not restitution. In contrast, the plaintiffs in Perry Capital have no contract action of any to recover what was illegally taken from them by Treasury.
Similarly in Kalodner v. Abraham, the plaintiff lawyers had helped consumer groups secure refunds of excess payments under the Emergency Petroleum Allocation Act, for which they claimed compensation under the common fund doctrine—yet another variation on the principle of unjust enrichment—to recover fees from money that the United States held in escrow for distribution to the individual consumers. 310 F.3d 767 (D.C. Cir. 2002). Yet their restitution claims were not against the United States but against the consumers. They were brought, moreover, after the plaintiffs had previously received a direct payment from the underlying defendant, Occidental Petroleum, as part of the overall settlement of the case. The government received no unjust enrichment from operating an escrow account. Accordingly, the court treated the plaintiffs as if they were asking the government to pass judgment on who should get the disputed funds. By applying sovereign immunity, the court kept the government from being caught in the cross-fire between two parties where it claimed no beneficial interest. The plaintiffs in Kalodner were trying for an end run around the usual rules of restitution. The D.C. Circuit also noted that once the funds were distributed, sovereign immunity did not prevent the plaintiffs from bringing their common fund claim against the consumers. Again, there was no demand for restitution from the government of the sort made in Perry Capital, where the plaintiffs have no other way to get their money back. So long as money is fungible, it is ludicrous to insist that full recovery is possible by tethering the claim to specific dollars but not otherwise.
The restitution remedy has also been allowed notwithstanding Section 702(a) where it is “restitutionary or if it was incidental to or intertwined with injunctive relief.” Teamsters, 494 U.S. at 571. In this case, it is beyond dispute that the plaintiffs are entitled to obtain an injunction that prevents the defendant from receiving any further payments from FHFA. It is not defensible to argue that it can undercut the effectiveness of that injunction by adopting delaying tactics in litigation so that it can keep all money it illegally received from FHFA until it finally runs out of excuses and appeals. The restitution remedy completes the task of relief that the injunction begins. It is the type of mandatory decree that is contemplated in Section 702(a), and is thus incidental to and intertwined with equitable relief, which could also include treating excess payments made as an implicit redemption of senior preferred shares. It is inconceivable that the availability of sovereign immunity should turn on the line between restoration and set-off of the exact same dollars. All equitable remedies, including restitution, are allowable against FHFA and Treasury.
Administrative Deference
The final question posed by the D.C. Circuit is whether “the FHFA’s challenged actions were taken solely in the agency’s capacity as conservator for Fannie Mae and Freddie Mac, or whether they were taken in whole or in part in a regulatory capacity.” That is a question that receives a definitive answer: no part of the government’s actions was done in its regulatory capacity, either by FHFA or Treasury. The explicit terms of the 2008 bailout says it all: the transaction was called the Senior Preferred Stock Purchase Agreement. Over and over again, the parties were described as sellers and purchasers. The separate statutory authorizations under HERA for both FHFA and Treasury were solely for entering these agreements. The Third Amendment to the SPSPA was also an agreement signed by Timothy Geithner for Treasury and Edward DeMarco for FHFA, without any rulemaking activity of any kind, tailored precisely to this case. FHFA and Treasury need to keep their interactions contractual in order to deal promptly with this unique emergency situation, without the fuss and bother of administrative rulemaking in any of its endless variations. This unique agreement was indispensable for the bailout process to work.
Understanding the contractual base of this transaction means that the government is not entitled to any sort of deference in enforcing this deal. In United States v. Winstar, Justice Souter noted that in “evaluating the relevant documents and circumstances, we have, course, followed the Federal Circuit in applying ordinary principles of contract construction and breach that would be applicable to any contract action between private parties.” 518 U.S. 839, 871 (1996). Accordingly, the Supreme Court’s 1984 decision in Chevron v. NRDC, with all its countless variations, has no application. 467 U.S. 837.
In conclusion, none of the three issues raised by the D.C. Circuit prevents this case from being decided on its merits. There is full subject-matter jurisdiction over both parties. The doctrine of sovereign immunity has been effectively waived, and the rule of administrative deference does not apply to contract disputes to which the government is a party.
More Resources Below:
New unsealed court documents from Fannie & Freddie Secrets
New filing in the Robinson case, click here to view.
New filing in the Saxton case, click here to view.
Anon said:
Peter Chapman writes, “Mr. Pagliara delivered his Opposition to Judge Cacheris today explaining why FHFA is confused about its reluctance to let him have a peek at Freddie Mac’s books and records and misinterprets HERA’s shareholder substitution and succession language.”
Click to access 16-00337-0036.pdf
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unbelievable said:
From Perry’s Appeals Court Transcript and Audio Recording clearly state these are direct claims.
(02:40:25)
MR. HUME: No, no, no. No, no, no. Sorry, Judge Millett. We absolutely raised direct claims. Our breach of contract claims were unambiguously always —
(02:40:55)
MR. HUME: — a contract between me the shareholder and you the company. I’m the shareholder, I get to enforce the contract. It is a direct claim, look at page six of our reply brief, those kinds of claims are always analyzed under state law as direct claims. They didn’t even argue this in the District Court, or in any other case, in Kellmer, in the Barnes case, see footnote —
(02:41:29)
MR. HUME: Let me try to be very clear. Our breach of contract claims are direct claims. I don’t mean to suggest there’s some other amorphous direct claim. Our breach of contract claims are all direct, breach of contract, breach of implied covenant. The only issue was whether we said enough for a direct fiduciary breach claim. And on that, I’ll rest on what I said before, which is we think we said enough, if not, we ask the right to amend. But on breach of contract there’s no ambiguity at all, those claims were brought —
(02:42:07)
MR. HUME: — directly to the shareholders, directly, nothing new is through the companies. And that — just to — in the Barnes case, the Leven case, the Kellmer case, the FHFA or the FDIC, whichever it was didn’t even try to intervene on behalf of the direct claims. They admitted through their conduct that direct claims belong to the shareholders. They never even took the position in any of those cases, please see the cases in footnote six on page four of our reply, and also what happened in Kellmer. And it does, to what we discussed earlier, it does raise a serious issue of constitutional doubt to even suggest the shareholders, whom they admit have economic rights and
interests, don’t have the ability to come to court to protect them, that raises serious constitutional issues as recognized by Judge Easterbrook in the Leven case, and the Plaintiffs in all Winstar case, and by Judge Edwards in the Waterview case, and in the, which is cited in the Pershing Square Amicus brief, which I —
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unbelievable said:
Auditor PwC said to be under investigation in biotech fund embezzlement case.
[The lawsuit says PwC allegedly acquiesced to its client, Burrill, to limit disclosure in the financial statements about the fraudulent transfers, keeping the fund’s limited partner investors “in the dark.”]
Sounds familiar….
http://www.marketwatch.com/story/auditor-pwc-said-to-be-under-investigation-in-biotech-fund-embezzlement-case-2016-07-18?
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anonymous said:
The FHFA’s laws of Quantum Mechanics and Parallel Universe
———————————————————————————–
The FHFA’s attorneys are the authoritative source for these laws that were created by Fellow Travelers when journeying through quantum space and parallel universe.
Only Fellow Travelers can change these laws.
FHFA’s laws of Quantum Mechanics says, you can not precisely determine all the following variables at a given moment in time.
1. what FHFA did
2. under what role
3. under what authority.
4. at what Date and Time
The FHFA’s attorneys earnestly explain this by saying that no one (being earthly human) can do this because when some one tries to precisely determine all the variables at given moment in time, it creates the grandfather paradox. That is a paradox of time travel which results in an inconsistency through changing the past.
The paradox is described as follows: when a time traveler goes back in time and kills his grandfather, eliminating the possibility of one of the time traveler’s parents ever coming into existence. As a result, the time traveler is never born. But if the time traveler is never born, then he does not travel through time and kill his grandfather, which means that the time traveler is born after all, and he kills his grandfather, and so on. (Ref: https://en.wikipedia.org/wiki/Grandfather_paradox)
Further the FHFA’s attorneys explain this paradoxical paradigm. This happens because FHFA is immune from judicial review under laws created by the Fellow Travelers in quantum space and also because of exceptional risk taxpayers took in investing in FnF. Taxpayer took exceptional risk investing in FnF because FnF never needed it and FnF had many other less riskier options.
The FHFA’s attorneys earnestly explain that no laws of this earthly world apply to FHFA because FHFA does to belong to this earthly world and FHFA only works in the probabilistic world of quantum mechanics and parallel universe.
FHFA’s attorneys explain that in the probabilistic world of quantum mechanics, things are only implied and imagined and can never be seen or touched. When some one tries to see or touch these things in the FHFA’s space of quantum mechanics, it violates the laws created by Fellow Travelers and quantum space is sucked in to black hole and all the information is lost.
Other variant of the grandfather paradox is that when the traveler kills the grandfather, the act takes place in, or results in the creation of a parallel universe where the traveler’s counterpart never exists as a result, but their prior existence in the original universe is unaltered. In other variants the actions of the Fellow Travelers have no effect outside of their own personal experience.
In future FHFA’s attorneys will explain the specific laws created by Fellow travelers that are applicable in parallel universe. These laws are much more wierd than The FHFA’s laws of Quantum Mechanics.
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unbelievable said:
from merkhet
FHFA’s supplemental brief is pretty favorable for shareholders, IMHO. See attached.
(1) FHFA does not assert sovereign immunity.
(2) FHFA argues that 4623(d) removes jurisdiction because any relief would “affect the effectiveness” of FHFA’s regulatory action in enacting the Third Amendment.
I think (2) is a HUGE stretch because paying out on a breach of K claim does not affect the regulatory regime enacted by the NWS. It will be the same as it was afterwards — the only difference is that the shareholders would get paid for the breach. Moreover, I suspect that they came up w/ the argument in (2) because (A) they had no good arguments for withdrawal of jurisdiction and (B) they think the Court likes the idea of 4623(d) and might just go with it.
Finally, and I hope Hume picks up on this and hammers it in — FHFA argues in (1) that they do not have sovereign immunity because they acted as a conservator and not a regulator, and then in (2) asks for a withdrawal of subject matter jurisdiction because they are a regulator. Oops.
Click to access 14-5243-1624902.pdf
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Anon said:
*******Reply Brief for Class Plaintiffs is scheduled for 07/20/16********
Next week should be good.
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anon said:
Most Americans Want to Keep Fannie and Freddie
– July 14, 2016
Most Americans think it is too hard to afford a house and they grasp that Fannie Mae and Freddie Mac are more likely to help them achieve the American Dream than big banks, according to a new poll conducted by Schoen Consulting.
The public opinion survey on housing revealed how widespread the pain of the housing market collapse and recession has been for millions of Americans. There is a sense the United States could become a nation of renters rather owners unless a rigged system is fixed. Plus, respondents indicated that raiding Fannie and Freddie with no regard for the rights of shareholders is the opposite of what is needed. A majority of respondents said they believed the diverted money should be used to expand access to mortgages.
In a teleconference yesterday pollster Douglas Schoen explained that, among the likely voters surveyed, 53 percent said it was too difficult for them to buy a home and 41 percent agreed with the statement, “Banks don’t want to provide mortgages to people like me.” That sense was especially pronounced among Latinos, 78 percent of whom agreed that “It is too difficult for people like me to buy a home,” and Blacks, 67 percent of whom agreed with that statement.
And who was to blame for a system that is leaving so many people dissatisfied? 51 percent assigned blame to banks and 30 percent blamed Congress. Only 29 percent said federal agencies and Fannie and Freddie were the problem. In contrast 55 percent had a favorable view of Fannie and Freddie and only 37 percent held an unfavorable view of them. In addition, 70 percent would like to see government actions aimed at making mortgages more widely available.
With these viewpoints, it probably came as no surprise that when told about the Net Worth Sweep, 47 percent of those surveyed said the diversion of profits and violation of shareholder rights was unfair and 63 percent came down on the side of shareholders when presented with a trade-off between shareholders’ rights and government interests.
The housing market collapse and ensuing recession clearly continues to reverberate through the electorate. In one sobering snapshot, 43 percent of respondents said they knew someone who lost their home since the 2008 crisis and 23 percent of these voters said they or their family had lost their home. Invoking the adage that a recession is when your neighbor loses his job and a depression is when you lose your job, what happened in housing over the last eight years at least bordered on a depression for many American voters.
Nonetheless, voters continue to believe in the American Dream. They view homeownership as both a good investment with financial benefits (58%), and as part of the emotional promise of the American Dream (57%) and they want to the government to help them achieve it.
The survey is revealing. Housing policy reform, or lack thereof, in Washington fits into the salient narrative of this election year: Voters across the spectrum feel the political and economic system is skewed against them. Imagine what respondents would say if informed of the government’s efforts to keep secret its deliberations on the Sweep and the steady process of undermining Fannie and Freddie through risk sharing.
Douglas E. Schoen, LLC. conducted interviews with a national sample of 1,000 likely voters from June 24th to July 2nd, 2016. This poll assessed housing and mortgage access generally, as well as perceptions and policy preferences about Fannie Mae and Freddie Mac specifically.
http://investorsunite.org/americans-want-keep-fannie-freddie/
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The Stig, MD said:
I’m posting my comment on the new “Hill” propaganda piece in case they take it down (they have taken down my prior posts before). Hope this helps, feel free to reuse elsewhere.
Indeed, reform on housing is long overdue.
But before we delve into reform analysis, we should understand how housing finance works in the United States, and a brief history of the 2008 financial crisis.
A bank lends $1 mil to a customer to buy a home. Normally, this bank no longer has that $1 mil to lend out to other applicants. However, because of the secondary mortgage market, the bank can acquire new money to lend to Americans. Here’s how that works:
The secondary mortgage market is comprised primarily of two Fortune 500 companies, Fannie Mae and Freddie Mac. These are also known as “government sponsored enterprises” (GSEs) because of their official government charter to provide mortgage money to American families. What they do is give new money to banks that have lent out mortgages in exchange for their mortgage contracts, which can be regarded as a 30-year “bond” because, in effect, it is a contract that pays back the mortgage holder with interest.
Once they have these mortgages, they then reclassify them (for a small fee) into “mortgage-backed securities” (MBSs) to sell to foreign investors who want a secure, long-term return on their capital. Although investors may buy bonds, GSE MBSs are widely considered to be much more stable than American corporate bonds, which suffer unpredictable market sentiments and product cycles. Foreign investors, such as German financial institutions, Japanese retirement accounts, and Chinese banks, respect the stability that American GSE MBSs provide, due to an unofficial agreement that the American government stands by their GSEs’ credit-rating competence with guaranteed repayment in the case of default.
Once foreign investors purchase MBSs, their money is then transferred to the GSEs so they can repeat the lending cycle to other American banks that want to give out mortgages. Traditionally, the 30-yr fixed rate mortgage (FRM) is regarded as an unprofitable product due to US consumers’ right to refinance at lower interest rates. If a bank borrowed money from the US Treasury (UST) at, say, 10%, then they will lend it as a mortgage at 11-12% to make money. But if the Federal Reserve suddenly lowers interest rates to encourage spending, the loans that banks have already lent as mortgages still pay 11%, but the new loans that banks make at, say, 5% cannot cover the costs of the money borrowed from the UST at the higher interest rates. In short, if the bank still has a large chunk of money borrowed from UST at 11%, then the new mortgage loans that they make (say, at 5%) cannot cover the interest on their older, more expensive money. This is known as “interest rate risk,” and because the 30yr FRM has a LONG life cycle, banks tend to avoid lending these types of mortgages in favor of much shorter 15yr adjustable-rate mortgages (ARMs) with rates that banks can control to cover their own borrowing costs from the UST.
In fact, before the GSEs came along under FDR, banks usually made FIVE year balloon mortgages whereby the entire principal becomes due by maturity; then the loan officer reassesses the borrower’s credit and income status to determine whether s/he is worth the risk of refinancing. Needless to say, most middle-class Americans did not own homes in the 1930s-40s; Great Depression aside. In fact, the middle-class didn’t really exist prior to that era. However, with the advent of the GSEs, home ownership and lifelong savings became possible to build an American middle-class.
Huge changes occurred in the 80s with the advent of commercial MBSs from private American financial institutions, pioneered by Lew Ranieri at Salomon Brothers and Larry Fink of First Boston (who now leads the world’s largest hedge fund, Blackrock). Ranieri lobbied extensively the make commercial MBSs legal for purchase by state retirement funds WITHOUT government quality controls, arguing for Laissez-Faire principles and “government deregulation” (sound familiar?). The USG eventually capitulated and established clear turfs between the GSEs and private banks: the GSEs would cover mortgage liquidity for lower-middle class borrowers, while private banks would cover all other customers. However, the largest mortgage market is primarily the lower-middle class territory, and because the GSEs’ MBSs are sold with the implicit understanding that the USG will guarantee their products in the case of catastrophic market panics, foreign investors by far preferred GSEs’ MBSs over commercial variants. This infuriated the private banks, and they have been aggressively lobbying/vilifying the GSEs ever since the early 90s.
Their voices did not go unheard. Alan Greenspan, the new chair of the Federal Reserve in the 90s, decided to experiment with fully “privatizing” the GSEs by privatizing not Fannie and Freddie, but another GSE for student loans called Sallie Mae. Greenspan’s thinking went along the lines of “the market knows all and will self-regulate,” so Sallie Mae was eventually privatized into an independent corporation, thus withdrawing all of its loans off of government books. The results of this experiment was abysmal, with student loan subsidies now a long-forgotten privilege and loan debt ballooning to well over a trillion dollars today.
The culprit was the same as the cause of the 2008 subprime crisis: private institutions have no culpability for their loan standards because once their loans are securitized and sold, they are NOT responsible for borrower defaults. In contrast, Fannie and Freddie are REQUIRED to buy back MBSs that have defaulted, which forces them to keep stringent credit-rating standards. In effect, the lack of credit accountability by private banks creates a credit bubble from a combination of lax lending standards, no lender responsibility for their product quality, and poor USG oversight of credit-rating agencies such as S&P, Fitch and Moody’s, who were heavily encouraged by private banks into rating their mortgages as “AAA,” when by all logical analyses they should have been B or worse. Does this sound familiar to those who have seen “The Big Short?” It should, because it was essentially what had happened.
To profit not just by securitization fees, private financial institutions such as Goldman Sachs and Lehman Brothers, who knew full well the poor quality of their loans, adopted a “short bet” against the very loan packages they were selling by buying insurance contracts to cover their loans, in case they defaulted. These are known as “credit default swaps,” and Goldman and Lehman were actively selling their MBSs to unsuspecting buyers, then immediately buying CDSs on the loans they had just sold, knowing that those will default. Eventually, these insurance contracts became so labyrinthine and enormous that nobody knew who owed whom or what, or even how much they owed, with liabilities surging into TRILLIONS. As the predatory NINJA (no income, no job/assets) mortgages that private banks lent inevitably began defaulting by 2006-2007, their insurance contracts became due as well, bringing down the entire worldwide financial system.
How perfect a time, then, to scapegoat the GSEs who themselves had been forced by then UST secretary Hank Paulson into buying up the low quality mortgages made by private banks. If you didn’t know, Hank Paulson was the former CEO of Goldman Sachs (it’s true) before he became Treasury Secretary under GW Bush. 2008 became not a focal inflection point on economic ethics, but as just another profit opportunity to scapegoat the GSEs Fannie and Freddie, and steal their 10 trillion dollar market share for good.
Hence we have this article written up by none other than corporate shills/lobbyists for the very institutions that brought down the world’s financial system. You may have heard news that even while the GSEs became profitable again under US conservatorship (they were the only ones still providing mortgage liquidity when all TBTFs bailed), the US Treasury unilaterally changed their own contract with the “Net Worth Sweep” that sweeps away ALL of the GSEs’ earnings to ensure that these two companies can never survive or emerge from conservatorship. The tired argument for their action is to “protect American taxpayers” from the GSEs’ “failed business model,” phrases that you will hear repeatedly over, and over, and over, and over again. But what about the “failed business model” of lax regulation over secretive Too Big To Fail companies, who encouraged credit rating fraud, sold poor quality loans while purchasing insurance contracts on their own loans, and then were handed out a “$700 billion” bailout by Obama called TARP (Troubled Asset Relief Program) that combined with Quantitative Easing, actually amounted to OVER $5 TRILLION DOLLARS? Is that not a “failed business model,” of letting TBTFs perform fraud, then handing them trillions in taxpayer money when they whine?
Everything that I wrote today is publicly available knowledge from books written by people who witnessed the inner workings of TBTFs firsthand. I strongly encourage you to invest some time into reading, because the greatest threat facing America today is not foreign, but domestic. It is DISinformation, peddled by powerful, wealthy individuals interested in only one thing: more of everything.
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pauljon4 said:
Awesome analysis. Should be published everywhere.
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anonymous said:
How in the world any honest person can compare the bailout profits data and still say:
“privatizing gains, while socializing losses” in the context of FnF.
Facts based https://projects.propublica.org/bailout/
Profits on taxpayer TARP & FnF bailouts:
——————————————————————–
FnF:
————————
Net investment in FnF —- $187B (includes $47B accumulated interest)
Profit without NWS —– $59B (with NWS void)
Profit with NWS ——— $246B (with NWS intact)
Plus 80% of FnF equity
All others companies:
————————
Net investment ———– $433B
Profit ——————- $9B
In addition to this Gov provided $16T subsidized loans to banks after 2008 crisis.
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anon said:
FannieGate In Court Of Appeals: Analysis Of Upcoming Court Decision
Jul. 13, 2016 11:05 AM ET
Jeremy Cain
Summary
The purpose of this article is to provide an in-depth analysis of the upcoming decision in the Perry Capital et al. lawsuit before the Court of Appeals (D.C. Circuit).
It will analyze multiple aspects of the oral arguments and complaints to provide an opinion of the outcome.
Accompanying excursus articles assist in the decision analysis, as well as provide insight into the strengths of the plaintiffs’ claims and weaknesses of the defense.
After a thorough analysis, I estimate that it is highly probable (71-84%) that the Court of Appeals will overturn Judge Lamberth’s ruling that denied plaintiffs’ claims.
The panel will send the case back to District Court and order an administrative record to be produced along with the case to proceed for damages to plaintiffs.
Introduction
This is a rather lengthy examination of the oral arguments in a GSE investor lawsuit Perry Capital et al. vs. Jacob J. Lew et al. It is a significant case for the Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) shareholders (as well as the rule of law and capital markets), and investors need to pay close attention to the outcome, as explained later. This article will first examine the case from a technical manner. Then, an in-depth look at how the oral arguments proceeded will be done. Next, a brief estimate of how each judge will rule and overall judgment will be given along. Finally, concluding remarks and the relevance of the case to investors will be discussed.
http://seekingalpha.com/article/3988151-fanniegate-court-appeals-analysis-upcoming-court-decision
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th717 said:
Jeremy Cain did a fantastic detailed analysis of the Perry Capital Oral Argument. It is long but well worth reading!
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anon said:
Judge Sleet entered an order this afternoon lifting the stay in Jacobs v. FHFA
Click to access 15-00708-0047.pdf
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timdillen said:
Naked Short Report – Wed 7/13/16
———————-
The volume of Naked Shorting today was 49% of total $FNMA volume at 880,000 shares. Yesterday’s was 33.6% and 1,600,000 shares.
Highest %: 58% on 5/18/16
Highest Shares: 15,900,000 on 4/13/16
Shares for May: 49,700,000
Shares for June: 25,600,000
Week ending 6/24: 5,000,000
Week ending 7/1: 3,500,000
Week ending 7/8: 2,200,000
———————–
I was going to skip the post today as I didn’t think anything new was going on. I was wrong.
There was a dramatic upshift in Naked Shorting today. They had to step up their efforts considerably to 49%. The activity has not been this high in over a month!
Feels like something good may be in its way.
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timdillen said:
Naked Short Report – Tues 7/12/16
———————-
The volume of Naked Shorting today was 33.6% of total $FNMA volume at 1,600,000 shares. Yesterday’s was 33.5% and 670,000 shares.
Highest %: 58% on 5/18/16
Highest Shares: 15,900,000 on 4/13/16
Shares for May: 49,700,000
Shares for June: 25,600,000
Week ending 6/24: 5,000,000
Week ending 7/1: 3,500,000
Week ending 7/8: 2,200,000
———————–
The Naked Shorters had to step up their game again today. The stock was up +0.17 before they came in and hammered it down to just +0.09.
They held back going over 34% which I found interesting as they have shown they are willing to go as high as 58%. Their stategy is to hold the price down but they seem to have imposed a temporary limit of around 34% of total volume.
Someday we will know why.
———————–
http://otcshortreport.com/index.php?index=FNMA&action=view
The Naked short data does NOT include regular Equity Shorting.
———————-
“Naked short selling is selling stock that you haven’t even borrowed: You sell stock on the exchange, don’t deliver it, and when your broker demands that you deliver it you hang up on him. That’s illegal.”
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unbelievable said:
Unbelievable. Judge Thapar has decided to recuse himself and refer the case to Chief Judge Caldwell.
More delay!
Click to access 15-00109-0060.pdf
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anonymous said:
Knowing the lawlessness of FnF Conservatorship, Judges are discouraged and do not want to be involved in this mess and make odd comments about Gov agencies.
Judge Lamberth did the same thing in different way.
So far it is only Judge Sweeny who is shouldering all the burden to uphold the principles of justice and proving to be the Iron Lady.
Other Judges should look up to Judge Sweeny if they are discouraged by the lawlessness of FnF Conservatorship.
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timdillen said:
Naked Short Report – Mon 7/11/16
———————-
The volume of Naked Shorting today was 33.5% of total $FNMA volume at 670,000 shares. Friday’s was 27% and 700,000 shares.
Highest %: 58% on 5/18/16
Highest Shares: 15,900,000 on 4/13/16
Shares for May: 49,700,000
Shares for June: 25,600,000
Week ending 6/24: 5,000,000
Week ending 7/1: 3,500,000
Wee ending 7/8: 2,200,000
———————–
The activity in Naked Shorting increased today back up to 33%. Seems they had to work a bit harder to hold the price down today.
The Supreme Court ruled in May of this year that investors no longer have to sue in federal court for illegal Naked Shorting. Cases can now be brought in state courts.
http://www.bloomberg.com/politics/articles/2016-05-17/wall-street-faces-new-front-for-lawsuits-after-top-court-ruling
So for you big investors out there, find out who is behind this and you can make a considerable return and rid the OTC of this criminal activity. I would be happy to have my name on the lawsuit for NC but I do not have the ability to fund this crusade. I’ll even give you a hint on where to start looking (Goldman Sachs).
———————–
http://otcshortreport.com/index.php?index=FNMA&action=view
The Naked short data does NOT include regular Equity Shorting.
———————-
“Naked short selling is selling stock that you haven’t even borrowed: You sell stock on the exchange, don’t deliver it, and when your broker demands that you deliver it you hang up on him. That’s illegal.”
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smauney01 said:
View at Medium.com
Now we know why the POTUS’s favorite TV show is “House of Cards”.
Remember when Frank Underwood was stealing FEMA hurricane money to pay for his America Works program? This is art imitating life.
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smauney01 said:
Click to access 20160707Joint_Congressional_Investigative_Report-2.pdf
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smauney01 said:
Hey House of Representatives; Welcome to our world.
The committees persistently pursued the facts underlying the Administration’s decision to illegally fund the CSR program through a permanent appropriation. Because of the Administration’s obstruction, however, many questions remain unanswered. When exactly did the Administration decide to pull its request for the annual appropriation? Did OMB’s April 10, 2013 sequestration report affect that decision? Who decided that the Administration should pull the appropriation request and find a different source of funding, and why that was deemed necessary? Who instructed HHS Assistant Secretary for Financial Resources Ellen Murray to
call the Senate Committee on Appropriations to withdraw the request? What does OMB’s memorandum say? What did the Treasury Department redact from the final Action Memorandum that Secretary Lew signed?
These questions and others remain because the Administration has refused to cooperate, going to great lengths to obstruct the committees’ investigation at every step. The Administration has refused to produce documents, despite lawfully-issued congressional subpoenas. The Administration has refused to allow witnesses to answer questions—even factual questions such as who and when. It has attempted to cloak its obstruction by essentially claiming an inapplicable legal privilege, yet insisting at every turn that it has not, in fact, claimed such a privilege. And in at least one instance, the Administration has intimidated a witness to chill his willingness to answer Congress’ questions. 157
This is unacceptable. The Executive branch should not be permitted to shield how, when, and why it makes decisions from the American public—especially in this instance, in which the Administration decided to unconstitutionally spend taxpayer dollars that Congress did not appropriate. Congress is a co-equal branch of government and the branch most accountable to and representative of the American people. As such, the Executive branch must respect the constitutional powers and duties assigned to Congress, including the power to appropriate funds and the duty to conduct oversight over the laws it enacts. Unfortunately, the Administration has
failed to do so here. The American people need and deserve better from their representative government.
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Anon said:
Survey: American Voters Want Access to Homeownership Expanded and Believe the Net Worth Sweep is Unfair
WASHINGTON, D.C. —On Wednesday, July 13 at 10:00 am EST, Investors Unite Executive Director Tim Pagliara will host a teleconference to brief Investors Unite members and members of the media on key findings from a recent opinion survey on housing in America.
Pagliara will be joined by Douglas E. Schoen, founder and president of Schoen Consulting, who conducted the survey. On the call, Schoen will discuss highlights from the results, which include demographic data, and views on homeownership, the 2008 housing crash, and housing policy.
Of note, the survey found that “seven in ten likely voters (70%) support the government facilitating policies to make mortgages easier and more widely available.” Respondents also weighed in on the Net Worth Sweep of government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, which were placed in conservatorship in the aftermath of the financial crisis. The survey found that a plurality of likely voters believed the Sweep is a violation of shareholder rights.
To join the teleconference, please RSVP to media@investorsunite.org.
WHO: Tim Pagliara, Investors Unite Executive Director and CapWealth Advisors Chairman and CEO Douglas Schoen, Founder and President, Schoen Consulting
WHAT: IU Teleconference on Housing Questionnaire Findings
WHEN: Wednesday, July 13, 2016 at 10:00 am EST
DIAL IN: 888-632-3384; Code: 13857#
RSVP: Please RSVP to media@investorsunite.org
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anonymous said:
“avoid taking any steps that may facilitate the release of the government sponsored enterprises, Fannie Mae and Freddie Mac, out of conservatorship without comprehensive reform.”
———————————————————————————————————-
FHFA Conservator should be rebuffing all those, who are part of US Gov and are prohibited by law on influencing FHFA Conservator’s independent authority.
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Anon said:
The FHFA Letters Decoded
JULY 11, 2016 ~ JTIMOTHYHOWARD
On July 7, a bipartisan group of six (out of twenty-two) members of the Senate Banking Committee wrote a letter to Federal Housing Finance Agency (FHFA) Director Mel Watt, encouraging him to “avoid taking any steps that may facilitate the release of the government sponsored enterprises, Fannie Mae and Freddie Mac, out of conservatorship without comprehensive reform.” The letter writers counseled Watt that “changes…to the existing structure…should come from housing reform legislation, not unilateral action by this or any future administration.”
-more-
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anonymous said:
What are best FnF options for the Administration?
—————————————————————
The only best option for Administration, Dems, and FnF private shareholders seems to be, to settle this matter as soon as possible even before any court decisions.
All other options are going to hurt the Dems and the Legacy. Dems are not going to gain any support for harming the FnF/affordable goals. On the other hand FnF detractors are going kill the two birds without even wasting a single shot and benefit at the cost of everybody else.
FnF private shareholders have inherent and fundamental ownership rights in FnF, and no one can take away that. In the end FnF private shareholders will prevail, because FnF and FnF private shareholders are on much higher grounds in terms of ethical/moral principles, laws, bill of rights, and most importantly what is good for the nation, the economy and the common people.
If one looks at FnF private shareholder cases, since 2012, FnF private shareholders are gaining strength and momentum with every release of new information, whereas defendants are finding it difficult come up any meaningful defense with every release of new information.
Defendants are fighting a losing battle to keep the crucial information hidden from plaintiffs/public, and also to keep these cases going on to trial phase. It also became clearly evident that defendants are finding it difficult to come up any well meaning defense, when they came up with new paradigm defense with disconnected logic to connect it with NWS. By their own pleadings in court, defendants are basically relying on implied meaning of laws rather than any specific provisions in laws.
Defendant’s last crumbling defense seems to be implied principle that taxpayers (or King) can do no wrong, and taxpayers took great risks in bailing out FnF. However the facts not only do not support these claims but prove otherwise. Probably there will be more of this in their next filings.
No attorneys wish to be in the news for being on the failing side. One can only guess that defense team may be urging Defendant to settle these cases.
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anonymous said:
Our Gov (Administration, Congress, Courts ) does not represent Crown or King.
Our Gov is by/for/of the people and Gov represents the people.
In our system Gov do not create Courts. Courts are Gov.
Courts are created by the Constitution along with Administration and Congress.
So the below principle does not apply to courts in our system.
” the courts have no power to compel the sovereign to be bound by the courts, as they were created by the sovereign for the protection of his or her subjects.”
In our system, nobody is immune from Courts, as evidenced by the fact that courts compel the highest office holders to obey the court orders. Courts can also void the laws created by the Gov. So Courts are the highest oversight authority in our system unhindered by anybody.
If defendants use SI/SMJ to escape from the very laws that were created by them, then it is clear admission that defendants violated the laws to harm private shareholders.
Let SI/SMJ defense be used in the rarest situations to better serve the people and not to deny the justice to people.
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anonymous said:
Fannie-Freddie Would Be Lender-Owned in DeMarco’s Plan
http://www.bloomberg.com/news/articles/2016-06-29/fannie-freddie-would-be-lender-owned-insurers-in-demarco-s-plan
“DeMarco and Bright want to see Fannie Mae and Freddie Mac converted into mutual companies, owned by lenders, that would sell insurance against defaults instead of buying and securitizing mortgages. As they do now with Federal Housing Administration loans to less-wealthy borrowers, the lenders would issue mortgage-backed securities under the auspices of Ginnie Mae. As an exception, Fannie Mae and Freddie Mac could still buy loans directly from small lenders, the authors said.”
———————————————–
What does this mean?
1. FnF will become like mono-line insurance companies or like AIG.
All these companies went bankrupt during 2008 crisis.
BTW, PLMBS issuers bought insurance/CDS from these companies on crappy PLMBS but rated AAA.
2. FnF will become like private Federal Reserve Banks (FRBs) or private FDIC , where mostly FIs will be shareholders. It will serve like another proxy private institution that will control access to mortgage finance. It will be an institution that will be indirectly controlled by FIs but when things go south, Gov/taxpayers will hold the bags and member FIs will run to hills.
It is like limited risk but unlimited license for FIs to do whatever they want. Remember even though many FIs were FDIC insured and regulated by hundreds of federal and state agencies, most FIs were free to commit fraud and bring down the whole financial system
3. This plan will essentially eliminate any Gov control over secondary housing finance and FIs will have free hand to do whatever they want.
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anonymous said:
*
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anonymous said:
https://timhoward717.com is up again
However this “https://th717.wordpress.com” website is more reliable.
We need to promote this website on long term basis.
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anonymous said:
What are the authorities of FHFA/Conservator is claiming?
————————————————————————-
Based on court filings, FHFA/Conservator currently claims that Conservator has complete authorities under HERA to suspend;
1. rationale, reasoning, thinking, common sense, or any principles
3. human intelligence
4. science, math, logic, accounting,
5. truth
6. constitution, any laws and HERA
7. Public accountability
8. Public Trust
9. any court cases
10. and anything and everything he can think of as Conservator goes on
One more very important thing, Conservator also claims that Conservator can also grant these authorities to any third parties including all the dogs and cats he works with.
It is like twisted MIDAS touch. In the annals of legal history, FHFA conservator will go as the most twisted super monster ever created by law.
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thombiz said:
I checked TIMHOWARD717 blog this morning (Saturday) and it appears to be back up! We’ll see.
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george said:
Hi guys, timhoward717.com reopen again
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Anon said:
Ms. Robinson delivered papers to Judge Thapar today urging him to sell his 16 shares in Fannie Mae for about $32 to cure any potential conflict of interest and move this case forward expeditiously and without interruption.
Click to access 15-00109-0057.pdf
Accordingly, and for the reasons provided on the record, it is ORDERED as follows:
(1) The plaintiff’s motion for leave to file a memorandum addressing the Court’s
disclosure, R. 57, is GRANTED.
(2) The oral argument scheduled for Thursday, July 14, 2016, at 1:00 p.m. is
VACATED.
Click to access robinson-recusal.pdf
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anonymous said:
Does this not rebuff the arguments by likes of Lucifers & Co. that it is the hedge funds that are going to benefit from the RRR of FnF?
There are tens of thousands of people like Judge Thapar who own FnF shares.
Most retirees and pension funds invested in FnF as reliable investment and source of income.
These Lucifers are after the hard earned money of retirees and pension funds invested in FnF.
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anoymous said:
Are not these few people violating ethical standards and violating independence of conservatorship?
——————————————————————————————————-
When these few people are free to trade based on insider information,
when these few people have undisclosed trading short positions,
when these few people may be under SEC investigations,
When HERA and common conservatorship laws mandate independence of conservatorship decision making process,
when these few people start talking on behalf of congress,
when these few people start talking on behalf of taxpayers,
when these few people start talking about public losses and private gains while exactly opposite is happening
when these few people are going to benefit from what they asking conservator to do
when these few people paid billions for fraudulent practices
when these few people distribute insider information to their friends
when these few people benefited immensely from 2008 financial and housing crisis
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FannieFan said:
I completely agree with those comments! I can’t believe these “few” continue to say “private gains and public losses” when the Government (public) has been making/taking all the GSEs profit and the private sector that has Billions invested into the stock of the GSE’s are truly being robbed.
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timdillen said:
Naked Short Report – Fri 7/8/16
———————-
The volume of Naked Shorting today was 27% of total $FNMA volume at 700,000 shares.
Thu 23% 350,000
Wed 33% 330,000
Highest %: 58% on 5/18/16
Highest Shares: 15,900,000 on 4/13/16
Shares for May: 49,700,000
Shares for June: 25,600,000
Week ending 6/24: 5,000,000
Week ending 7/1: 3,500,000
Wee ending 7/8: 2,200,000
———————–
The weekly amount of Naked Shorting was below previous weeks but that was likely because they were able to slowly pressure the price down due to low trading volume and lack of news.
They seem to be happy to just press down a penny or two each day but that has added up to quite a bit of profit for them. Their day is coming and I can’t wait to see them get what they deserve.
———————–
http://otcshortreport.com/index.php?index=FNMA&action=view
The Naked short data does NOT include regular Equity Shorting.
———————-
“Naked short selling is selling stock that you haven’t even borrowed: You sell stock on the exchange, don’t deliver it, and when your broker demands that you deliver it you hang up on him. That’s illegal.”
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The inquiring mind said:
I followed timhoward717 since January 2014 through a comment on motley fool posted by smauney01. 2 1/2 years later here we are! Sigh!
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anonymous said:
KTF. With truth on our side there is nothing to be afraid of. Patience is a virtue and those who have it will be richly rewarded.
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anonymous said:
timhoward717 is back up again
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Just guessing said:
Corker warned Watt against taking actions to release of the GSEs!
One can only imagine or speculate what’s going on behind the scene…. (^_*)
👍👍👍👍👍👍👍👍😉😉😉😉😉😉
Click to access Bipartisan%20Letter%20to%20Watt%20July%202016.pdf
Could this be the reason why Tim Howard 717 website is closed?
(*-*)
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hll7575 said:
If you recall, before timhoward717 turned his blog private, his last piece laid out how FnF have been reformed under FHFA and conservatorship. Corker et al letter offered no specifics on the definition of “reforms”, so Watt could really lay out the reasons how FHFA had already done the job that Congress failed to do.
Oh by the way, Congress passed HERA authorized FHFA the sole authority of regulating FnF, so at best there are two conflicting laws regarding g the treatment of FnF.
FHFA may be preparing the date about the release, but it likely needs the courts to back it up with rulings slamming the government about its handling of FnF.
It makes perfect sense that the loudest noise so far (timhoward 717) retreats at this point to offer some space for the process to work thru, just like HRC’s emails scandal (sorry, the bottom line is: it’s all politics in the end.).
We should still thank Glenn, Investors Unite, etc., to keep the pressure on at the same time.
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smauney01 said:
Corker and company have obviously shorted or set up plans to profit from illegal taking. They have no basis for their protest other than quoting garbage from 2012 hit pieces.
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anoymous said:
If FnF are released (RRR) from conservatorship then warker/carner and their friends will their shirts/pants.
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anonymous said:
can u say that in English please?
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smauney01 said:
I think they mean ‘If FnF are released by FHFA then Warner and Corker along with DeMarco and Carney will trade shirts and pants while doing the circle jerk to pacify each other.’ I could be wrong.
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Annon said:
So, what if the Common Securitization Platform gets completed and a merger of Fannie and Freddie happened before plaintiffs win their case or cases. Will plaintiffs get cash compensation or the merged GSEs?
Click to access Implementation-of-the-SS-and-the-CSP_772016.pdf
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Dean said:
Litigation is proving liability and damages. Release allows the market to set the market value and avoids having to prove damages.
If they get rid of F&F, we must then prove damages after liability resolved. Just another step in the process…………
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anonymous said:
Corker has already fessed up that the Govt is now obliged to settle with shareholders; he mentioned it in a video that was circulating recently with Mark Warner and Jim Parrot in attendance. No matter what they do, their guilt is too well known by now and so they cannot take the booty and leave us holding the bag.
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reyq said:
Really the traffic here it’s slow and some old prolific poster are missing ,the good information and activism before I’ll hope don’t be loss ,lot off FnF ‘enemies were afraid of TH717’site ,some friends too apparently.! This fight for FnF it’s bigger,it’s for our constitution and our country,rules of law going to prevail ,with Blogs or without anyone, the victory it’s near IMO,KTF peoples.
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LongAndStrong said:
It is so slow here that I am beginning to miss Andrew’s posts. I wonder if he and numerous others who frequented timhoward717 blog, know abt this site.
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anonymous said:
Probably things are happening on the back stage, so that may be reason for timhoward717’s blog is down.
Current plaintiff’s filings look very positive for FnF sharehoders..
LikeLiked by 6 people
anonymous said:
That is the feeling I got too with the blog suddenly going cold, which is very strange. If he was giving up he would have most likely said so, but with not a word it is most likely something going on as u allude to.
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RVB said:
It could also be that 717 is on vacation at the Cape, and doesn’t want to have to deal with a blog constantly. he’s been tweeting pics of him and some pals playing golf.
That said, I do find it odd that Crooked Bob Corker sent a letter to Mel Watt asking him not to release the GSEs until Congress does something. That came out of the blue, given how quiet Mel has been in the last few months.
Also, the last time the stocks were above their 200-day moving averages, Wall Street Bob came on CNBC telling folks to short the GSEs. Not a peep (except for this letter), and the stocks have been well above 200-day averages for a month+.
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Dean said:
all the timhoward 717 traffic went somewhere……..anyone know?
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anonymous said:
We can use this blog.
Even though we are not familiar with moderator.
Moderator needs to introduce himself so that poeple feel invited.
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th717 said:
This site was created over a year ago to facilitate fact findings for several FnF investors who wanted to follow important news, articles and filings.
First and foremost, it was never meant to nor intended to replace Timhoward717 site, the Real Tim Howard site and/or other sites but to support them.
We plan to stay anonymous to the end. We are not seeking heavy traffic nor celebrity status. As you may notice, this site does not have a registered domain name unlike th717.com It is basically hidden in plain sight for privacy reasons.
Per request from Thombiz, you are welcome to use this site until (P.M.) th717.com grant you access to his private blog.
Lastly, I will not speculate on what happened to his site but I wish him the best and look forward to his return.
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ryan said:
Thank you for putting this up and allowing us to post.
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anoymous said:
Thank you. We all appreciate your help.
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anonymous said:
If The GSEs Weren’t Stolen To Begin With, There May Not Have Been This Massive Opportunity Before Us
Jul. 6, 2016 3:48 PM ET
By Glen Bradford
Summary
The government has used conservatorship illegally to confiscate assets that aren’t theirs and has been hiding behind procedural law; they can run but they can’t hide.
Hiding assets was the game until 2012, when the government declared that they would just take them all through the illegal net worth sweep.
Just because the net worth sweep was illegal and is illegal doesn’t mean that they couldn’t do it. They did it. It just won’t stick around.
If you have two companies that are consistently profitable, winding them down is no easy task. Historically, business owners that wanted to wind down their involvement with profitable businesses would sell their stake. In doing so, no business owner would write down the value of their assets in order to transfer human and technical capital to another operating entity leaving the original corporation in wind down. Then again, never before has a government agency tried to devalue private assets in order to facilitate their nationalization.
-more-
http://seekingalpha.com/article/3986697-gses-stolen-begin-may-massive-opportunity-us
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franceskh said:
Will the officials (courts) let them get away with flagrant fouls and run out the clock?
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anonymous said:
From Cooper
Click to access Perry-070616.pdf
From Hume
Click to access Perry-070616-Reply.pdf
Thanks to Glen Bradford
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Ryan said:
Supplement Brief is in for Perry V. Lew.
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hll7575 said:
Couldn’t wait to read. Go badass Hamish Hume!
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blklager said:
link?
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thatsmyfannie said:
http://www.glenbradford.com/2016/07/fnma-fanniegate-230/
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anon said:
Corker withdraws as potential Trump running mate
By Robert Costa July 6 at 12:53 PM
Sen. Bob Corker (R-Tenn.), the chairman of the powerful Senate Foreign Relations Committee who has recently emerged as a finalist in the search for Donald Trump’s running mate, told The Washington Post in an interview Wednesday that he has taken himself out of consideration for the position.
Corker said that he informed the presumptive Republican presidential nominee of his decision during their day together on Tuesday, when the senator had a series of meetings with campaign officials in New York and then flew with Trump to an evening rally in North Carolina.
“There are people far more suited for being a candidate for vice president, and I think I’m far more suited for other types of things,” Corker said in an extensive phone interview where he repeatedly praised Trump and said he is eager to serve as an informal adviser to the candidate in the coming months.
As they sat close together on Trump’s Boeing 757, Corker recalled telling Trump about how he’s more policy-oriented than political and how even though he has become friendly with Trump, he did not feel comfortable stepping fully into the role of political attack dog or rousing speechmaker.
“It’s a highly political job, and that’s not who I am,” Corker said. “We had a very open conversation about that, and actually, we have been very candid about it from the very beginning of our meetings. I left there feeling very good about him as a person but also realized that at age 63, I know the things I’m good at doing. And knowing what a candidate for vice president has to do, it’s just not the right thing for me, and I don’t think it’s the right thing for them.”
Republicans and Democrats alike are slamming Donald Trump for his comments about a federal judge. Here are six times something Trump said made sparked a huge backlash from critics. Here are six times something Trump said made sparked a huge backlash from critics.
“So, I’m going to move on,” Corker said. “I am very positive about him as a person. It was incredible to be with him in Raleigh and see the way people react to him. They’re so excited, and I truly believe he has such an opportunity ahead.”
Corker added that he expects Trump to make a final decision on his pick by July 15, three days before the opening of the Republican National Convention.
Over the past month, Corker has been under serious consideration by Trump and had submitted personal documents to attorney A.B. Culvahouse Jr., who is managing the vetting process.
Corker’s sudden departure from the campaign’s high-stakes deliberations over the selection leaves a group of Trump allies still in the running.
Former House speaker Newt Gingrich, New Jersey Gov. Chris Christie and Indiana Gov. Mike Pence remain near the top of the short list, according to multiple Trump campaign associates.
In the interview, Corker said he spent eight hours with Trump on Tuesday, starting with meetings at Trump Tower in Manhattan in the late morning and ending in the late evening.
“Yesterday tightened the bond and certainly a friendship has been created. It was a pretty remarkable day,” he said. “I spent a good deal of time with Ivanka and Jared,” Trump’s eldest daughter and her husband, Jared Kushner. “I spent a good deal of time with Paul Manafort just about where things are going. Then there was time with Trump, in his office and on his plane.” He said he also spent time with Trump’s son Eric.
“I do wish people had an opportunity to visit there and see the people who work with him. They’re the kind of people I like to be associated with. You don’t get the caricature of Trump, if you will. You see he couldn’t be more of a gentlemen and how he acts the same with both the most senior and the most junior people around him,” he said.
Corker first came into Trump’s orbit after praising aspects of the candidate’s foreign policy. Both men are not aligned with the GOP’s hawkish wing and found themselves at times echoing each other about how the United States should operate in the world.
Eventually, Corker found his way to Trump Tower in May for a private conversation with Trump, a visit which stoked vice-presidential speculation.
“I wasn’t going to say anything, I just came to visit,” Corker said onstage Tuesday alongside Trump. “But I have to tell you something. The rallies that I have back home aren’t quite like this: pretty cool.”
https://www.washingtonpost.com/news/post-politics/wp/2016/07/06/corker-withdraws-as-potential-trump-running-mate/
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blklager said:
Big win for shareholders.
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hll7575 said:
Likely during the vetting process, some skeletons were discovered. For the sharp eyes, nowadays policies and politics are inseparable. To say Corker is a policy guy, and not into politics is disingenuous.
Also, if not selected anyway, why bow out at this moment. Keep in until the VP announcement could only raise one’s profile down the road.
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hll7575 said:
Just some random thoughts on two news from yesterday: 1) FBI decided not to press criminal charges against Hillary Clinton on emails scandal; 2) Corker was vetted for Trump’s VP.
It goes to tell how we shareholders are up against a political system that is so rigged in favor of the rich and powerful.
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hll7575 said:
FHFA ranked highest in “federal agencies” in awards!!
http://www.fedsmith.com/2016/07/05/top-10-agencies-with-highest-federal-employee-salaries-and-individual-awards/
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CamJam said:
In your 1) it helps to understand the law. There was a Supreme Court case a few years ago that defined that intentional espionage is different from unintentional carelessness. FBI director felt it would difficult to prove that it was intentional. BTW, he is a Republican.
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hll7575 said:
Thanks for the clarification. “Unintentional carelessness” is too hard a term to swallow for HRC’s email scandal. As a low-level fed myself, we were required to do training on classified documents and documents control in general, especially emails.
There’s absolutely no reason why HRC made an exception to herself running official functions using exclusive private servers. If she could not trust State Department’s IT security, then as the Secretary, she should’ve done something about it. After all, it’s not just her own privacy and security, but all State Department’s staff’s privacy and security, especially oversea personnels carrying out open and secret deplomacy.
Laws are for ordinary people. Look no further than #Fanniegate.
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thatsmyfannie said:
KTF!!!
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thombiz said:
Corker Drops OUT! http://www.nashvillepost.com/politics/article/20827343/corker-drops-out-of-veepstakes
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timdillen said:
Naked Short Report – Tues 7/5/16
———————-
The volume of Naked Shorting today was 35.5% of total $FNMA volume at 450,000 shares. Friday’s volume was 22.7% and 370,000 shares.
Highest %: 58% on 5/18/16
Highest Shares: 15,900,000 on 4/13/16
Shares for May: 49,700,000
Shares for June: 25,600,000
Week ending 6/24: 5,000,000
Week ending 7/1: 3,500,000
———————–
Activity in Naked Shorting increased today. Looks like they had to put a bit more effort in to keep the price down today.
———————–
http://otcshortreport.com/index.php?index=FNMA&action=view
The Naked short data does NOT include regular Equity Shorting.
———————-
“Naked short selling is selling stock that you haven’t even borrowed: You sell stock on the exchange, don’t deliver it, and when your broker demands that you deliver it you hang up on him. That’s illegal.”
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John said:
Do we expect anything from Honorable Judge Sweeney or Delaware Court?
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Annon said:
DeMarco’s Radical and Uncharted Post-GSE World
– July 5, 2016
As former Federal Housing Finance Agency Acting Director Ed DeMarco’s public service career recedes farther in the rear-view mirror, the more prone he is to revising history and fantasizing about a future without Fannie Mae and Freddie Mac.
The latest salvo in his war on the GSEs is a new paper titled, “Why Housing Reform Still Matters,” published by the Milken Institute, where he is now a senior fellow. His co-author is Michael Bright, a former aide to Sen. Bob Corker, R-TN, who is also a dogged foe of the secondary mortgage market enterprises.
DeMarco argued for putting Fannie and Freddie “out of the taxpayers’ misery” last summer. The new paper puts some meat on the bone on how he thinks this can and should be accomplished. The upshot is that Fannie and Freddie would be dismantled and mostly handed over to large lenders. The lenders would reconstitute the GSEs in an arrangement akin to a private-sector mutual insurance company. This lender-owned enterprise would sell insurance against defaults instead of buying and securitizing mortgages.
There will be more details in subsequent papers, but some elements of the authors’ initial framing of housing finance policy past, present and future cannot go unchecked. The phrase “life support” is used several times to characterize the conservatorship of the GSEs, which is now in its eighth year. But the paper omits any reference to the Net Worth Sweep in 2012, which started the process of turning highly profitable enterprises into captives of the Treasury. This was a policy DeMarco championed, as has become ever more evident as documents in shareholder suits are unsealed. As noted in a blog earlier this year, just as the patient was ready to come off life support DeMarco and his colleagues induced a coma and initiated organ harvesting.
In addition, the paper explained, “The government life support given to them at the height of the financial crisis was meant to be temporary, followed by legislation replacing the toxic aspects of their activities and reforming our market structure.”
The dismantling of the GSEs may well be how DeMarco interpreted the Housing and Economic Recovery Act (HERA) but here is what it actually said: FHFA powers as conservator, as outlined by HERA: is to “take such action as may be—(i) necessary to put the regulated entity in a sound and solvent condition; and (ii) appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity.” [12 USC § 4617(b)(2)(D).]
Thus, DeMarco and Bright can decry the fact that what was supposed to be temporary conservatorship has gone on for eight years, but DeMarco is dancing past his role in creating this untenable arrangement in the first place. HERA actually vested power in FHFA, not Congress, to facilitate most of the reforms that would be needed. Sen. Corker’s Jump Start bill, lauded in the paper, was actually a power grab by Congress not to expedite reform but to perpetuate the status quo for at least another year, and probably more.
Taking stock of the current situation, the paper presents a false choice of continuing the conservatorship in perpetuity or going back to what is described as a “failed model.” In fact, as we have pointed out, no credible analysts or commentators advocate reverting back to the structure and operation that was in place leading up to the 2008 financial crisis. In fact, everyone agrees reforms are needed, but the DeMarco-backed Sweep has actually hindered real reform.
Instead, DeMarco boasts about crafting the 2012 FHFA Strategic Plan for Enterprise Conservatorships and the scorecards that set in motion credit-risk transfer (CRT) and the common securitization platform (CSP). After devoting considerable space to showing the rapid changes underway, the paper proclaims, “Either way, both of these initiatives—the CRT and the CSP—are meaningful undertakings that faced skepticism in the beginning but are now largely recognized as worthwhile endeavors. These changes alone, so long as they are continued, help ensure that the post-conservatorship secondary market segment traditionally served by Fannie and Freddie will not look the same as it did before the crisis.”
This assertion is only partially correct. It is true that with risk sharing and the CSP Fannie and Freddie have been forced to slowly shed their core business to private investors on terms that lack a compelling business rationale. The longer this “reform” by bureaucratic fiat continues, the more likely it is that they “will not look the same as it did before the crisis.” But we should not rush to assume this undertaking is a “worthwhile endeavor.” There are more questions than answers on that.
In fact, the very day that the paper was released, FHFA issued a progress report on the status of risk sharing and request for suggestions on how to undertake more front-end risk transfer transactions – those that take place before or at the same time Fannie or Freddie acquires a loan. In essence, FHFA is conceding that it is drifting into uncharted waters on a boat that is leaking capital, thanks to the Net Worth Sweep.
In their inaugural paper, DeMarco and Bright give lip service to affordable housing, the political realities of undertaking radical reform, whether there is enough capital to replicate what Fannie and Freddie have done over the decades, interest rate stability, and whether a lender-owned mortgage insurer could handle the stress of another financial crisis. These issues must be addressed in any serious discussion of housing finance policy. One matter on which there was clarity in the paper is that HERA’s obligation to shareholders in Fannie and Freddie would be negated. So much for reform.
http://investorsunite.org/demarcos-radical-uncharted-post-gse-world/
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smauney01 said:
Guys like Jack Lew, Anthony Weiner, Ed DeMaro and Michael Milken creep me out. I think I have creepdar.
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copperriver01 said:
Why the mirror image of the TimHoward717 site. Just a simple change in the picture would of allowed you to stand on your own! Odd and why I have little interest here!
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anonymous said:
Most people or entities do not want to associate with any comments or opinions in the cases involving most powerful defendants.
At the same time if you look at defendants strategies, they have been doing the same thing for last 8 years. Defendants are scared of public.
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thombiz said:
There are daily developments in the FnF conservatorships, and the other site was key to exploring and logging those developments. When it went down, that very valuable service was lost. It was lost, not to just to those that post, but also to those who read it for the information value. This site has generously allowed us to continue this valuable work, and for this, I’m immensely grateful. It takes more than one general to win this war.
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anonymous said:
some one from FnF investors has to take lead and start another website to continue the work of timhoward717. Another option is approach Investors United.
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In the Dark said:
still have not heard why the timhoward 717 is now private?? Can anyone help with this?
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RH said:
More or less common sense if you think about it.
Lots of heat coming probably.
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LongAndStrong said:
Can u please elaborate?
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thombiz said:
It is likely that someone posted a protected document. Such action could pose a judicial threat to plaintiff’s cases.
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blklager said:
If you went through the old posts from 2014, there are several leaked treasury documents on there. Some of which appeared to have made it into discovery. Not sure why he would have left that up there.
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Saint Market 1992 said:
Some time ago the same situation happened but the page few days later came back, but now is out almost a week. Is very weird. Does some one know if Tim said something at his tweeter account?
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blklager said:
I am starting to think he was requested to shut it down. I suspect the reason he wasn’t posting much is that everything would have been required to be blessed by legal teams. Makes it hard to write things in a timely manner. I suspect we are much closer to the end of this than we know.
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LongAndStrong said:
Just out of curiosity: is this site run by TimHoward717 or is it some other person/entity? Sad to see the traffic that was active on the other site, that has now gone private, does not seem to have migrated here. May be many are not aware of this site.
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anonymous said:
About this site
First and foremost, this is not intended to be Tim Howard 717 blog site, the Tim Howard soccer site or Tim Howard, the former CFO of Fannie Mae site. However, we strongly support Tim Howard, former CFO of Fannie Mae and his allegation against the government. We believe he presented facts and true account of actual events leading up to the Conservatorship and beyond.
The Administrator and contributors are anonymous and have no political ties to any specific political parties nor personally know or have any relationship with any important politicians and/or hedge funds.
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anonymous said:
What Investors Can Learn From The Strange Saga Of Fannie Mae And Freddie Mac – Valuewalk
By Bethany McLean
Good article – please read.
http://www.valuewalk.com/2016/07/fannie-mae-investor-lessons/?all=1
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thombiz said:
For whatever reason, I couldn’t get that hook to work, but this one works:
http://www.valuewalk.com/2016/07/fannie-mae-investor-lessons/
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anonymous said:
Question:
What do banks hope will happen?
McLean:
Big banks are not uniform in their outlook.
Some, like Wells Fargo, very much want the
GSEs destroyed and would like to control more of
the mortgage market.
Small banks, on the other hand, want Fannie and
Freddie kept alive because they fear that without
Fannie and Freddie to buy their mortgages, the big
banks would take over, which would be Less
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Guido da Costa Pereira said:
Couldn’t the big banks control FNMA and FMCC by buying their stocks at such low prices?
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anonymous said:
Gov will never allow any private entities to control FnF (or secondary mortgage markets) for obvious reasons that Gov controls and uses FnF with zero equity investment and also no risk.
Gov forced SPSPA concrete life savers on FnF without any thinking but at the behest of WS tycoons to sink them. That is why even after 8 years nothing much has changed.
The big question is, Will ever Gov give up its control over FnF and control over secondary mortgage markets. Secondary mortgage markets are essential part of Gov/Fed’s monetary policies.
FnF are private shareholder companies for public policy purposes and FnF are subject to very high level of controls and unfunded social mandates by Gov.
Congress and Administration use and control FnF as if FnF are Gov agencies.
WDC/WS allege that FnF have unfair advantage over others just because common people think that FnF have Gov implicit guarantees. Will any sophisticated investor ever invest without reading Gov charter and FnF prospectus which clearly disclaim Gov Guarantees of any sort?
Currently nothing prevents any other FI from doing whatever they want (including what FnF are doing) without any controls or unfunded social mandates by Gov.
But other FIs hate competing with FnF. Other FIs have been hatching plans for long time to own all the business of FnF along with 100% explicit Gov guarantees and none of the controls and mandates by Gov.
As mentioned earlier Gov will never give up control over secondary mortgage markets. Since FnF are the primary gate keepers of secondary mortgage markets, Gov can never disband them. Pre-conservatorship FnF model was the best option for Gov with private risks/capital but with full Gov control.
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thombiz said:
We’ve learned that the banks can make nearly as much money shorting a housing bubble burst as they can in the “longs” market. The banks need to keep a strangle hold on FnF so they can have a “fall guy” to blame it on and a government gladly waiting in the wings to bail them out with a fresh flow of cash.
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anonymous said:
Why there are no court cases to challenge constitutionality of HERA and legality of PSPA?
——————————————————————————————–
Judge Lamberth in his opinion, clearly hints that plaintiff’s filing are flawed and they needs to challenge rights things.
Judge Lamberth’s opinion:
1. It is a slippery slope for the Court to poke holes in, or limit, the plain language of a statute, especially when, as here, the plaintiffs have not asked the Court to weigh in on the statute’s constitutionality.
2. Notwithstanding the plaintiffs’ attempt to downplay the need for a GSE bailout in thefirst place, the plaintiffs do not contest the initial PSPA or subsequent two amendments to the PSPA, but rather only challenge the Third Amendment to the PSPA.
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Researcher said:
How 2 US senators profited from America’s financial crisis
Documents connect Senators Bob Corker and Mark Warner to controversial Wall Street deals.
http://finance.yahoo.com/news/goldman-abacus-144604786.html?soc_src=copy
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pauljon4 said:
“
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Researcher said:
Fannie Mae And Freddie Mac Plaintiffs Allege Companies Are Treated Like Government ATM Machines
Jul. 1, 2016 5:00 PM ET
By Glen Bradford
Summary
FHFA’s history of claiming that it is able to act in separate capacities simultaneously has been confirmed by two judges, Pratt and Lamberth.
Judge Sweeney’s orders and dialog suggest an interpretation of the law that points to more separation of powers than pooling of powers.
Owning Non-Governmental GSE equity securities is a play that minority stakeholders have rights even when the government interprets the law as eliminating them in order to take everything for nothing.
Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) are the only two private companies in America at present where the government takes all of their net profits leaving little for private shareholders. In 2008, they were placed into conservatorship under their regulator the Federal Housing Finance Agency (FHFA) and are often referred to as the Government Sponsored Enterprises (GSEs).
During the period of time between 2008 and 2011, the government issued itself hundreds of thousands of dollars of GSE preferred stock by writing down GSE assets. The third amendment net worth sweep was put into place in 2012 and the writedowns were reversed sending all of the money to the government and leaving out the companies and non-governmental shareholders.
http://seekingalpha.com/article/3985841-fannie-mae-freddie-mac-plaintiffs-allege-companies-treated-like-government-atm-machines
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timdillen said:
Naked Short Report – Fri 7/1/16
———————-
The volume of Naked Shorting today was 22.7% of total $FNMA volume at 370,000 shares. Yesterday’s volume was 29% and 400,000 shares.
Highest %: 58% on 5/18/16
Highest Shares: 15,900,000 on 4/13/16
Shares for May: 49,700,000
Shares for June: 25,600,000
Week ending 6/17: 5,000,000
Week ending 6/24: 5,000,000
Week ending 7/1: 3,500,000
———————–
The total shares of Naked Shorting for $FNMA for this week was 3,500,000. The low volume for the week was likely due to lack of news. I expect it will pick up dramatically when we get a positive ruling in Delaware and/or the Appeals Court.
———————–
http://otcshortreport.com/index.php?index=FNMA&action=view
The Naked short data does NOT include regular Equity Shorting.
———————-
“Naked short selling is selling stock that you haven’t even borrowed: You sell stock on the exchange, don’t deliver it, and when your broker demands that you deliver it you hang up on him. That’s illegal.”
LikeLiked by 2 people
timdillen said:
A very positive article. I was hoping someone would take the time to explain what all this meant. Looks very good for us.
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Jerry said:
Tim,
Totally agree with what this all meant. Epstein did a nice job explaining each question and providing the plaintiff’s case in each. What I still don’t understand is why the questions were only addressed to the class plaintiffs. Does this mean that the institutional plaintiffs claims are different and do not have these same issues or are all plaintiffs addressed with these questions. Epstein did not address this.
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timdillen said:
I noted that too. I read a post last week who said they had some legal experience and noted that the questions were related to the class action plaintiffs. Their interpretation was that the institutional plaintiffs had met their threshold to bring their case.
The class action plaintiffs are in a somewhat different legal category and the court wanted more justification as to their claim to be in this court.
Have no idea if that is true but sounded interesting. Hopefully someone here can clarify for us.
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timdillen said:
I’m also encouraged that the Appeals Court is taking their time. Its a very very big case against the federal government with $100+ billion in potential damages.
This is a novel case that will set precedence regarding corporate, government and shareholder law. It will also determine who will control the $3 trillion mortgage industry and a major portion of our GDP.
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Jerry said:
I am hoping the reverse Lamberth’s decision rather than remand back to him. It feels like with all of this time they are taking that they may be leaning that way if their last questions are satisfied. We shall see.
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