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#FannieGate, $fmcc, $fnma, Fannie Mae, FHFA, Freddie Mac, HERA, Third Amendment Sweep
The Direct Claim Argument Should Overcome Section 4617(b)(2).
Courts and the parties agree that FIRREA’s provisions regarding the powers of conservators, including the succession clause, are materially identical to those of HERA.
The Court has already accepted the Eleventh Circuit’s position construed FIRREA’s successor clause while reviewing an order from the United States Bankruptcy Court for the Southern District of Florida.
Relying on Lubin, the Court succinctly found: “Therefore, all derivative claims in the Appellant’s proposed complaint belong to [FDIC], and all direct claims belong to [Stockholder].” Consistent with Lubin, “[n]o federal court has read” Section 4617(b)(2) or the analogous provision of FIRREA to transfer direct shareholder claims to the conservator or receiver.
HERA Does Not Strip Plaintiffs of Their Rights in Their Stock.
- First, HERA does not bar Plaintiffs from asserting direct claims that relate to their ownership of stock, and all of the claims at issue here are direct.
- Second, even if Plaintiffs’ claims were derivative, courts repeatedly have recognized that shareholders may bring derivative claims during conservatorship where, as here, the conservator has a manifest (and therefore disqualifying) conflict of interest.
Plaintiffs May Bring Direct Claims.
HERA provides that FHFA as conservator succeeds to “all rights, titles, powers, and privileges of . . . any stockholder . . . of the regulated entity [i.e., Fannie] with respect to the regulated entity and the assets of the regulated entity.” 12 U.S.C. § 4617(b)(2)(A)(i) (emphasis added). Whatever implications this succession clause may have for shareholders seeking to bring derivative claims on behalf of Fannie, it does nothing to divest shareholders of their own, independent and personal economic rights in Fannie and, therefore, does nothing to prevent shareholders from maintaining direct claims on behalf of themselves to protect their own rights against any culpable party. This is why, upon imposition of the conservatorship, FHFA correctly insisted that Fannie’s shares would “continue to trade” and that its shareholders would “retain all rights in the stock’s financial worth.”
FHFA Fact Sheet, Questions and Answers on Conservatorship 3, https://goo.gl/Gl9z04. If FHFA’s current litigating position were correct, these public assurances would have been demonstrably false.
[Adopting FHFA’s position would also render numerous conservatorship decisions nonsensical. For example, FHFA expressly suspended payment of dividends to private shareholders like Plaintiffs during conservatorship. But if FHFA had in fact succeeded to the shareholders’ contractual dividend rights, any payment of dividends would have been to FHFA itself, not to shareholders. FHFA then would have had no need to announce to itself that it was halting the payment of dividends. Moreover, FHFA entered into contractual agreements with Treasury—a shareholder in the Companies—that provided Treasury with dividend and liquidation rights, and FHFA has paid tens of billions of dollars in dividends under those agreements. If FHFA’s assertion were correct, Treasury’s dividend rights would belong to FHFA, and these payments should have been retained by FHFA rather than given to Treasury. ]
Under Delaware law, shares of stock and interests in non-corporate business entities “carry with them particular rights that a holder of the [interest] can exercise by virtue of being the owner.” Direct claims for breach of fiduciary duty arise when those rights are infringed. Moreover, even in cases involving derivative claims, the same claims can have direct aspects when the allegedly faithless transaction involves an extraction from one group of stockholders, and a redistribution to another, of “a portion of the economic value and voting power embodied in the minority interest.”
Plaintiffs must prove a breach of an underlying fiduciary duty, such as the duty belonging to FHFA. If FHFA took over Plaintiffs’ claims, it would need to prove that it breached its fiduciary duty. FHFA would have to attack its own records and depose its own officers to effectively pursue Plaintiffs’ claims. An obvious manifest conflict of interest prevents FHFA from proving Plaintiffs’ claims
Plaintiffs May Bring Derivative Claims Where the Conservator Has a Manifest Conflict of Interest.
Plaintiffs must prove a breach of an underlying fiduciary duty, such as the duty belonging to FHFA. If FHFA took over Plaintiffs’ claims, it would need to prove that it breached its fiduciary duty. FHFA would have to attack its own records and depose its own officers to effectively pursue Plaintiffs’ claims. An obvious manifest conflict of interest prevents FHFA from proving Plaintiffs’ claims.
While Section 4617(b)(2)(A) generally has been interpreted to bar derivative (but not direct) suits by shareholders during conservatorship or receivership, it does not follow that all shareholder derivative suits are barred without exception, including derivative suits involving misconduct by the conservator or receiver itself.
Two federal courts of appeals have squarely addressed this question, both in the context of 12 U.S.C. § 1821(d)(2)(A)(i), the provision of FIRREA on which Section 4617(b)(2)(A) was modeled. And both of those courts held that shareholders may maintain a derivative suit when the conservator or receiver has a manifest conflict of interest. See First Hartford Corp. Pension Plan & Trust v. United States, 194 F.3d 1279, 1283 (Fed. Cir. 1999) (finding standing to sue “because of the FDIC’s conflict of interest by which it is both alleged to have caused the breach and controls the depository institution”); Delta Sav. Bank v. United States, 265 F.3d 1017, 1024 (9th Cir. 2001) (adopting “a common-sense, conflict of interest exception to the commands of FIRREA” and permitting a shareholder to bring a derivative suit against one of the FDIC’s “closely-related, sister agencies”).
JUDGE GINSBURG: Well, they had a preexisting right to bring the lawsuit, the succession clause takes away something.
STERN: Yes, it takes away.
JUDGE GINSBURG: But does it take away a direct claim? It doesn’t take away a, just because a shareholder is a shareholder doesn’t mean that his loss of rights as a shareholder means his loss of rights in any other capacity. If he were also a tradesman he’d still retain his trade account.
STERN: I think it’s a derivative claim, Your Honor.
JUDGE GINSBURG: Insofar as they want their liquidation preference they don’t get, Fannie Mae doesn’t get anything.
HUME: Our contract claims are direct claims.
HUME: They have always been direct claims.
HUME: We litigated them as direct claims, they were analyzed as direct claims, and —
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 –
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 –
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 —
Pagliara v. Fannie Mae case (Opening Brief in Support of Motion to Remand) are direct claims
Edwards v. Deloitte case are direct claims
Recent Updates from the Investors Unite Blog
Newly Unsealed Documents Show How Treasury Violated HERA
Tuesday, August 2nd, 2016
The more that is known about the thinking and discussions in the inner sanctums of government during the course of the conservatorship of Fannie Mae and Freddie Mac, the more obvious it is that Treasury officials exceeded their legal authority in order to hasten the dismantlement of the enterprises.
The latest evidence has come to light in unsealed documents produced in the discovery process in the U.S. Court of Federal Claims, which were cited in a complaint filed by investors in Chicago.
In addition to setting up a process by which the assets of Fannie and Freddie would be conserved and preserved, the Housing and Economic Recovery Act (HERA) explicitly delineated the powers and duties of the Federal Housing Finance Agency (FHFA) as conservator and constricted Treasury’s powers. Top government officials intimately involved with the drafting of the statute have detailed how Congress made it a point to reinforce the independence of FHFA as the conservator, consistent laws dealing with distressed institutions going back decades. But this seemed to have little bearing on Treasury’s determination to dictate Fannie and Freddie’s fate, which ultimately led to the Net Worth Sweep in 2012 and the depletion of their capital.
For example, Jim Parrott, who was a top housing policy advisory at the White House at the time of Sweep, was asked in a deposition whether there had been outreach to Congress about the Sweep. He replied that he had not done so and commented “…this was a Treasury-driven process. So to the degree there was outreach to the Hill, it would have come from Treasury, and not from, from me.”
Parrott’s name has surfaced in several documents unsealed this spring. Recall one of them was his email to senior officials at Treasury the day the Sweep was announced, boasting that diverting Fannie’s and Freddie’s profits would eliminate “the possibility that they ever go (pretend) private again.”
Treasury’s assertion of de facto control came early in the conservatorship. A heavily-redacted presentation prepared by PriceWaterhouseCoopers for Freddie to FHFA in October 2008, explained that the Preferred Stock Purchase Agreement terms “restrict the business activities” of Freddie and prevents the company from taking various steps in its own management “without prior written consent of Treasury.” Thus, the designated conservator was told early on that the buck stops with Treasury, regardless of what the statute said.
This interest by Treasury to keep Fannie and Freddie on a short leash is also evident in a draft document spelling out the terms of the PSPA s prepared for Treasury in August 2008 by the law firm of Wachtel, Lipton, Rosen and Katz and Morgan Stanley, in their capacity as independent consultants. In the section of that document titled “Transfers of Assets” the ability of the GSEs to sell assets without Treasury’s consent is restricted. The document also reveals Treasury’s long-term calculations on the value of the warrants the government received for Fannie and Freddie’s stock. Ultimately, these terms would make it impossible for Fannie and Freddie to pay back public funds made available to them at the start of the conservatorship.
Other documents from the early months of the conservatorship provide yet more information that Ed DeMarco had been on a quest to assist Treasury in using the conservatorship to dismantle Fannie and Freddie practically from the outset. In a presentation in November 2008 to other government officials, DeMarco, then a deputy director at FHFA, said “…conservatorship is a legal process to stabilize a troubled institution with the objective of returning the GSEs to normal business operations. Structure was flawed.” Thus he knew the statute said one thing (restore their financial footing) but he believed it was better policy to do something else (wind them down.)
On top of these documents is a March 2012 memo from Deloitte that observes that with Fannie and Freddie in conservatorship, “…the US government, and the US Treasury continue to be able to direct the Company’s business.” Interestingly, a September 2008 memo from Freddie’s auditor, PriceWaterHouseCoopers, says “Treasury’s authority to purchase GSE debt obligations and securities will expire on December 31, 2009.” As we now know, that deadline meant nothing as Treasury engineered the Sweep in the summer of 2012.
All this serves to underscore an important claim by shareholders who have challenged the Net Worth Sweep: Treasury controls the GSEs and FHFA’s role as independent conservator was rendered meaningless from the start of the conservatorship. As the discovery process yields more information it is a safe bet that more violations of HERA will come to light. When they do, the rationale for the Sweep will crumble and the injustice suffered by shareholders will be glaringly apparent.
Pingback: HERA Section 4617(f) Does Not Bar Plaintiffs’ Claims Against FHFA When They Acted Ultra Vires. | TH717
ed said:
This is Bingo the Cato Institute Working Paper. What’s old is new again.The Tsy and FHFA have been fighting the law. The Law will win. It’s a shame b/c IMO he did a lot of good stuff butt he’s trying to run from a lot of bad stuff. VJ it’s not too late to turn it but lest I remind U, The Tsy is a Tax Collector and I’m a tax payer.. KISS stupid
Click to access working-paper-26.pdf
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timdillen said:
Naked Short Report – Thu 8/11/16
———————
The volume of Naked Shorting today was 61.5% (**ALL TIME HIGH**) of total $FNMA volume at 5,400,000 shares!
Former highest %: 58% on 5/18/16
New high %: 61.5% on 8/11/16
Highest Shares: 15,900,000 on 4/13/16
Shares for May: 49,700,000
Shares for June: 25,600,000
Shares for July: 9,900,000
———————–
Most of the past 5 trading days have been uneventful for illegal naked shorting, intensity was 20% to 38% (still a lot). Today was a different story. The fraud reached an all time high today. They struggled mightily to hold the price down.
The pressure they are exerting on the price leads legal equity shorters to step in, which I believe is more what was happening in the past 5 trading days. I’m fine with that. Those trades have to be cleared eventually with a buy transaction unlike naked shorting.
Today there was strong buying pressure which forced these criminals to show us how far they are willing to take their illegal market manipulation. They are above the law. They have no fear. But they will pay the price of failure when the Appeals Court rules.
———————–
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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Observer168 said:
Tim, it’s disheartening to see criminals running rampant yet no actions was taken by SEC. I guess that’s what you get when your stock is trading on OTC.
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reyq said:
Agreed totally with you about this naked short matter, illegality and impunity something very visible and common under this Gov.
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ed said:
This is crazy But “what if” the illegal shorts are attempting to drive the price down to gain immensely if/when the merit panel remands..
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ed said:
odd that FNMAS hasn’t moved in concert with the common this past week of 8/12..
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Observer168 said:
timdillen,
Can you please share some information on naked shorts since beginning of this week. The commons have been dropping like a rock…Thanks.
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timdillen said:
Sorry I’ve been tardy. Taken a new job which is sucking the life out of me. At least I’m not glued to the stock ticker.
From what I’ve seen, naked shorting has not increased much this past 5 trading days. I’m going out on a limb here and saying that standard equity shorting is to blame. I’ve seen this activity in the past.
They are looking at a very short term gain and have their finger on the buy button to clear their equity short position at the first sign of good news. I don’t see this as a bad thing as they will have to eventually buy to cover (unlike naked shorting).
Think of this activity as loading the spring. It will just propel the price higher when we get a good judgement.
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timdillen said:
What I have done in the past when this has happened was to sell a personal possession and buy on the way down. Picked up many shares when they push it down to close to a dollar. Buyers pile in when it gets down that far.
Sold my corvette last year. Sold my beach condo and bmw this year. I’ll be able to buy them all back later.
If you always have a few hundred bucks sitting in your brokerage account, these slides are far less painful as you get to buy at fire sale prices.
Watch your “good” sources of data and ignore the idiots who are trying to painic people into selling thinking bad news has leaked out to the “smart” money. Have seen a lot of that happening this week.
Sit tight, stap in good, keep your hands down, it’s the best damn ride of my lifetime. Start playing with Realtor.com and picking out your mansion. I do!
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anonymous said:
When do you expect the verdict to be out? I am hoping it will be this month, if not then next month. If we have to wait till after elections, it will be a painful wait.
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timdillen said:
That’s the multi billion dollar question!
Far too many forces at work to know. I’ve waited 7 years. I’ve learned everyone’s timing predictions have been wrong so far.
Try not to dwell on it. It will drive you crazy. Divert your attention elsewhere and time will go faster. It is gonna happen. The law is on our side.
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The Stig, MD said:
I agree Tim, it looks like shorts posting some “bad news” eg Gurufocus article on Berko selling commons to push price below $2 to trigger stops.
I also expect price to hit $1.50 area before RSI around 10-12 encourages pump and dump.
As for court news, possibly September, but could be sooner. With Sweeney’s prior document releases, they usually occurred a week or so before court rulings.
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timdillen said:
Agreed.
There are some very bad actors in this play. In the end, all will get what they deserve, good or bad. But this play does drag on ever so much.
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ed said:
some serious bad actors who wrote policy with an agenda using the Law (HERA) as their shield!
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unbelievable said:
The DC Circuit Should Invalidate The Net Worth Sweep Of Fannie/Freddie Assets
Richard Epstein
A motley collection of procedural objections should not block a long overdue decision
In the aftermath of oral argument of April 15, 2016 in Perry Capital v. Lew, there has been an unusual flurry of briefing activity, which clearly reflects the high stakes of this undecided case. Up through the oral argument, the focus had been on the merits of the net worth sweep (NWS) introduced by the Third Amendment to Senior Preferred Stock Purchase Agreements (SPSPAs) in August 2012. The D.C. Circuit was curious about whether it should reach the substantive issues at all, given lurking complications with the doctrine of sovereign immunity. I wrote an extensive analysis that concluded that there was nothing of merit in this diversionary action. And so it has turned out. All the parties agreed that the sovereign immunity defense was available neither to FHFA nor to Treasury. The upshot of that detour is that the correct analysis of this case begins and ends with observation that the NWS was introduced by contract and thus should be analyzed not as a regulatory action, but under ordinary contract rules. Sadly, no one could think of the NWS as a legitimate modification for mutual benefit of the original 2008 agreement, when Treasury got not something, but everything, from its sweetheart deal with FHFA. The private shareholders get nothing, come hell or high water. If the NWS sticks, they should be wholly indifferent to the fortunes of a business in which they no longer have a stake.
http://www.forbes.com/sites/richardepstein/2016/08/08/the-dc-circuit-should-invalidate-the-net-worth-sweep-of-fanniefreddie-assets/
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hll7575 said:
Somehow I got the feeling that professor Epstein is lecturing one John Carney of WSJ?
His recent series of articles made the DC appeal court judges harder to make a political ruling in favor of the government.
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smauney01 said:
Treasury has used FnF monies for:
Fast and Furious
Obamacare
Iran hostage/nuclear deal payoff
So much for the Treasury’s “Fiscal Conservatism”
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Locust said:
Looks like we are moving in here for a while at least.
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hll7575 said:
Timhoward717 appears to have been back up again as of this morning.
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Dean said:
Does not appear to be back up from what I can tell……….
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hll7575 said:
I tried again just now. It is there. I also had a problem last night, but at least for me it’s back up, though not much new stuff added there.
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thombiz said:
I can confirm, it does seem to be back up.
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anonymous said:
I get this message: Coming soon! Check back soon to see the New and Improved website and blog. for timhoward717. With new features, topics and resources for our readers and subscribers to share.
Do you get the above msg or are you able to see the blog?
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anonymous said:
I am able to access the blog now. Thanx
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Dean said:
I cant seem to get in to timhoward717? any ideas how?
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FannieFan said:
New TimHoward717 link? I still can not get in. Thanks,
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anonymous said:
When will appeals court decision will be announced?
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thombiz said:
Looks like http://www.timhoward717.com is gone for good this time.
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franceskh said:
Unbelievable to let go of the steering wheel at this point in time. I hope not.
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thombiz said:
I’m going to speculate, I think the timhoward717 blog was being run by a law firm as a way to get hundreds of people doing research (call it due diligence). A year or so back, I googled it and came up with an address for a law firm in Wash DC. To take the blog down suggests the decision has been determined by the courts/appeals and there is no need or purpose to continue the blog. It suggests the law firms have been notified of the decision and it will be announced in the next few days, in favor of the plaintiffs.
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anonymous said:
What is the basis for your speculation? It could be the site is faced with a problem like in the past and will come back. What is so different this time to make u think it will never come back?
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thombiz said:
.In the past, the “Tim” was participatory in the days leading up to blog being closed. Not so this time. He has hardly been active since it came back up. In the past you would not go to a page where http://www.timhoward717.com was not found. This time, it acts as if it cannot be found. Of course, last time, it denied access based on needing approval. Again, not so this time.
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wheedass said:
Timhoward717 author was too blindly liberal and mostly interested in the social agenda of FnF to be a ghostwriter for one of the law firms.
One of the last post was him relaying the message that the hedgefunds plaintiffs asked him to stop making a racist issue out of #fanniegate. This is something I complained about TH717 doing repeatedly. I don’t think a lawyer for the plaintiffs would have had that level of divisive political ineptitude.
It is obvious that the TH717 author had more information than was available to the rest of us, but I would be shocked if he were a lawyer.
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thombiz said:
There seems to be lots going on at the timhoward717 “The Black Swan” twitter account: https://twitter.com/timhoward717?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor
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thombiz said:
Looks like I was wrong about the timhoward717 blog. This morning (Monday 8/8) you get a message to stay tuned because a bigger and better blog is coming. So much for my career as a predictor! Sorry about that.
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anonymous said:
Parrot–“…eliminate the possibility that they ever go private again.” Since when did they ever cease to be private? (9th Circuit Court ruling)
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Anon said:
Fairholme fund just dumped their position in Freddie and Fannie. That doesn’t sound very good. Any thoughts?
http://finance.yahoo.com/news/fairholme-fund-exited-4-positions-220654504.html;_ylc=X1MDMTE5Nzc4NDE4NQRfZXgDMQRfeXJpZAMzNTdyNnMxYnE3cDlpBGcDZFhWcFpEeHVjejR5Tm1JNU9ERXlZeTFsTkdReExUTmxOVFl0T0RJM05TMDNZbVV6T0dabE9XWTVZbU04Wm1sbGJHUStabTV0WVE9PQRsYW5nA2VuLVVTBG9yaWdfbGFuZwNlbgRvcmlnX3JlZ2lvbgNDQQRwb3MDMARyZWdpb24DVVMEc3ltYm9sA0ZOTUE-?.tsrc=applewf
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franceskh said:
What happened to the Preferred? If this link is accurate, it looks like Commons were dropped.
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The Stig, MD said:
Here’s the author’s profile from GuruFocus: David Goodloe.
https://www.tipranks.com/bloggers/david-goodloe#!
He’s a “financial blogger” with an unremarkable success rate; I question his ties to funds as renowned as Fairholme. Wonder whether he was paid by anti-GSE trolls to scare prices down? Hillary isn’t beneath such measures with her troll PAC; what’s to keep TBTFs from doing the same.
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anonymous said:
Who cares? Berkowitz has been more of a preferred than aq common shareholder all along. Since they sold the GSEs are up and we are doing well on the litigation front. Evidently someone bought what was sold and moreover it is better to have many small shareholders than a few very big ones.
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anonymous said:
Why is the price not taking a hit?
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anon said:
This is a direct quote from Tim Howard, the former CFO of Fannie which was posted yesterday.
“As you’ve already noted, I don’t support Treasury’s exercise of the warrants to give itself 79.9% of Fannie’s and Freddie’s common stock, for two reasons. First, I believe Treasury’s granting itself the warrants in 2008 can and will be challenged successfully in court, and second, warrant exercise would cause a fourfold increase in shares outstanding at both companies, making it extremely difficult for them to raise through still more equity issues the significant amount of capital they will need to achieve adequate capitalization as newly private entities.
If Treasury did exercise the warrants and sell (in blocks over time) the newly issued shares, it would eventually lead to private ownership of Fannie and Freddie–with Treasury getting cash from the proceeds of the sales. But I’m not sure what would motivate Treasury to give 15 percent of its shares to an affordable housing fund. As to returning all the excess money paid to it because of the sweep, I believe Treasury will be forced to do that by the courts, and that it will have no alternative but to repay these monies by retroactively paying down the balances of Fannie and Freddie senior preferred stock. With little or no remaining senior preferred outstanding (paying an annual 10 percent after-tax dividend), both companies would be able to retain the bulk if not all of their earnings, and thus be viable as stand-alone companies. At that point, FHFA could free them from conservatorship, whether Treasury agreed with that decision or not.”
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anon said:
GSE Upside: PricewaterhouseCoopers Showed FHFA How To Implement Capital Draws
Glen Bradford
Summary
Documents released Monday show PricewaterhouseCoopers showed the FHFA how to implement capital draws.
Forcing the GSEs to take capital they don’t need is not the action of a conservator.
These documents support the lawsuits trying to force Deloitte and PricewaterhouseCoopers to restate the financials of Fannie Mae and Freddie Mac.
A financial restatement will likely put the enterprises’ capital back over $100B.
These projections came from BlackRock.
http://seekingalpha.com/article/3995702-gse-upside-pricewaterhousecoopers-showed-fhfa-implement-capital-draws
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Anon said:
FannieGate In Court Of Appeals: Excursus 1 – Profitability Of GSEs
Jeremy Cain
Summary
This is an excursus of the GSEs’ profitability and an examination of FHFA’s and Treasury’s ‘death spiral’ defense and their true intent in implementing the NWS.
Fannie Mae and Freddie Mac have paid exceedingly more money in dividends under the NWS ($200.1 billion) than the original 10% dividend ($33.55 billion) with amortization.
A mathematical analysis and parametric study shows that Treasury’s commitment could have lasted 73 and 109 years for Fannie Mae and Freddie Mac, respectively (90% of 10% dividend paid).
The record clearly shows that the NWS justification given by FHFA and Treasury is not supported by facts, and was done solely to wind them down.
http://seekingalpha.com/article/3995664-fanniegate-court-appeals-excursus-1-profitability-gses?
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Anon said:
Fannie Mae Reports Net Income of $2.9 Billion and Comprehensive Income of $2.9 Billion for Second Quarter 2016
• Fannie Mae expects to pay $2.9 billion in dividends to Treasury in September 2016. With the expected September dividend payment, the company will have paid a total of $151.4 billion in dividends to Treasury.
• Fannie Mae was the largest provider of liquidity to the mortgage market in the second quarter of 2016, providing approximately $145 billion in mortgage financing that enabled families to buy, refinance, or rent homes.
• Fannie Mae is focused on serving its customers’ needs, implementing innovative tools that deliver greater value and certainty to lenders, and helping make predictable long-term fixed-rate mortgages, including the 30-year fixed-rate mortgage, a reality for families across the country.
• Fannie Mae continued to lay off risk to private capital in the mortgage market and reduce taxpayer risk through its Connecticut Avenue SecuritiesTM (CAS), Credit Insurance Risk TransferTM (CIRT TM), and other types of risk-sharing transactions. Through the second quarter of 2016, Fannie Mae had transferred a significant portion of the mortgage credit risk on over $660 billion in unpaid principal balance of mortgage loans pursuant to these transactions.
Click to access q22016_release.pdf
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pauljon4 said:
*
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John said:
Glad I found this site, interesting information about Dannel Malloy….it’s starting to make more sense.
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blklager said:
tick-tock tick-tock. Decision has to be near.
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Tony said:
Does anyone know if the aug 2nd docs released will be taken into consideration in the perry DC circuit case?? are they just gettin released to us, or have they already seen them?? It might be a little late to drop these docks, and address everything in them
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anon said:
Since Hume is also an attorney in Federal Claims, it is reasonable to assume that Perry Appeals have many if not all of those sealed and unsealed documents.
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Kman1 said:
Could someone please explain the importance of it coming from Blackrock?
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The Stig, MD said:
Blackrock is led by Larry Fink, one of the inventors of private mortgage backed securities in the 80s when he was at First Boston (the other was Lew Ranieri with Saloman Bros). He is being considered for Treasury Secretary by Hillary Clinton. I had written about this on the old Tim’s site but was deleted by Dannel Malloy (who presumably runs the TimHoward717 blog) since he is running for Senate. He’s obviously in trouble with the Clintons now as he is “under investigation” for corruption, along with a couple of other Dems who are “being disciplined” by them.
Blackrock, one of the world’s largest hedge funds, has been conniving with other money players for years to dismantle GSE market share.
On the GOP side, Trump has been considering Carl Icahn for the Treasury post. Icahn is obviously a Fink competitor and although he only owns a paltry sum of GSE shares, his major investments are in energy/transport (CHK, Cheniere) with minimal plans for the mortgage business, as far as I’m aware.
In regards to the latest release, I recall Sweeney timing releases with upcoming court rulings, many of which have been favorable. Given how ridiculously redacted the PWC, Deloitte memos are, I’m keeping my fingers crossed for yet another bad day for gov.
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Observer168 said:
Great explanation, thank you.
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The Stig, MD said:
My pleasure to help 🙂
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Anon4 said:
Thank you so much for the work. We continue fighting for justice till we win.
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Observer168 said:
Wish there are more posters on this site, the owner spends more time here compare to the other site. KTF!
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timdillen said:
The law is on our side. We will win.
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anonymous said:
I hope we see something happen soon – hopefully this month. We have so much good news to back us, yet it seems very frustrating fighting da evil Govt. – a tyrant so nasty, so vicious.
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Michaael Mageau said:
Please inform us as to the % of naked shorting today. Why would the PPS be down with such a good Quarterly Statementt?
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kuwlness said:
Things are heating up! New docs unsealed. “BlackRock was where the projections came from” … And … First! 🙂
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