12 U.S. Code § 4617(a)(3)(A)-(L) as it Relates to the Regulated Entities.
Question:
On September 7, 2008, did the Regulated Entities meet the grounds for discretionary appointment of conservator or receiver?
♦BlackRock August 25, 2008 Feddie Mac Confidential Capital Review
♦October 2008 PWC Freddie Memo
♦October 2008 FHFA Presentation
♦September 2008 PWC Freddie Memo
♦ November 2008 FHFA Presentation
♦ October 2008 Grant Thornton Notes
♦ August 2008 Draft Treasury Summary
♦A Pattern of Deception – J Timothy Howard
HERA Statute as Written:
12 U.S. Code § 4617(a)(3)(A)-(L) Grounds for discretionary appointment of conservator or receiver
The grounds for appointing conservator or receiver for any regulated entity under paragraph (2) are as follows:
(A) Assets insufficient for obligations
The assets of the regulated entity are less than the obligations of the regulated entity to its creditors and others.
(B) Substantial dissipation
Substantial dissipation of assets or earnings due to—
(i) any violation of any provision of Federal or State law; or
(ii) any unsafe or unsound practice.
(C) Unsafe or unsound condition
An unsafe or unsound condition to transact business.
(D) Cease and desist orders
Any willful violation of a cease and desist order that has become final.
(E) Concealment
Any concealment of the books, papers, records, or assets of the regulated entity, or any refusal to submit the books, papers, records, or affairs of the regulated entity, for inspection to any examiner or to any lawful agent of the Director.
(F) Inability to meet obligations
The regulated entity is likely to be unable to pay its obligations or meet the demands of its creditors in the normal course of business.
(G) Losses
The regulated entity has incurred or is likely to incur losses that will deplete all or substantially all of its capital, and there is no reasonable prospect for the regulated entity to become adequately capitalized (as defined in section 4614 (a)(1) of this title).
(H) Violations of law
Any violation of any law or regulation, or any unsafe or unsound practice or condition that is likely to—
(i) cause insolvency or substantial dissipation of assets or earnings; or
(ii) weaken the condition of the regulated entity.
(I) Consent
The regulated entity, by resolution of its board of directors or its shareholders or members, consents to the appointment.
(J) Undercapitalization
The regulated entity is undercapitalized or significantly undercapitalized (as defined in section 4614 (a)(3) of this title), and—
(i) has no reasonable prospect of becoming adequately capitalized;
(ii) fails to become adequately capitalized, as required by—
(I) section 4615 (a)(1) of this title with respect to a regulated entity; or
(II) section 4616 (a)(1) of this title with respect to a significantly undercapitalized regulated entity;
(iii) fails to submit a capital restoration plan acceptable to the Agency within the time prescribed under section 4622 of this title; or
(iv) materially fails to implement a capital restoration plan submitted and accepted under section 4622 of this title.
(K) Critical undercapitalization
The regulated entity is critically undercapitalized, as defined in section 4614 (a)(4)of this title.
(L) Money laundering
The Attorney General notifies the Director in writing that the regulated entity has been found guilty of a criminal offense under section 1956 or 1957 of title 18 or section 5322 or 5324 of title 31.
Summarized Key Points of HERA
In total, HERA provided for 12 circumstances (summarized points) in which FHFA could place the Regulated Entities into Conservatorship or Receivership:
- If a Company’s assets were insufficient to meet its obligation;
- If a Company’s assets or earnings were substantially dissipated due to unlawful conduct or unsafe or unsound practices;
- If a Company was in an unsafe or unsound condition to transact business;
- If a Company willfully violated a cease and desist order;
- If a Company concealed books and records from the FHFA Director;
- If a Company became unlikely to be able to pay its obligations or meet the demands of its creditors in the normal course of business;
- If a Company incurred, or became likely to incur, losses that would deplete substantially all of its capital with no reasonable prospect of becoming adequately capitalized;
- If a Company violated the law;
- If a Company’s board of directors or shareholders passed a resolution consenting to a conservatorship or receivership;
- If a Company became undercapitalized or significantly undercapitalized, as defined by the governing statute, and could not or would not take corrective measures;
- If a Company became critically undercapitalized, as defined by the governing statue; or
- If a Company engaged in money laundering.
These are the arguments against the Discretionary Appointment of Conservatorship or Receivership. In my opinion, the burden of proof of placing GSEs under conservatorship should be upon the FHFA as Regulator.
(A) Assets insufficient for obligations
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. As of June 30, 2008, the date of most recently reported financial results for the last quarter immediately preceding Fannie Mae’s conservatorship, which were not filed with the SEC until August 8, 2008, Fannie Mae had assets of $885.9 billion and liabilities of $844.5. Thus, Fannie Mae assets exceeded its liabilities by more than $41 billion just shortly before the conservatorship was imposed. In fact, Fannie Mae’s assets had exceeded its liabilities by approximately $40 billion for each of the past three calendar years. Thus, no factual basis existed for asserting that the Regulated Entities’ assets were less than their obligations and; therefore, the statutory ground set forth in section 4617(a)(3)(A) was not satisfied.
(B) Substantial dissipation
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. From December 31, 2005, to June 30, 2008 Fannie Mae’s assets grew from $834.1 billion to $896.6 billion. Thus, company assets were increasing. Fannie Mae earnings had no substantial dissipation; although, Fannie Mae’s earnings decreased from 2005 to 2007, they increased in the first half of 2008 over earnings in the second half of 2007. Furthermore, Fannie Mae’s decline in earnings in 2007 was not attributable to either a violation of law or to any unsafe and unsound practice; but rather, the decline was largely attributable to the following:
>A narrowing of the interest spread earned by Fannie Mae resulting from higher borrowing costs during a period of turmoil in the financial markets;
>The need to increase reserves to offset expected future credit losses stemming from the general decline in the housing market which was negatively impacting all financial firms at the time; and
>Discrete one-time losses on derivatives contracts with corresponding offsetting gains that were not simultaneously recognized.
None of these circumstances reflected either a violation of law or an unsafe and unsound practice on the part of Fannie Mae. Furthermore, there has never been any allegation that the Companies engaged in a violation of any law resulting in the substantial dissipation of assets or earnings. On September 7, 2008, public announcement of the conservator, Director Lockhart strongly emphasized that the management and directors of the Companies had done nothing wrong, noting that any difficulties they were facing were the result of extenuating circumstances. On the same day, Secretary Paulson emphasized that; “I attribute the need for today’s action primarily to the inherent conflict and flawed business model embedded in the GSE structure, and to the ongoing housing correction. Fannie Mae’s and Freddie Mac’s management and their Boards are responsible for neither.”
(C) Unsafe or unsound condition
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. Neither GSEs were engaged in any unsafe or unsound practice or was in danger of incurring losses that would caused their capital to fall below regulatory capital requirements. Moreover, the GSEs had capital substantially in excess of their regulatory capital requirements. Accordingly, the GSEs were not operating in an unsafe or unsound condition. The GSEs were subject to capital requirements contained in HERA, which, by definition, were engineered to ensure that the GSEs remained in a safe and sound condition. To that end, HERA specifically provides that the risk-based capital requirement shall “ensure that the enterprises operate in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of each enterprise.” To be clear, both of the Regulated Entities substantially exceeded the applicable risk-based requirements, and this has always been the case. Thus, by definition, the Entities were in a safe and sound condition.
“Stress test”, commonly referred to as the “100-year storm” test, required that the GSEs total capital was sufficient to withstand a 1-year period of extreme economic instability and adverse market conditions.
As of June 30, 2008, Fannie Mae’s core capital exceeded both the FHFA-directed and statutory minimum capital requirement and its total capital exceeded its minimum capital requirement by $14.3 billion, or 43.9%, and its total capital exceeded its statutory risk-based capital requirement by $19.3 billion, or 53%. Regulated Entities would have passed any reasonable risk-based capital stress test that could have been applied at that time. Therefore, GSEs were not operating in an unsafe or unsound condition and, therefore, the statutory ground for appointing a conservator set forth in this subsection was not satisfied.
(D) Cease and desist orders
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. Neither GSEs were in violation of a cease and desist order. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.
(E) Concealment
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. Neither GSEs at any time concealed their books, papers, records, or assets, or any refusal to submit the books, papers, or records for inspection to any examiner or to any lawful agent of the Director. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.
(F) Inability to meet obligations
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. The regulated entities were likely to be able to pay its obligations or meet the demands of its creditors in the normal course of business. As of June 30, 2008, Fannie Mae had $344.8 billion of short-term assets, comprised chiefly of cash, cash equivalents, and investments in publicly traded securities. This far exceeded the company’s $247 billion in short-term liabilities. Fannie Mae’s holdings of investment securities were carried on the company’s balance sheet on a fair value basis, and thus represent a market valuation for those assets. Both GSEs had sufficient assets to meet their obligations and any demands of their creditors in the normal course of business. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.
(G) Losses
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. During the period leading up to the imposition of the conservatorship, neither regulated entities had incurred losses that substantially depleted their capital let alone all of their capital. From December 31, 2007, to June 30, 2008 Fannie Mae’s total capital increased from $48.7 billion to $55.6 billion, and its core capital increased from $45.4 billion to $47 billion. Thus, Fannie Mae capital had not been depleted. Losses were primarily reflected the Entities’ recording of substantial reserves for potential future credit losses. These losses are not actually realized until future periods (if they are ever realized at all), and they can be offset by correlating deferred tax assets that have a reasonable expectation of being realized in the future (based partly on a lengthy history of largely positive financial performance), Thus, they are added back into the calculation of total capital and do not actually impact total capital. Moreover, Fannie Mae had access to substantial capital in the public equity markets. In December 2007, Fannie Mae raised approximately $7 billion through an issuance of Series S preferred stock; in May 2008, Fannie Mae raised almost $2.1 billion by issuing Series 2008-I preferred stock; and also raised an additional $2.25 billion by issuing Series T preferred. At around the same time, Fannie Mae also raised $2.59 billion by issuing 94.3 million shares of common stock at a price of $27.5 per share. The original 82 million shares offering was oversubscribed by 12.3 million shares. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.
(H) Violations of law
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. Neither Companies violated any law or regulation, or any unsafe or unsound practice or condition that is likely to—
(i) Cause insolvency or substantial dissipation of assets or earnings; or
(ii) Weakening of their condition.
Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.
(I) Consent
The Regulated entities did not by resolution of its board of directors or its shareholders or members voluntarily consents to the appointment of conservator. Any consent purportedly obtained by the Companies’ board of directors was coerced and/or otherwise improperly obtained, rendering any such consent invalid. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.
(J) Undercapitalization
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. At all relevant times prior to and including the time the FHFA was appointed as conservator, the Companies were “adequately capitalized.” To qualify as “adequately capitalized,” a company is required to have:
(a) “Total Capital” (as defined at 12 C.F.R. § 1750.11(n)) equal to or in excess of its “Risk-Based Capital” (as defined at 12 U.S.C. § 4611 (a)(1)); and
(b) “Core Capital” (as defined at 12 C.F.R. § 1750.2) equal to or in excess of its “Minimum Capital” (as defined at 12 C.F.R. § 1750.4).
At the time the conservatorships were imposed, not only were the Companies adequately capitalized with both of these requirements, and each company’s capital was substantially in excess of its capital requirements. Moreover, each company’s ability to raise capital from the public equity and private capital markets was more than sufficient to allow it to absorb any potential future losses, particularly if the Companies had been allowed to offer terms to potential investors as favorable as those demanded by the Government in exchange for the extremely costly capital it provided upon taking control of the Companies. And the Companies always had more than sufficient assets and capital to satisfy all obligations to their creditors. See 10K filing. Because both Companies were more than adequately capitalized, as defined under law, they were not undercapitalized or significantly undercapitalized. Therefore, the FHFA Director lacked any justification or legal authority to appoint a conservator for the Companies.
In addition to the statutory capitalization requirements, Fannie Mae was, during parts of 2007 and 2008, subject to a consent order from OFHEO under which it was required to keep core capital at a level 30% higher than the minimum capital requirement. This 30% requirement was lowered to 20% for the first quarter of 2008, and lowered again to 15% for the second quarter of 2008 in accordance with the provisions of the consent order. Fannie Mae had sufficient surplus capital such that it was always in compliance with this additional capitalization requirement. As a note, in the months leading up to the decision to appoint the FHFA as conservator for the GSEs, Companies’ regulators repeatedly emphasized that the Companies were adequately capitalized.
Moreover, even if one of the Companies was undercapitalized, Director Lockhart would have been required to provide the undercapitalized company an opportunity to submit and comply with a capital restoration plan, and to demonstrate that it could have raised private capital if and as needed. Specifically, under 12 U.S.C § 4615(a) (entitled “Mandatory actions”), as amended by HERA, “the Director of the FHFA shall” impose on an undercapitalized Regulated Entity a capital restoration plan. Had such a plan been required of either company, both GSEs would have been capable of meeting such a requirement and, further, would have been able to raise additional capital from the private markets if and as needed. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.
(K) Critical undercapitalization
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. As alleged above, at all relevant times, both GSEs had total capital and core capital in excess of all applicable regulatory requirements. Therefore, at all relevant times, neither GSEs were critically undercapitalized. As such, the ground for appointing a conservator set forth in this subsection was not satisfied.
(L) Money laundering
Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. Neither GSEs were ever been found guilty of a criminal offense under section 1956 or 1957 of title 18 or section 5322 or 5324 of title 31. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.
Michael Kimelman: How Obama committed “biggest theft in history”
anon said:
https://www.theinstitutionalriskanalyst.com/post/calabria-s-fhfa-fans-the-fires-of-contagion
Calabria’s ill-considered comments made many people in the mortgage industry question the judgment and state of mind of the FHFA head.
For one thing, federal regulators are not supposed to make gratuitous comments in the media about the financial institutions they regulate. His actions seem calculated to undermine confidence in the GSEs and the mortgage market.
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It is time to make FHFA and FHFA Director accountable to all stake holders and public.
Stake Holders should be be able to challenge all decisions of FHFA as regulator and as conservator in a court.
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anon said:
SENIOR PREFERRED STOCK PURCHASE AGREEMENT
Background
A. The Agency has been duly appointed as Conservator for Seller pursuant to Section 1367(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (as amended, the “FHE Act”). Conservator has determined that entry into this
Agreement is
(i) necessary to put Seller in a sound and solvent condition;
(ii) appropriate to carry on the business of Seller and preserve and conserve the assets and property of Seller; and
(iii) otherwise consistent with its powers, authorities and responsibilities.
Click to access FNM-SPSPA_09-07-2008.pdf
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Clearly original SPSPA – background stipulations contradict the hidden real intentions of FHFA-Conservator and UST choosing to plunder and bankrupt FnF through NWS, Besides Obama administration chose to wind down FnF as a matters of budgetary policy.
After signing SPSPA, FHFA-Conservator and UST have filed documents in courts asserting that FHFA-Conservator can wind down FnF while in conservatorship.
FHFA-Conservator and UST have filed documents in courts asserting that FHFA-Conservator can act in the interest of FHFA in contravention of original SPSPA – background stipulations.
Obama UST officials publicly made statements that NWS was to wind down FnF and never to allow FnF to exist conservatorship.
One can go on listing such bad faith acts of both FHFA and UST officials to bankrupt FnF at the expense of FnF and its shareholders.
5C Court has ruled that NWS is not consistent with powers, authorities and responsibilities of FHFA-C.
These and many other facts clearly provide enough reasons to invalidate SPSPA and amendments.
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franceskh said:
Good comment. On a different matter, does anyone know why GSELinks stopped posting?
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franceskh said:
I wonder who the financial “Harvey Weinstein” of the FnF debacle is and why are the courts so blind?
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anon said:
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anon said:
Mr. POTUS,
Please dismiss all socialists, communists, liers and mobsters from Gov agencies.
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anon said:
https://www.dropbox.com/s/kmmay35nmqau7kl/sweeney%20opinion%20denying%20motion%20to%20dismiss%20in%20fairholme.pdf?dl=0
“This court agrees with the reasoning and conclusion in Sisti : the FHFA does not shed its government character when acting as conservator because it does not step into the shoes of the Enterprises. Otherwise stated , the FHFA-C is the United States because it retains the FHFA’s government character . Plaintiffs’ claims, therefore, are against the United States for purposes of the Tucker Act.”
USCFC- CJ
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Friend said:
Did U.S. steal $300 billion from investors in ‘coercive’ takeover of Fannie Mae, Freddie Mac?
Updated: December 9, 2019 – 11:16 AM
https://www.inquirer.com/columnists/fannie-mae-freddie-mac-mortgage-refunds-20191209.html
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anon said:
In the Court of Federal claims:
Judge:
So, it’s a schizophrenic approach and I’m just waiting to hear a reasonable explanation. This has been a recurring theme in this case.
The gov’t claims on the one hand “plaintiffs cannot sue us because we are not the gov’t” and
then on the other claims
“we do not have to turn over certain papers to you in discovery because we are the gov’t”.
————————————————————
Makes clear about whom the revolving door bureaucracy serves.
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anon said:
Q&A for Keynote Speaker Craig Phillips
December 2, 2019
https://housingfinancestrategies.com/235-2/
Quote:
“The GSEs operate as an insurance model and not a balance sheet-funded model. Because the GSEs primarily finance themselves through asset sales, by issuing guaranteed mortgage-backed securities, unlike banks they do not have funding roll-over and interest rate management risk. It is a matter of opinion, but I believe the risk weighted capital requirement in the originally proposed rule was aligned with the capital treatment for a bank that engaged in similar activities to those of the GSEs. Numerous private sector calculations based on historic losses have validated that judgment.”
Will the Calabrias’s new capital rules change Mel Watt’s proposed capital requirements from bank-like capital requirement to insurance-like capital requirements?
If MC comes up with insurance-like capital requirements for FnF, then this will be a big game changer in re-capitalizing FnF.
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anon said:
Transcript of oral arguments to dismiss the case in Judge Sweeney’s Court
Click to access Fairholme-Condensed-Transcript.pdf
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Comments by Judge
THE COURT: I hate to say it, I’m not — this is going to sound so flip, and I don’t mean for it to, but this is like the mob. And it’s not, of course, but, I mean, you have all the money is being turned over to the Treasury
THE COURT: But, you know, what kind of — how are they saving — it’s almost as though the companies or the enterprises have become shells, and they’re able — and they’re supposed to continue on in their work, but they will never make a profit because everything’s being diverted to Treasury.
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anon said:
Former Freddie Mac CEO says time is running out for housing finance reform
FHFA might not have the resources need to complete the steps, Layton said
https://www.housingwire.com/articles/former-freddie-mac-ceo-says-time-is-running-out-for-housing-finance-reform/
““The FHFA would be required to do an unprecedented amount of work at a very fast pace,” Layton wrote. “The FHFA, under its new director, Mark Calabria, is clearly biting off a lot, which will maximize its influence – but we shall see how well it chews it all. It will require significant management and leadership at the agency to increase and organize its resources to do everything it is being assigned to do on an expedited basis.”
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Obviously WS bankers and traders insidious plan is to keep on dragging the FHFA conservatorship as long as possible.
FHFA needs to make its own plans based on WH policy mandates to end Conservatorship. Currently there are no valid reasons to continue conservatorship. FnF have been profitable ever since conservatorship was forced on them. Massive write downs were accounting frauds to destroy FnF.
FHFA conservatorship can be terminated today without any risks with just NWS rerversed based on 5th circuit ruling. FnF will be of less risks to taxpayers outside conservatorship than inside conservatorship. FHFA needs to end conservatoship NOW rather than be trapped by the insidious WS bankers and traders plan.
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anon said:
https://www.realclearmarkets.com/articles/2019/09/20/have_fannie_and_freddie_paid_the_taxpayers_back_yet__103920.html
Have Fannie and Freddie Paid the Taxpayers Back Yet?
By Alex Pollock
September 20, 2019
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Alex Pollock seems to be the most weirdo bank lobbyists to even raise this question.
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anon said:
MC seems to be a totally confused soul when it comes to thinking that duopoly decreases the competition in situations like FnF. MC keeps on repeating this BS every where as if it is the eternal truth.
In case of FnF, FnF are GSEs created by Gov for the purposes of Gov Public policies of affordable housing goals and more. Unlike private sector companies FnF are highly controlled/regulated by the Gov in every aspect.
So there is no way that any for profit private sector companies can beat FnF in terms of pricing. Because of these factor no private sector would like to compete with FnF even when Gov creates a level playing field for all. Adding more private sector players will only increase the costs for the end consumers and reduce the quality of service.
Without FnF standards the secondary housing finance market will look like wild west. There are so many examples to see how despite the more players the consumer are paying higher prices like in health insurance. Even today if given a choice all loan originators and home buyers prefer FnF loans.
Some One needs to educate MC on this aspect.
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anon said:
Regarding today’s Senate Hearing:
How long are we going to hear same BS from WS Bankers/Traders like SM and their feet dragging?
It is time to replace such people with honest people who can can deliver rather than just talk. It has been almost 3 years we are hearing same BS from SM and nothing much to see in terms of results.
One can hear this frustration from many senators, asking the trio to present a bill with their ideas instead of the same repeat BS.
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anon said:
It is so pathetic that SM does not even understand meaning of affordable housing finance but SM is heading housing finance reform plans.
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anon said:
5th circuit thinking on Count 1: the Third Amendment exceeded FHFA’s statutory powers”
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5th circuit clarifies many of the HERA terms and clauses that DC Circuit court judges very conveniently misinterpreted so as to rule in favor of Gov defendants.
1. Plaintiffs have very broad statutory rights under APA
2. FHFA as a conservator essentially liquidated assets without ever being appointed receiver. Improperly exercising a power is not restrainable, but exercising one beyond statutory authority is.
3. Section 4617(f) will not protect the Agency if it acts either ultra vires or in some third capacity.
4. The Agencies primarily contend that the Third Amendment falls within the conservatorship powers, 12 U.S.C. § 4617(b)(2). As we explain below, that is incorrect, at least at the pleading stage.
5. Count I, to the extent it has merit, is a direct claim.
6. Supreme Court authority similarly warns against applying a general provision at the expense of more specific ones.
1. to distinguish powers of conservator and receiver
2. any exercise of an incidental power must serve an enumerated power (main powers).
3. FHFA may pursue its own interests only within the conservator’s enumerated powers.
It may not, for example, wind down a GSE and jettison receivership protections all in its own best interests.
7. Here “may” is a grant of power that enables FHFA to act. FHFA as conservator may not exercise a power beyond the ones granted.
8. FIRREA decisions also demonstrate the conservator’s limited, enumerated powers.
Under FIRREA, a conservator has power to steward the bank’s assets, not to make every conceivable use of them.
9. Congress did not repudiate common-law conservatorship in FIRREA or HERA.
10. Given the potential effect on markets, firms, and consumers, partial suggestions are not enough to show that HERA inverted traditional conservatorship. “Conservator” is an old role’s anchor, not a new role’s banner
11. For reasons we are about to explain, this “wind down” exceeded the conservator’s powers and is the type of transaction reserved for a receiver.
12. But the net worth sweep continues transferring the GSEs’ net worth indefinitely, well after Treasury has been repaid and the GSEs returned to sound condition. That kind of liquidation goes beyond the conservator’s powers. FIRREA precedent confirms that this exceeds statutory conservator powers.
13. FHFA was never appointed receiver, so it lacked authority to bleed the GSEs’ profits in perpetuity.
14. The Third Amendment inverts traditional conservatorship.
15. We think that, in interpreting HERA’s conservatorship and receivership scheme, FHFA’s general powers should not render specific ones meaningless. This is especially true because, although HERA qualifies traditional conservatorship, it does not eviscerate it. So traditional principles of insolvency and FIRREA decisions remain relevant. And they counsel against a near-limitless view of FHFA’s conservator powers.
16. When we reverse the grant of a motion to dismiss, the district court may decide if fact issues require trial or if summary judgment should be granted.
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anon said:
5th Circuit thinks Shareholders could theoretically obtain full relief under Count I
alone. So probably may be for this reason it did not grant relief under count 4 of unconstitutional structure.
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anon said:
5th circuit says that FHFA acted unlawfully outside the congressional authority and NWS is unlawful using so many different analyses.
But the 5th circuit did not rule to void NWS. Does District court have any other option but to rule that NWS is unlawful and void?
How does this ruling affect case in Judge Lamberth’s court.
Any one has insight on these.
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anon said:
Trump administration to release plan for Fannie, Freddie after Labor Day
Here’s what to expect
August 27, 2019 Kelsey Ramírez
https://www.housingwire.com/articles/49952-trump-administration-to-release-plan-for-fannie-freddie-after-labor-day?utm_campaign=Newsletter%20-%20HousingWire%20Daily&utm_source=hs_email&utm_medium=email&utm_content=76145500&_hsenc=p2ANqtz–16sqYMCuK54sbQKlfuCxdhgG8yiZijs8JRZh8LLvFfrEglBrvhXs-C-ol7a83Hw3eh0DQ8HXpAbkRG7NXfosvOmyBOw&_hsmi=76145500
1. “There will be suggestions, of course we’re an independent regulator, so Treasury will likely make suggestions on things that they think I should do, and being an independent regulator I will give those to consideration and see what makes sense for us to do,” Calabria said. “There will be a bit of a blueprint that will be a suggested roadmap for Congress.”
2. “I don’t expect to see legislative language, but I expect to see conceptual language that lays out a vision and a set of principles from the administration of what they think Congress should put in place in terms of a new model,” he said. That’s my expectation of what I think we’re likely to see.”
3. The plans released previously by the administration also give some idea of what to expect.
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Article misses the following points:
This White house plan would avoid any risks to economy and also risks that can not be managed by the administration. So any attempts to raise massive new capital, massive dilutions and other grandiose schemes will be out. This plan would also avoid any controversial use of Conservatorship powers that can start new law suits.
This plan is a merged summary of HUD, TSY, and FHFA (may also be other agencies) proposals that are once again based on White house policy Memo. So this may not resemble any of the WS banker’s plans and their think tank lobbyist’s plans .
Probably it will start with reversal of lawless actions of OB Tsy and FHFA like NWS, setting SPS to zero and ending conservatorship. Probably It will start capitalization with retained capital and Gov SPS credit line. There may be some proposals on disposing off warrants so that FnF will become fully private and set stage for raising new fresh capital as when required.
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anon said:
https://www.housingwire.com/articles/43747-end-of-conservatorship-trump-administration-proposes-privatizing-fannie-mae-freddie-mac
End of conservatorship? Trump administration proposes privatizing Fannie Mae, Freddie Mac
Government reveals plan to reshape country’s housing finance system
June 21, 2018 Ben Lane
“What’s interesting about this proposal, in addition to what it contains obviously, is where it came from. The proposal came straight from the Office of Budget and Management, not the Department of the Treasury.”
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thombiz said:
September 6, 2019 WE HAVE WON!!! From En Banc: Quote: The Shareholders are entitled to declaratory judgment that the Third Amendment exceeded FHFA’s lawful authority because the agency adopted it outside the President’s supervision. This analysis also supports an injunction vacating the Third Amendment. :Unquote
Congratulations my friends!
The 5th CIrcuit Court Ruling: http://www.ca5.uscourts.gov/opinions/pub/17/17-20364-CV2.pdf
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anon said:
https://www.washingtonpost.com/business/economy/bill-dudley-urges-fed-not-to-bail-out-trump-on-trade/2019/08/27/3a294bea-c8da-11e9-a1fe-ca46e8d573c0_story.html?noredirect=on
Former Fed official Dudley urges central bank not to ‘bail out’ Trump on the economy
“An economist who worked at Goldman Sachs for more than two decades before joining the Fed, Dudley is now a senior research scholar at Princeton University.”
—————————————————-
This clearly shows how unelected Federal Reserve officials are harming the economy with vast unaccountable money power controlled by the private banks.
In US we do not want to have two independent govs working against each other. There is only Gov headed by the POTUS and all the laws need POTUS signature. This Stupid idiot do not understand this simple fact.
Princeton needs to fire this idiot immediately.
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anon said:
If one Looks at how revolving door Wall Street Bankers and Traders are abusing the powers of UST and Fed, and screwing the economy, it is best to avoid appointing Wall Street Bankers and Traders to these highly critical positions.
Even a middle school student can understand how short term rates can be higher than long term rates (inversion), for a simple reason that Fed has indiscriminately increased short term rates.
It is time to replace revolving door Wall Street Bankers and Traders at Fed and UST who have caused these problems.
BTW it is the same revolving door Wall Street Bankers and Traders at Fed and UST who caused 2008 financial meltdown by letting large Financial Institutions to fail and imposing conservatorship on FnF. Now even after 10 years, these bankers and traders are resisting ending conservatorship.
It is time free FnF from the evil hands of revolving door Wall Street Bankers and Traders.
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anon said:
Who is a best expert in housing and housing finance?
Being a life time real estate Developer there can be no better expert than Trump himself to see foolishness of imposing bank like capital on FnF.
Trump clearly understands the implications of unaffordable housing finance policies and its effect on economy. So it is safe to assume that the capital requirements will be compatible with affordable housing policies and not based on greedy wall street loan sharks.
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anon said:
Treasury Plan for Fannie Mae & Freddie Mac near complete
By Charles Gasparino, Lydia Moynihan
Published August 21, 2019Home
“Meanwhile, Trump Administration officials are said to be mindful that any radical change to the GSEs could shake the housing market during an election year, and negatively impact economic growth. The Treasury reform plan is expected to address those concerns by not calling for an immediate radical overhaul of the companies. ”
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The housing/Real estate expert Trump is taking steps to keep the economy humming by releasing FnF from the evil hands of swampy bureaucrats and WS
loan sharkies.
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Anon said:
Mark Calabria, said it was his “hope” that they would have exited or be ready to exit conservatorship before his term ends in 2024.
Sep 2020: Plan published
before end of 2024: exit
My guess:
before Sept 2020, 5th circuit ends NWS
Banks are happy too: they have time to influence politicians in 2021 and 2022 to get their legislative reform.
But big shareholders are also ready by then.
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anon said:
What about WH memorandum to end Conservatorship as soon as possible?
Fake lawless conservatorship is the biggest risk and threat to democracy and the constitutional rights of the people.
Will people ever accept dictatorship because of fake made up risks to taxpayers?
Recap can be done without conservatorship much more easily and with many more options.
Fake Conservatorship is only serving the interests of Wall street mafia. Fake Conservatorship should end immediately. There is urgent need to restore constitutional rights of FnF and its shareholders.
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Anon said:
he will set it in motion.
preferred will be disappointed because of waiting a few years to get dividends.
commons should be happy due to less dilution
both stock prices should move up steadily
banks will eventually lose, but delayed
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Anon said:
It looks like DEM will win white house, house and senate in 2020. In 2022, GSEs may become a national utility.
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anon said:
Winning against sitting potus is very difficult that too with excellent economy and jobs.
Besides there is no compelling candidates from Dems. Dems are single mindedly focused on taking care of illegals than more important issues like economy, law & order, employment etc…
How can any one trust that Dems will release FnF after 8 years of OB lawless legacy.
After 9 years of Bush and Barry administration’ s lawless conservatorship, it is only Trump administration that is officially working on ending conservatorship.
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anon said:
“https://video.foxbusiness.com/v/6059461043001/#sp=show-clips”;
Latest GASBAG VIDEO on Fox Business …..
Treasury reportedly unlikely to advocate privatization of Fannie, Freddie
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It is well known that Bankers and Traders do not want to give up UST control over FnF. Even the FHFA is a puppet in the hands of these Bankers and Traders for last 11 years under unlawful SPSPA agreement.
The strategy of these Bankers and Traders is, to delay and drag until some crisis happens. Then that crisis can be used an excuse to destroy affordable housing and FnF.
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anon said:
UST bankers and traders will never want to give up their total control over FnF and FHFA. That is how fake conservatorship and SPSPA was started and has continued for last 11 years.
Now it time for HUD and FHFA to assert their legal duty/responsibility to promote affordable housing and free FHFA and FnF from the unlawful control of these wall street bankers and traders .
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anon said:
Former Freddie CEO Donald Layton reflects on his new ‘technocrat’ role and on what it would take to end conservatorship of two mortgage giants
By Andrew Ackerman – July 12, 2019 8:00 am ET
https://www.wsj.com/articles/former-freddie-mac-ceo-plans-to-keep-hand-in-housing-finance-11562932800?tesla=y
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Extracts from the interview
————————————————————-
1. “There’s a low-risk approach, which is imminently implementable and which I call the baseline: The companies have four or five years of retained earnings, during which all of the preparatory work is done by the companies and their federal regulator. Then there’s a re-IPO to get over the finish line, so that on the closing of the IPO, the conservatorship ends and investors get their voting rights.”
Even better approach would be to end Conservatorship and Release immediately and then start building capital with retained earnings and other options to build the trust with the investors. If required raise capital through smaller secondary offerings over many years. Rushing to raise big capital would be very risky to taxpayers and economy.
2. “Raising the capital through the baseline is not hard. It’s low-risk. It’s all the plans to accelerate that process that are complicated. ”
100% correct.
3. “I know a lot of people who would love to accelerate from that, but then they have to deal with all of these trade-offs. That acceleration is one area that’s hard. ”
100% correct. Rushing to raise any capital under conservatorship would be very risky to taxpayers and economy.
4. “The second part that’s hard is the corporate-finance legalities and the politics of dealing with the original investors.”
Release and Recap will resolve many of these legal issues. Recap planning and implementation should be done by the shareholder elected independent BOD and CEO to avoid many of the legal issues and conflict of interest issues. FHFA or UST bureaucrats should not be banned from interfering in the recap process.
5. “I do have evidence from public statements that “recap and release”—going back to the old model—is not what the administration means. They mean “reform and release,” and I think they’ve been very public about that. ”
100% correct. What matters is what works. “Recap and Release” is non viable for million reasons that too under lawless conservatorship of 11 years.
6. “Fannie and Freddie need some form of credit support from the government that is acceptable to the market. It’s necessary for their business model. ”
FnF will require temporary credit support from Gov during capital buildup. This credit support should come from HUD or neutral sources , considering the hostile conduct of revolving door UST bureaucrats during 11 years of conservatorship.
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anon said:
“FnF will require temporary credit support from Gov during capital buildup. This credit support should come from HUD or neutral sources , considering the hostile conduct of revolving door UST bureaucrats during 11 years of conservatorship.”
FnF’s best option to get reliable and reasonable temporary credit line seems to be procuring credit line from private sources but guaranteed by the HUD-GNMA.
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qishhuang said:
Some preferred shareholders love to say common shares should be worth less. Do they want to convert their preferred into more common shares? Otherwise, they get their dividends, regardless of the common price.
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anon said:
These (some) JPS holders are vultures trying to benefit robbing from other investors and taxpayers. This is how Wallstreet bankers and traders make money.
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anon said:
Currently FnF are in very good financial health with excellent quality assets and are highly profitable for foreseeable future despite lawless supervision FHFA conservators.
Only problem is FHFA conservator and UST Global bankers have robbed FnF of all their capital. Thus FHFA conservator and UST Global bankers have put taxpayers and economy at greater risk through NWS theft.
It is time to stop NWS and end very lawless conservatorship.
FnF under professional private management are much safer than vulturistic wall street bankers and traders and politicians in the pockets of bank lobbyists.
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Anon said:
FNMA makes $12B a year. it is worth at least $150B.
If new capital to be raised is $100B, then FNMA is $250B.
If total 5B shares, $50 per share.
If total 4B shares, about $60 per share.
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anon said:
FnF are in better shape than pre-conservatorship. FnF have very high quality assets and guaranteed high ROI.
FnF should command good PPS than pre-conservatorship..
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anon said:
For those who have forgotten –
Brazen acts of Hank Paulson
——————————————————-
https://www.seattletimes.com/business/henry-paulson-alerted-hedge-funds-in-advance-to-fannie-freddie-rescue/
After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson described a possible scenario for placing Fannie and Freddie into “conservatorship” — a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.
Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So would the various classes of preferred stock, he said.
The fund manager says he was shocked Paulson would furnish such specific information — to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers at the meeting were thus given a choice opportunity to trade on that information.
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ANON said:
In a surprise outcome, the U.S. Supreme Court on Wednesday reaffirmed a longstanding precedent that requires courts to defer to federal agencies’ REASONABLE interpretations of their ambiguous regulations, an issue that has arisen in education over such issues as transgender student rights and racial disparities in student discipline.
Justice Elena Kagan wrote a plurality opinion for four justices in Kisor v. Wilkie (No. 18-15), and Chief Justice John G. Roberts Jr. provided the fifth vote to retain what is known as Auer deference, based on a 1997 decision known as Auer v. Robbins, which built on a 1945 decision, Bowles v. Seminole Rock & Sand Co. Both decisions say courts should defer to agencies’ interpretation of their own ambiguous rules as long as the interpretation is REASONABLE.
A taking is not REASONABLE.
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anon said:
“Possible Fannie, Freddie IPO whets Wall Street’s appetite ”
JP Morgan held meeting to discuss Fannie, Freddie public debut: Charlie Gasparino
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These investors are very well aware of how
1. Bush, Hank, OB, Tim and lawmakers used FHFA conservator to rob the FnF in the last 11 years.
2. Investors lost fresh $20B that they invested in FnF in 2007-2008
3. CS and JPS holders have been deprived of their property and contractual rights
4. Their 100s of billions can be swiped during next crisis
It is highly unlikely that these investor will invest in FnF under conservatrship/4617(f) unless they get massive Zimbabwe discount.
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anon said:
Trump is trusting wall street Crooks (Traders cum Bankers) and appointing them with the hope that these appointees will work with white house to better serve the people.
But these appointees are loyal to money and their wall street masters and never to the country.
It is time to replace all these wall street appointees with honest non-wall street people who are loyal to the country.
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anon said:
Globalist (mainly Globalist Bankers, Traders and economists) are the ones who are resisting the Trump MAGA policies from inside the administration.
It is time for Trump to send the Globalist Bankers, Traders and economists to their original wall street employers.
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anon said:
Lawmakers spar over whether Fannie, Freddie are SIFIs
By – Hannah Lang – Published June 25 2019, 3:53pm EDT
https://www.americanbanker.com/news/lawmakers-spar-over-whether-fannie-freddie-are-sifis
————————————————————-
Sen. Sherrod Brown, D-Ohio, the ranking member of the panel, said that comprehensive housing finance reform centered on a goal of homeownership would necessitate a different kind of supervision.
“It would also require a different type of oversight than we have for the megabanks and shadow banks that poisoned the mortgage market and infected our economy,” he said. “Different than we have for financial interests that are obsessed with stock buybacks and that believe they have no obligation to serve the nation that bailed them out.”
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anon said:
Sen. Sherrod Brown seems to be getting correct idea on how not to screw up the economy and affordable housing by designating them as SIFI.
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anon said:
FnF should be designated as
“Too Big to Kill even by Gov thugs…”
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BenSam said:
LOL
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anon said:
Recapping under lawless FHFA Conservatorship is another of Stickup robberies to destroy FnF and give their business Wall street Banks. This will also eventually destroy affordable housing policies.
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anon said:
If Whitehouse and FHFA follow fair rule of law then both CS and JPS should get fair return on their investments based on their share contracts.
Only crooks or fools can think of implementing Recap under conservatorship because there is no way private investors will invest 100s of billions in companies under conservatorship.
Recap under conservatorship is another of Stickup robberies. Recap under conservatorship will be another Concrete Life jackets in addition to consevatorship, SPSPA, Warrants and NWS. The purpose Recap under conservatorship is to destroy FnF, because crooks know very well that FnF can never be recaped under conservatorship.
Only way out of conservatorship is Release and Recap.
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