Investors Unite Teleconference: What is Risk Sharing? And how does it Work?
Friday, November 11th, 2016
On Tuesday, November 15 at 10:30 am EST, Investors Unite will hold a teleconference to discuss risk sharing in the secondary mortgage market, a major policy that could affect Fannie Mae and Freddie Mac moving forward.
The teleconference will feature Investors Unite Executive Director Tim Pagliara, former Chief Financial Officer and Vice Chairman of the Board of Fannie Mae Tim Howard, and the Head of External Affairs for the Community Mortgage Lenders of America Rob Zimmer.
To join the teleconference, please RSVP to firstname.lastname@example.org.
Tim Pagliara, Investors Unite Executive Director and CapWealth Advisors Chairman and CEO
Tim Howard, Former Chief Financial Officer and Vice Chairman of the Board of Fannie Mae
Rob Zimmer, Community Mortgage Lenders of America Head of External Affairs
WHAT: Investors Unite Risk Sharing Call
WHEN: Tuesday, November 15th, 10:30 am EST
DIAL IN: 800‑895-2195; Conference ID: Investors
RSVP: Please RSVP to email@example.com
About Investors Unite: Formed by Tennessee investor and CapWealth Advisors Chairman and CEO, Tim Pagliara, Investors Unite (investorsunite.org) is a coalition of over 1,400 private investors from all walks of life, committed to the preservation of shareholder rights for all invested in Fannie Mae and Freddie Mac. The coalition works to educate shareholders and lawmakers on the importance of adopting GSE reform that fully respects the legal rights of Fannie Mae and Freddie Mac shareholders and offers full restitution on investments.
- Investors Unite is holding a conference call Tuesday. Investors Unite is a shareholder advocacy group for GSE shareholders both common and preferred.
- A new presidency opens the door for reversing part of the ongoing relationship between FHFA and Treasurythat even FHFA’s current director says trumps the law.
- Expect a ruling on the Writ in the next 30 days based on the government’s arguments that they should only need 30 days to reply to Judge Sweeney.
- Worrisome power of financial market participants to influence a US President.
- The privatization of FnF is the sale of FnF to Wall Street dirt cheap.
- FnF have already repaid the Treasury, so the warrant ought to be cancelled.
- FnF’s shareholders threaten to sue the government if it exercises the warrant.
By Andrea Riquier
Shares of Fannie Mae and Freddie Mac have rallied this week as President-elect Donald Trump surrounds himself with advisors seen as sympathetic to shareholders of the two mortgage companies.
Shares of Fannie are up about 41% since Tuesday, and Freddie shares have risen about 46% in that time.
Fannie (FNMA) and Freddie (FMCC) were placed into federal conservatorship during the 2008 financial crisis, and in 2012 the Obama administration amended the terms of the 2008 agreement to sweep quarterly profits from the two enterprises, a move that’s been challenged in court by shareholders.
Ken Blackwell, who’s been tapped to lead the domestic transition team, wrote an op-ed (http://thehill.com/blogs/congress-blog/economy-budget/207937-treasury-stealing-from-fannie-and-freddie-shareholders) in 2014 in which he called the Treasury arrangement “theft of private property.” In the piece, Blackwell noted that there is a “bipartisan consensus on how to wind down Fannie and Freddie.”
On Wednesday, the Wall Street Journal reported (http://www.wsj.com/articles/donald-trumps-financial-advisory-team-stocked-with-wall-streeters-1478730578?mod=djemMoneyBeat_us) that hedge fund investor John Paulson had been tapped to be a Trump advisor because of his understanding of the housing market. Paulson is known (https://www.amazon.com/Greatest-Trade-Ever-Behind-Scenes/dp/0385529945/ref=sr_1_1?ie=UTF8&qid=1478808291&sr=8-1&keywords=the+greatest+trade+ever) for shorting the subprime mortgage market as the housing bubble inflated a decade ago.
Paulson’s company has donated extensively (http://www.wsj.com/articles/bets-on-fannie-and-freddie-get-help-from-lobbyists-1463087581) to nonprofits and lobbyists advocating for the release of the enterprises from government controls, according to an earlier Journal article.
Other Trump advisors have a less explicit stake in ending conservatorship, but are likely to be sympathetic to the shareholder interests. Steven Mnuchin, a Goldman Sachs veteran who’s reportedly on the short list (http://www.marketwatch.com/story/gingrich-palin-among-possible-trump-cabinet-picks-obamacare-defenders-vow-total-war-2016-11-10) to be Treasury secretary, serves on the board (https://searsholdings.com/invest/corporate-governance/board-of-directors) of directors of Sears Holdings(SHLD) with Bruce Berkowitz, CIO of Fairholme Capital Management, one of the firms leading the shareholder lawsuits.
First we must satisfy a key requirement to prove fraud (on the path to restitution) and that is “intent”. This is easily proven. HERA provided for the FHFA to act independently (that was breached by and agreement with the Treasury) to preserve and conserve the assets of FnF (that was breached by the sweep amendment). The intent to do this was announced in the White Papers of Feb 2011 titled “Reforming America’s Housing Finance Market” authored by the Obama Administration, the US Treasury, and HUD. In this report to Congress, they lay out their plan to “wind down” FnF.
A year later, in FHFA’s Strategic Plan for Enterprise Conservatorships: The Next Chapter in a Story that Needs an Ending, Feb 21, 2012, Edward DeMarco (Director of FHFA) announces his plan to “wind down” FnF and replace them with new infrastructure, based on a commitment to the White Papers of Feb 2011 (mentioned above).
Later in August and Sept of 2012, FHFA signs an agreement with Treasury for full net worth sweep, and does so based on a commitment to the White Papers of 2011.
Clearly, intent to breach HERA is proven by the government’s own announcements.
So, lets talk restitution. I see it as unwinding everything that was based on fraud. It is illegal to let stand any actions based on fraud. This means all money in excess of that used to bailout FnF must be returned. As well, this money shall have earned an annual interest rate of 10%, the same rate acceptable to the Treasury for support of FnF.
I don’t know about punitive damages. Seems like I read somewhere that you cannot claim punitive damages when it comes to the federal government. Perhaps someone can shed some light on this.
Lastly, Writ of Mandamus is fully briefed in the United States Court of Appeals for the Federal Circuit. Speculating to hear an opinion regarding the Writ of Mandamus on or before December 14.