rros

Attached are the questions... The 5th circuit has sent this “letter of advisement” to collins P and govt in connection with the collins rehearing en banc: “Dear Counsel, Having granted both petitions for rehearing en banc in this case, the court directs the parties to file supplemental briefs addressing the constitutional, statutory, and remedy arguments that were presented to the panel. Counsel are specifically directed to address Supreme Court and federal appellate court opinions that support the respective positions taken by the parties on these issues. With respect to the remedy argument, expressly state whether, and under what circumstances, the proper remedy in a separation-of-powers case is to set aside the agency actions, see NLRB v. Noel Canning, 134 S. Ct. 2550, 2558 (2014), or to excise the unconstitutional portion of the statute, see Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 508–10 (2010); Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461, 1485–87 (2018) (Thomas, J., concurring). Additionally, in practical terms, what would setting aside the Net Worth Sweep entail and how would it affect other functions of the FHFA.” this is self-explanatory, but it does bear emphasizing that the en banc panel is focused on whether invalidating the NWS is required if they (as did the merits panel) find that the fhfa is unconstitutionally structured. collins counsel found another case to support NWS invalidation: Bowsher see https://www.law.cornell.edu/supremecourt/text/478/714 collins counsel set forth Bowsher in their Bhatti 8th cir. appeal brief but did not cite to it in their original collins 5th cir panel appeal brief because, I believe, they came across the Bowsher precedent only after the collins merits panel issued its opinion (it happens). the money quote from Bowsher: “Accordingly, the judgment and order of the District Court [invalidating the Comptroller General’s action] are affirmed.” So added to Canning as support for NWS invalidation will be Bowsher and Lucia (an appointments clause case decided after collins was argued before the 5th circuit merits panel that should have precedential value even though collins is a separation of powers case). As to the mechanics of invalidating the NWS and how that would affect fhfa functions, Collin counsel has addressed that in the bhatti appeals brief: no or little money need change hands as one can reduce the liquidation preference of the senior preferred, so treasury will not need to, for example, seek an appropriation of money from congress; and while invalidation of NWS might serve as a precedent for other plaintiffs to seek invalidation of fhfa action, there are many reasons why those hypothetical plaintiffs might not be able to bring those actions, such as the passage of the statute of limitations. As to the APA claim, collins P will have to rely principally on the dissents of the 5th circuits own J Willett and former DC circuit Judge Brown. having just read J. Thomas’s concurrence in Murphy, it should be pointed out that J. Thomas is asking the question whether it is a proper function of judicial review to sever a statutory provision that scotus finds unconstitutional to “save” the remaining provisions of the statute. reference to J. Thomas’s concurrence in Murphy by this “letter of advisement” really is a favorable reference for P, as it was the merits panel’s act of severing the fhfa director’s removal only for cause provision that served to justify the merits panel’s denial of relief (NWS invalidation) to P. Thank you. Is invalidating the same as an injunction in legal jargon? I ask because the PSPAs have that clause that says an injunction by any court will render the agreement null. In which case, the financial commitment is withdrawn.

Chris, did you see the 2 questions addressed to counsel on Collins? One is specifically on the NWS. That has to be good news, no? Also, did anybody hear Corker today at the hearing? He said something like 'the wh will take some actions and then leave other things to congress' or similar. Looks like he has accepted the fact there will be administrative reform. He then insisted on the GSEs being SIFIs. Probably, thinking the only way to contain them once out c-ship is by over-regulation/overseeing. He seems to be anticipating, perhaps correctly, this is going the way of Treasury/FHFA.

Thank you, Chris. If senior judges do not count that will be a lot less. Patrick McHenry just mentioned GSE's reform on Bloomberg. Said something *must* be done now. When pressed by reporter he said Waters' proposal will not gather enough votes neither anything from the Senate. So his idea is to start afresh. He said he is not dogmatic on any solution but one that can move forward because housing has unmet pressing needs now. Start afresh? We are always on the "start" stage lol.

So this... "and a majority of the circuit judges". Does this refer to the 3 judges? Then, this is why you believe 2 out of 3 (Willet and someone else) want a second look at the issue? no all active 5th circuit judges Oh.. must be the 26 listed here? http://www.ca5.uscourts.gov/about-the-court/fifth-circuit-judges

So this... "and a majority of the circuit judges". Does this refer to the 3 judges? Then, this is why you believe 2 out of 3 (Willet and someone else) want a second look at the issue?

Thank you, Chris. Nothing like the legal inside view.

C'mn people... my 11 year-old boy will inherit this claim and will continue to try to make as miserable as possible anyone who sits at the FHFA and Treasury. And he could do it for many more decades without me. Don't let them off the hook!

But one can also say Mnuchin has accomplished more than any of those fine gents. He masterfully dodged the Trump bullet and kept his seat at Treasury. A different take: he has shown extreme loyalty. Which may mean it is Trump who really matters now.

Chris, can you expand please? Not positive that the WSJ officially confirms the admin route? I could not read it.

Mnuchin is on record saying any serious talk of reform requires companies to have capital first. But this was in the early days, before radio silence.

This makes sense.

Mnuchin? Never thought of that...

Mnuchin has said he prefers a legislative option and that it will need to be bipartisan. multiple times. imo nothing from yesterday changes that. I watched an interview from 2 days ago where Max said a top priority is housing reform if she's in charge. She likely wants explicit affordable housing mandates. Mnuchin wants some things, like a federal gtee and more competition, and they will likely negotiative legislatively in 2019 along with Pat Toomey. Then, if that fails, then maybe we'll see administrative reform. In the mean time, please stop the sweep! it is a fair policy choice, can spark action, and rules out nothing legislatively. I really cannot see Toomey, Blackburn, Sherrod Brown or even Maxine Waters being against stopping the sweep. Her 2014 proposed bill, let's not forget, happened in the midst of Obama policies. Commenting on her own bill when proposed back in March 2014: 1. She likes the explicit gov guarantee and may go w/ Mnuchin security-level narrower one. 2. The perverse incentives talk was Obama's script. We will have to wait for her 2019 updated version on that. Specially, with Corker/Hernsanling out.

Let's see what Watt does on November 16th or soon after that. Any action he takes, or none, may reveal what Democrats really want. what's 11/16? The last day for public comments on the proposed rule on Enterprise Capital requirements. Deadline was moved out 60 days. https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Issues-Proposed-Rule-on-Enterprise-Capital.aspx

Let's see what Watt does on November 16th or soon after that. Any action he takes, or none, may reveal what Democrats really want.

Looks like Tim Pagliara's Marsha Blackburn will replace Corker. Night and day.

Speculation on election outcome?

In a summary judgement hearing, the judge considers only facts that are undisputed by both sides. If, given those facts, the judge accepts the arguments of the party making the motion, then that side "wins" and there is no trial. If the judge rejects the motion for summary judgement, then you probably go on to trial. In other words, if the defendant makes a motion for summary judgement that is denied, we still go to trial. Can the judge still deny it if asked by both parties like in this filing?

The MBA plan of multiple guarantors includes this: * Preserve where possible the existing infraestructure -for example, a rechartered Fannie Mae and Freddie Mac could be the first two guarantors. In their detailed plan, where the first initial action is legislation, they actually make room for something similar to Landon Parson's wish list. There is this: So Parson's request is not incompatible. However, the MBA plan requires a bridge bank that would buy GSEs assets and liabilities to the extent that liabilities do not surpass assets. So Srs. may need to be cancelled for Jrs. and commons to also transition to the bridge bank. Who decides this in MBA's plan? Congress. Unless Parson gets his wish. If he does, MBA plan will still have a backstop set at $258 billion with perhaps... a commitment fee, instead? Adding.. The MBA plan fully contemplates Treasury's divestiture. So no question Treasury will make tens of billions out of the warrants. The plan, in the transition and implementation stage, keeps Treasury's interests alive. However, this doesn't guarantee a place for legacy shareholders. The plan doesn't specify if Treasury's stake that transitions to the bridge bank are the warrants or the exercised stock. Ideally, it should be common stock. This will guarantee our survival in the transition. If not, commons may not survive and Jrs. may survive in part or in full as a receivership may trigger our liquidation preference issue. If commons are green light, we shine bright. With the caveat above.

The MBA plan of multiple guarantors includes this: * Preserve where possible the existing infraestructure -for example, a rechartered Fannie Mae and Freddie Mac could be the first two guarantors. In their detailed plan, where the first initial action is legislation, they actually make room for something similar to Landon Parson's wish list. There is this: So Parson's request is not incompatible. However, the MBA plan requires a bridge bank that would buy GSEs assets and liabilities to the extent that liabilities do not surpass assets. So Srs. may need to be cancelled for Jrs. and commons to also transition to the bridge bank. Who decides this in MBA's plan? Congress. Unless Parson gets his wish. If he does, MBA plan will still have a backstop set at $258 billion with perhaps... a commitment fee, instead? Adding.. The MBA plan fully contemplates Treasury's divestiture. So no question Treasury will make tens of billions out of the warrants. The plan, in the transition and implementation stage, keeps Treasury's interests alive. However, this doesn't guarantee a place for legacy shareholders. The plan doesn't specify if Treasury's stake that transitions to the bridge bank are the warrants or the exercised stock. I personally don't think it is possible to transform the current warrants into warrants of a different, newly issued Guarantor's common stock. If warrants and the common stock they are attached to are indistinguishably bonded, they must travel together, no? Further, it is literally impossible to conceive a transition where one of the actors is permitted to transition its 79.9% stake while the other actor who owns the remaining 20.1% disappears in the ether. Still, the ideal situation would be for fully diluted common stock. This will guarantee total survival in the transition. If not, commons may not survive and Jrs. may survive in part or in full as a receivership may trigger our liquidation preference issue.

‘‘(A) IN GENERAL.—The Director shall appoint the Agency as receiver for a regulated entity if the Director determines, in writing, that— ‘‘(i) the assets of the regulated entity are, and during the preceding 60 calendar days have been, less than the obligations of the regulated entity to its creditors and others; or ‘‘(ii) the regulated entity is not, and during the preceding 60 calendar days has not been, generally paying the debts of the regulated entity (other than debts that are the subject of a bona fide dispute) as such debts become due. ‘‘(D) RECEIVERSHIP TERMINATES CONSERVATORSHIP.— The appointment of the Agency as receiver of a regulated entity under this section shall immediately terminate any conservatorship established for the regulated entity under this title. But receivership can be avoided due to this section: SEC. 1108. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS. The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting after section 1313A, as added by this Act, the following new section: ‘SEC. 1313B. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS. ‘(a) Standards- The Director shall establish standards, by regulation or guideline, for each regulated entity relating to-- ‘(1) adequacy of internal controls and information systems taking into account the nature and scale of business operations; ‘(2) independence and adequacy of internal audit systems; ‘(3) management of interest rate risk exposure; ‘(4) management of market risk, including standards that provide for systems that accurately measure, monitor, and control market risks and, as warranted, that establish limitations on market risk; ‘(5) adequacy and maintenance of liquidity and reserves; ‘(6) management of asset and investment portfolio growth; ‘(7) investments and acquisitions of assets by a regulated entity, to ensure that they are consistent with the purposes of this title and the authorizing statutes; ‘(8) overall risk management processes, including adequacy of oversight by senior management and the board of directors and of processes and policies to identify, measure, monitor, and control material risks, including reputational risks, and for adequate, well-tested business resumption plans for all major systems with remote site facilities to protect against disruptive events; ‘(9) management of credit and counterparty risk, including systems to identify concentrations of credit risk and prudential limits to restrict exposure of the regulated entity to a single counterparty or groups of related counterparties; ‘(10) maintenance of adequate records, in accordance with consistent accounting policies and practices that enable the Director to evaluate the financial condition of the regulated entity; and ‘(11) such other operational and management standards as the Director determines to be appropriate. ‘(b) Failure To Meet Standards- ‘(1) PLAN REQUIREMENT- ‘(A) IN GENERAL- If the Director determines that a regulated entity fails to meet any standard established under subsection (a)-- ‘(i) if such standard is established by regulation, the Director shall require the regulated entity to submit an acceptable plan to the Director within the time allowed under subparagraph ©; and ‘(ii) if such standard is established by guideline, the Director may require the regulated entity to submit a plan described in clause (i). ‘(B) CONTENTS- Any plan required under subparagraph (A) shall specify the actions that the regulated entity will take to correct the deficiency. If the regulated entity is undercapitalized, the plan may be a part of the capital restoration plan for the regulated entity under section 1369C. ‘© DEADLINES FOR SUBMISSION AND REVIEW- The Director shall by regulation establish deadlines that-- ‘(i) provide the regulated entities with reasonable time to submit plans required under subparagraph (A), and generally require a regulated entity to submit a plan not later than 30 days after the Director determines that the entity fails to meet any standard established under subsection (a); and ‘(ii) require the Director to act on plans expeditiously, and generally not later than 30 days after the plan is submitted. ‘(2) REQUIRED ORDER UPON FAILURE TO SUBMIT OR IMPLEMENT PLAN- If a regulated entity fails to submit an acceptable plan within the time allowed under paragraph (1)©, or fails in any material respect to implement a plan accepted by the Director, the following shall apply: ‘(A) REQUIRED CORRECTION OF DEFICIENCY- The Director shall, by order, require the regulated entity to correct the deficiency. ‘(B) OTHER AUTHORITY- The Director may, by order, take one or more of the following actions until the deficiency is corrected: ‘(i) Prohibit the regulated entity from permitting its average total assets (as such term is defined in section 1316(b)) during any calendar quarter to exceed its average total assets during the preceding calendar quarter, or restrict the rate at which the average total assets of the entity may increase from one calendar quarter to another. ‘(ii) Require the regulated entity-- ‘(I) in the case of an enterprise, to increase its ratio of core capital to assets. ‘(II) in the case of a Federal Home Loan Bank, to increase its ratio of total capital (as such term is defined in section 6(a)(5) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(5)) to assets. ‘(iii) Require the regulated entity to take any other action that the Director determines will better carry out the purposes of this section than any of the actions described in this subparagraph. ‘(3) MANDATORY RESTRICTIONS- In complying with paragraph (2), the Director shall take one or more of the actions described in clauses (i) through (iii) of paragraph (2)(B) if-- ‘(A) the Director determines that the regulated entity fails to meet any standard prescribed under subsection (a); ‘(B) the regulated entity has not corrected the deficiency; and ‘© during the 18-month period before the date on which the regulated entity first failed to meet the standard, the entity underwent extraordinary growth, as defined by the Director. ‘© Other Enforcement Authority Not Affected- The authority of the Director under this section is in addition to any other authority of the Director.’. So if a court issues an injunction on the nws and the PSPAs blew up and the commitment disappears (as written in there), the Director can correct that deficiency unilaterally. My understanding... And I think the above should be read together with this: https://www.law.cornell.edu/uscode/text/12/4622 ----- Importantly, the PSPAs contain their own termination guidelines: https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/2008-9-26_SPSPA_FannieMae_RestatedAgreement_N508.pdf 5.3. Conservatorship. Seller shall not (and Conservator, by its signature below, agrees that it shall not), without the prior written consent of Purchaser, terminate, seek termination of or permit to be terminated the conservatorship of Seller pursuant to Section 1367 of the FHE Act, other than in connection with a receivership pursuant to Section 1367 of the FHE Act.

Let's not forget the Capital Alpha partners piece that spread the rumor of a settlement and a recap/release a few years ago. Looking back, it may have been a pump job for some hedgie to exit.

Yes, thank you. But now the risk has increased substantially. Bloomberg also mentions the Corker risk on his way out. I still think Corker could try to sneak in a Jumpstart on end-of-year legislation that Trump must sign. Anyone think this isn't a risk? We will not even know until it's too late.

Rising rents, similar to rising tuition bzzzzzz wrong. Bloated Administration room+board fees >> rising tuition. Room fees = rents = up and up, no supply.

Is this a quote from Henry Clews book "50 years in Wall Street" from 1850's?