rros

Like many other businesses this one is subsidized. So the question is can they be in business w/o subsidies? If so, who pays for the additional cost of capital? This may all translate into a viable business model where mortgages are more expensive. What happens when you remove the political factor.

I may be off, but all cases can move forward. The "all is all" precept has a single point of failure. That is, when the Director wasn't acting as conservator, therefore HERA won't apply. In which case, no rights were removed, the nws becomes illegal and Perry prevails. Separately, the possibility of having a conservator removing all rights -provided the conservator follows the law and does act as a conservator under HERA- still gravely affects constitutional rights because in this scenario suing for breach of K becomes impossible. The fact that FHFA argues this way, after this last ruling, makes clear to Sweeney a taking has occurred. So we do not need to lose Perry's to win Sweeney's. Sweeney, after this, has been set on the right track either way. And Brown and Ginsburg can still determine FHFA wasn't a conservator. Point is that all rights may not have been removed because the conservator may have failed to act as such but that they could have if he had acted as such. A Perry defeat is not necessary to prove this.

My wife who has no understanding of investing or law has been predicting that no decisions will come out from any courts until after the election, and depending on who wins the election, the court will rule accordingly. She comes from China so she applies the way Chinese government and court do things to here. I think the Obama administration is becoming more and more like China and Russia, so it is quite possible that her prediction is true. :( so, the whole reason this investment "may" make sense is because of the separation of powers, rule of law and independence of the judiciary...which is to say that brown and ginsburg, at least, dont give a rip what the obama administration thinks. let's see if theory=practice Chris, that is exactly right. And the core issue. Either the rule of law and separation of powers are real or not. That is, in essence, what we are betting on. Unexpectedly, it has become a less than sure bet.

lol , pretty obvious right? I'm surprised that Obama hasn't taken the "make $100B for the taxpayer" path yet... Probably waiting for push comes to shove from the Courts as we get to see more and more documents. Their narrative, spearheaded by Stegman, is that recapitalization comes at a cost to taxpayers. Translation: by giving up the sweep the taxpayer loses the income. There are restrictions regarding the sale of the exercised commons. It is not that those funds can be used for infrastructure or low income housing.

levine is not only smart, but he is willing to provide an out of box take on a situation. here he rightly eliminates the DTA reserve creation and then subsequent reallowance as a net non-cash wash, and points out that even if the next cash infusion is a total loss, govt still comes out ahead based upon its return to date. i can assure you that not only did no one else reporting on GSEs write this insightfully, but likely few who are reporting can even understand levine. That's a great insight, thank you. Yes, his unusual take together with his giving shareholders the benefit of the doubt are both pluses.

And how is Paulson going to handle the conflict of interest?

I am not too versed in legal matters. But I do have a bit of common sense. The whole point of this appeal and by far the biggest and largest of all the pictures is to ratify that the investment done by investors has been a legitimate investment opportunity that has been artificially cut short. Appeals judges can most likely understand this and may also understand that issuing a ruling favorable to plaintiff that is devoid of any financial return invalidates the whole exercise. Therefore, the only reason to rule in favor of plaintiff will be to confer them a valid, legitimate financial return.

What does this have to do with any ruling by any court?

Stopping the sweep won't be a complete victory. Even the best case scenario of re-categorizing the excess funds as redemption of Sr. Shares will leave the conservatorship intact, the companies severely undercapitalized and the full Treasury commitment in place. Plus a 10% dividend on the balance of the commitment and most likely a new compensation fee on the balance that has not been drawn. It will still be a sea change for shareholders in that they will have a small seat at the table. But then, Treasury can exercise the warrants, pursue a double dip for recap and leave shareholders with less than 10% ownership while Treasury could become the controlling shareholder and name a few new Board directors. So while our situation may improve drastically, dangers will still be present. And Congress could still have a shot at dismantling the companies or HRC at merging both institutions. Many things can still happen if and even after the sweep is reversed.

and re: amicus ploy The worrisome -and I admit conspirative- thought is if it is the same appeals court offering defendant ideas as to how to "legally" circumvent the law: FHFA being and not being the government simultaneously, winning in all courts. We already had the appeals court bringing up 4623 and sovereign immunity on their own. So, who is being played? agree with merkhet on his response, but would go one step further. i do believe that ginsburg and brown assume that if they rule against govt, the next step would be for govt to ask for en banc hearing. so bringing up (and discarding) all possible jurisdictional escape hatches is not only proper, but also wise given that the entire appeals court will have to at least look at whether it should look at this case again...and when it looks to see if an en banc hearing is appropriate, a very big reason not to give the case a second look en banc is that it will see that the merits panel itself bent over backwards in trying to see if all of the govt's possible arguments have been raised and answered. plus, to extent that ginsburg and brown are in a majority ruling against govt, doing so will insulate them from any criticism that they are rogue "constitution in exile" judges. All this makes sense. As well as Merkeht's measured response from the legal side. But we would be naive not to see that the DOJ team has been less than bright fighting this case in the last few years yet suddenly smarting up to be able to come up with a "FDIC-FHFA maneuver". I can't give them credit for that and I am in need to fill up that hole.

and re: amicus ploy The worrisome -and I admit conspirative- thought is if it is the same appeals court offering defendant ideas as to how to "legally" circumvent the law: FHFA being and not being the government simultaneously, winning in all courts. We already had the appeals court bringing up 4623 and sovereign immunity on their own. So, who is being played?

Can the FDIC influence the court in that the FHFA has sovereign immunity in spite of FHFA itself not claiming it?

You are good with words, s_berk.

S Berk, it may make the judge a bit self-conscious. On the other hand, no words have ever been spoken that drive the message of what they did so clearly and so powerfully. So, why not use them?

Problem with this is that before Appeals brought this up FHFA and DOJ didn't even know there was such a thing as a 4623. Yet, now they want to tie the nws from the conservatorship to something they weren't aware of at the time. It would be really bad if the ones moving the goal post are the judges themselves.

How about when you read judge Wheeler's compelling argument to have Greenberg get paid in AIG lawsuit yet he did not? Add this one too to the list of compelling arguments that win nothing for plaintiff?

I do not know how the word "may" will be interpreted. But sometimes rehabilitating is not possible, whereas liquidation is a certainty. Therefore, legislators could have used the word may (or can) anticipating that -after a best effort- the conservator can't. I do not think legislators were offering the conservator a choice of may or may not, but instead "may" as in "only if possible" (may) or "if everything else fails" (may not). Extrapolating the word "may" as "may or may not (not obligated)" to the rest of the statute and the general powers will lead to an unreasonable interpretation. An excuse not to comply with a provision. "May" could be interpreted as "is allowed".

But then, Olson takes advantage of the exchange and says something like 'that is what happens when the record is incomplete, we are here speculating' and the judge says 'that is exactly right, I don't think we need to go further than that'. As for Cayne, that only liquidation is the additional power of the receiver, I am having a hard time seeing how J. Ginsburg would interpret this as a conservator being able to wind down and a receiver being able to rehabilitate since -according to Cayne and liquidation aside- all the powers granted by statute are shared. This is why I think J. Ginsuburg used the *implied* word "respectively". Meaning powers are distinct and separate.

Wouldn't the panel at least try to understand that word in the context of FDIA and FDIC actions and history?

It is either / or, not both. 12 US Code 4617 - (4) (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 chapter. But also, specific scenarios should be present for determining receivership. Some of these scenarios (critical undercapitalization) have been frozen by the regulator via 4623 so the regulator can't deem the companies undercapitalized. (3) Grounds for discretionary appointment of conservator or receiver © Unsafe or unsound condition An unsafe or unsound condition to transact business. Remember, Kayne said re 4623 that Treasury's commitment in lieu of companies' capital made them sound and solvent. So if sound and solvent is equivalent to safe and sound then FHFA must terminate the conservatorship. Laughable. Receivership is what happens once Conservatorship fails (companies can't be recapitalized). But you can't use Conservatorship to drive the companies to the ground and therefore justify a Receivership, neither force an unnatural depletion of capital. Anyway you look at the statute you are not going to find any justification for what the government has done. Unless you are Lamberth. In this conservatorship saga there hasn't even been an attempt at restoration of capital, as outlined by law. (12 U.S. Code § 4622 - Capital restoration plans.) Therefore, it is inconceivable that the regulator will receive the companies without a shot at trying to rebuild capital or explaining why this can't be done. -- My layman view... what is wrong are these words "while in conservatorship" from Lockhart's action in 08'. Because it is precisely while in conservatorship that capital must be given a shot at being rebuilt. He issued a resolution that is contradictory in nature and both DeMarco and Watt followed suit. Court should untangle that original action first -as contrary to existing laws- and the rest will fall into place.

It seems a low bar for the judges to agree that the nws prevents fnma from becoming sound and solvent (g tipped his hand on this one). But does it necessarily follow from a statutory standpoint that they're in liquidation, and hence in receivership? i think millett was struggling with this and I'm not clear on it either J. Millet tried to find some comfort of mind explaining it as a "moving" state. In route, but not there yet. Ginsburg, in turn, tried a variation of Lamberth by explaining it was a shrinking prior to a full wind-down. If judges have such a hard time trying to understand what the government did, it means they clearly never followed the black and white, crystal-clear statute. Either restore, or in the alternative liquidate. There is a huge Grand Canyon in the middle.

// to do whatever it needs to in order to act in the interests of the agency. whatever it needs within the confines of conservatorship or receivership. Wouldn't that leave "limbo-ship" out of the picture? It is not anything-goes as she would like to believe. More like black and white and if restoring the companies back to health is not possible, then liquidation must follow. According to Krimminger the word "Agency" denotes either conservatorship or receivership. So any and all actions must respond to the question: was the action within the precepts of a conservator or receiver?

Can the regulator tie the hands of the conservator? But since Watt is both, he could have undone Lockhardt's action had he wanted/needed to.

Nothing a President does is illegal. Not even what is illegal. Nixon Leave my Stern alone!

4623 lead to an action taken by the regulator. The nws was a conservateur's action. Possibly, very different things. What is being challenged is the action of the latter. I may be wrong on this.