doughishere

Cool little website found in the last post. This is probably the best aggregate website i have seen on F&F http://gselinks.com/ GSE Links Your Starting Point for GSE News, Resources, and Information "Ultimately, Truth Prevails"

this from Valueplays FANNIE MAE & FREDDIE MAC: Fresh Attack on Profit Sweep in N.D. Iowa Three Iowa shareholders sued the Federal Housing Finance Agency and the U.S. Treasury last week. Their complaint challenges the legality of the government's use of the profits of Fannie Mae and Freddie Mac under what is known as the Third Amendment Sweep, and does so in a couple of ways not fully explored in similar earlier lawsuits by GSE shareholders. The complaint initiating Saxton v. FHFA, Case No. 15-cv-00047 (N.D. Iowa), tells the Court in broad terms: "Plaintiffs bring this action to put a stop to the federal government's naked and unauthorized expropriation of their property rights. . . . Treasury's violation of HERA is straightforward: the Net Worth Sweep, by changing the fundamental economic characteristics of Treasury's investment, created a new security, and HERA forbade Treasury from acquiring Fannie and Freddie stock in 2012. This Court must set aside the Net Worth Sweep and restore to Fannie's and Freddie's private shareholders the property rights the federal government has unlawfully expropriated for itself." While that general overview sounds familiar, the 49-page, 146-paragraph document contains some details not found in other shareholder lawsuits. A spokesperson for the Iowa shareholders and their lawyers said, "this is the first suit by individual shareholders in Iowa and the first suit filed since Treasury documents leaked earlier this year 48 raised serious questions about whether judges lacked relevant information before ruling in similar cases related to the Third Amendment Sweep." As reported by HousingWire.com, one leaked document -- dated Jan. 4, 2011, and posted at http://bit.ly/1RvKntV -- is a planning memo by then undersecretary for domestic finance at Treasury, Jeffrey A. Goldstein, on the disposition of the GSEs. The Goldstein Memo was not provided to shareholders, Housing Wire observes, going on to explain that this is most notable because critics of the Treasury say it makes the argument that Treasury should disregard the federal Housing and Economic Recovery Act rules that circumscribe its duties in the conservatorship. As previously reported in the Troubled Company Reporter and Class Action Reporter, Fannie Mae and Freddie Mac received $187.5 billion from Treasury between Nov. 2008 and June 2012. The GSEs have returned $230.7 billion to Treasury to date, earning taxpayers a 23% return on their money so far. A similar lawsuit by Continental Western Insurance Co. in the Southern District of Iowa challenging Treasury's endlessly increasing rate of return by sweeping all of the GSEs' profits each quarter was dismissed by Judge Pratt earlier this year, and Judge Lamberth in the District of Columbia dismissed several similar lawsuits in Sept. 2014. Both judges said the government acted within the boundaries established by the Congress when it voted to approve HERA. Judge Lamberth's decision is currently on appeal to the U.S. Court of Appeals for the D.C. Circuit. Briefing in the D.C. Circuit might be completed by early-October 2015. "It does seem peculiar that Treasury did not provide [shareholders with a copy of the Goldstein Memo]. It raises the question of whether, or what, other documents were not disclosed, and why," prolific Graham, Fisher & Co. analyst Josh Rosner told Housing Wire. "[Additionally,] it suggests that they fully appreciated what HERA required and chose to circumvent the spirit, if not the letter, of [the] law." An earlier memorandum from Mr. Goldstein to Treasury Secretary Timothy Geithner-- dated Dec. 20, 2010 and posted at http://nyti.ms/1HCgIZ2 that was turned over to shareholders -- unambiguously spoke about "the Administration's commitment to ensure existing common equity holders will not have access to any positive earnings from the GSEs in the future," notwithstanding the absence of any provision in HERA making that decree. InvestorsUnite.org observes that the Saxton case in the Northern District of Iowa won't be encumbered by Judge Lamberth's ruling in the District of Columbia or Judge Pratt's decision in the Southern District of Iowa dismissing similar lawsuits. Chief Judge Linda R. Reade -- appointed to the federal bench by President George W. Bush in 2002 -- is free to take a fresh look at the facts and applicable law in the Saxton case and make her own independent findings of fact and conclusions of law about whether the government went too far when Treasury and FHFA executed the Third Amendment and how that overreaching should be reformed. The Saxton plaintiffs say in paragraph 68 of their Complaint that: 49 "A senior executive at one of the Companies . . . discussed the reversal of the deferred tax assets valuation allowance with Treasury on eve of the Net Worth Sweep." That factual assertion doesn't appear to have bubbled to the surface in other GSE litigation to date and is inconsistent with these statements appearing in the Declaration submitted by FHFA Advisor Mario Ugoletti in Perry Capital v. Lew, Case No. 13-cv-01025 (D.D.C.), Doc. 27, Tab 1, par. 20 at 9-10: "At the time of the negotiation of the Third Amendment, the Conservator and the Enterprises had not yet begun to discuss whether or when the Enterprises would be able to recognize any value to their deferred tax assets. Thus, neither the Conservator nor Treasury envisioned at the time of the Third Amendment that Fannie Mae's valuation allowance on its deferred tax assets would be reversed in early 2013, resulting in a sudden and substantial increase in Fannie Mae's net worth, which was paid to Treasury in mid-2013 by virtue of the net worth dividend." Retired Fannie Mae lobbyist Bill Maloni wondered aloud yesterday at http://timhoward717.com/ -- the self-described "Fannie Mae-Straight Talk" blog unaffiliated with J. Timothy Howard, Vice Chairman and CFO of Fannie Mae until 2004 and author of "The Mortgage Wars" -- if former Fannie Mae CFO Susan R. McFarland might be the executive to which the Saxton Plaintiffs make reference. Mr. Maloni thinks he recalls something about Ms. McFarland threatening to resign her CFO post if Fannie Mae didn't make changes in the way it accounted for its deferred tax assets before she departed in 2013. Paragraph 11 of the Saxton Plaintiffs' Complaint touches on a question about the GSEs' actual need for cash injections from Treasury from 2008 to 2012. The GSEs created and recorded large loan loss reserves in 2008 and additional eye-popping loan loss reserves in 2009. Those feared losses never materialized and were reversed after the Net Worth Sweep was put in place. While the large non-cash losses created by those write downs adversely affected the GSEs' balance sheet solvency, there's no indication that the GSEs ever faced a liquidity problem or needed Treasury's cash injections to meet their day-to-day expenses and obligations. "By 2012," the Saxton Complaint says in paragraph 59, "the housing market was already recovering and both Fannie and Freddie had returned to profitability. In August 2012, the Companies and FHFA knew or should have known that previously anticipated losses far exceeded their actual losses. These excess loss reserves artificially depressed the Companies' net worth. Upon reversal of these loss reserves, Fannie's and Freddie's net worth increases accordingly." Paragraph 67 of the Saxton Complaint charges that "[t]he Companies, FHFA, and Treasury knew or should have known in August 2012 that the Companies would reverse substantial loss and deferred tax reserves and reap substantial profits from lawsuits and sources other than their day-to-day business operations." The Saxton Plaintiffs assert these five claims for relief in their Complaint: 50 (A) FHFA's conduct exceeds its statutory authority as Conservator; (B) Treasury's conduct exceeded its statutory authority; © violation of the Administrative Procedure Act: Treasury's conduct was arbitrary and capricious; (D) breach of contract against FHFA as Conservator of Fannie and Freddie; and (E) breach of implied covenant of good faith and fair dealing against FHFA as Conservator of Fannie and Freddie; and ask the Court to grant these six forms of relief: (1) Declaring that the Net Worth Sweep, and its adoption, are not in accordance with and violate HERA . . . , and that Treasury acted arbitrarily and capriciously . . . by executing the Net Worth Sweep; (2) Vacating and setting aside the Net Worth Sweep . . . ; (3) Enjoining Treasury and its officers, employees, and agents to return to FHFA as conservator of Fannie and Freddie all dividend payments made pursuant to the Net Worth Sweep or, alternatively, recharacterizing a portion of such payments as a pay down of the liquidation preference and a corresponding partial redemption of Treasury’s Government Stock rather than mere dividends; (4) Enjoining [FHFA and Treasury from] taking any action whatsoever pursuant to the Net Worth Sweep; (5) Enjoining FHFA and its officers, employees, and agents from acting at the instruction of Treasury or any other agency of the government and from re-interpreting the duties of FHFA as conservator under HERA; and (6) Awarding Plaintiffs damages . . . , including . . . contractually-due dividends on the preferred and common stock for each quarter when a dividend based on the net worth of the Companies was paid to Treasury. Referring to the Sweep, plaintiff Tom Saxton of Cedar Rapids, said, "I've invested a fair amount of money in Freddie Mac. What the government has done is wrong, and I'm filing this lawsuit to protect my property." Bill Ackman at Pershing Square Capital Management LP suggested at the 2015 Harbor Investment Conference earlier this year that Fannie and Freddie's common shares have one of the most attractive risk-reward profiles in the markets today. To put some meat on those bones today, FNMA shares trade at less than $3 per share, which is a slight discount to their book value for all authorized, issued and outstanding shares. If one of the shareholder suits were successful in reforming the Third Amendment and 51 recharacterizing the GSE's payments to Treasury, the book value of FNMA common shares, for example, would rocket to more than $50 per share, and preferred shares in the GSEs would be expected to rebound to their par value. According to regulatory filings, Pershing Square owns more than 100 million shares of FNMA common stock and more than 60 million shares of FMCC common stock at an average cost of just under $2.25 per share. Regulatory filings disclose that Fairholme Capital Management, Icahn Associates Corp., Third Avenue Management, and Seamans Capital Management also oversee large positions in the GSEs' publicly traded securities. A full-text copy of the Saxton Complaint is available from GSE Links -- described as "Your Starting Point for GSE News, Resources, and Information" -- at no charge at: http://gselinks.com/Court_Filings/Saxton/15-00047-0001.pdf The Saxton Plaintiffs are represented by: Alexander M. Johnson, Esq. Sean P. Moore, Esq. BROWN, WINICK, GRAVES, GROSS, BASKERVILLE AND SCHOENEBAUM, P.L.C. 666 Grand Avenue, Suite 2000 Des Moines, IA 50309-2510 Telephone: 515-242-2400 E-mail: [email protected] [email protected] An updated chart is available at no charge at: http://bankrupt.com/gselitigationsummary201505.pdf to help organize information about the many lawsuits challenging the Third Amendment and Net Worth Sweep, including the cases challenging the sweep as a confiscation of private property for public use by our government without just compensation in violation of the Fifth Amendment to the U.S. Constitution before Judge Sweeney in the U.S. Court of Federal Claims. At this time, jurisdictional discovery is underway in Fairholme v. U.S., Case No. 13-465 (Ct. Fed. Cl.), and (subject to further extensions), jurisdictional discovery is currently scheduled to wrap up by June 29, 2015. Completion of jurisdictional discovery in Fairholme -- on whatever date it actually happens -- will unleash a flurry of activity in Judge Sweeney's court including Fairholme filing its response to the government's motion to dismiss its complaint and other pre-trial filings by the government and other aggrieved shareholders.

What about the memo that was broke by inside sources a month ago from Undersecretart for Domestic Finance to Treasury Secretary Tim Geithener. Dated Jan. 4 2011. http://www.insidesources.com/wp-content/uploads/2015/04/DOT-1.4.2011.pdf Bullet point 4. "Potentially accelerate recognition of losses prior to 2012 (there is currently a $180 billion difference between the GAAP and Far Value balance sheets of the GSEs)."

Been quiet the last few days...just wanted to say hi

http://www.minnpost.com/business/2015/05/journalist-gretchen-morgensons-remarks-2015-spj-page-one-awards Journalist Gretchen Morgenson's remarks at the 2015 SPJ Page One Awards By Gretchen Morgenson | 05/20/15

After the Government filed its motion to dismiss Fairholme’s complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Rules of the Court of Federal Claims (RCFC), Fairholme requested limited, jurisdictional discovery regarding three issues for the purpose of responding to the Government’s motion. The Court granted Fairholme’s request. To date, the Government has produced over 600,000 pages of documents, and the parties have completed two depositions.

Ackmans Call http://www.valuewalk.com/2015/05/bill-ackman-q1-conference-call/

what is the may 18th extension for? what was the motion on it?

http://malonigse.blogspot.com/ Treasury Memo Not being a lawyer –instinctive sensing how it might play in the dizzying remaining GSE court cases--and not believing in coincidences, I think somebody (former Treasury official?) gave Goldstein 2.0 to an obscure publication, hoping to stir things up—politically and legally—as the leaker sat back to see who among us bayed at the moon loudest and most effectively. He/she must be disappointed. I didn’t sense any mountains moving in the Court of Claims (Judge Sweeney), in the Appeals Court (Judge Lamberth’s peers), on the Hill, or among the media. I could be wrong, but.... The expected comments/questions about Goldstein’s memo run the gamut. ---“It’s the smoking gun (for the plaintiffs).” (I don’t think so.) ---“It’s been out before and Lamberth and Sweeney have it.” ---“It was withheld from Lamberth and Sweeney, both will be pissed” ---”It makes clear FHFA wasn’t running the show, contrary to what the law (HERA) stipulates.” (Tru dat!) ---”Where’s the reference to the taxpayers money being ‘invested” not loaned to F&F.” ---“The memo claims the GSEs only need between 3 and 4% to capitalize their business.” ---”It shows the Obama Administration just followed the agenda that Paulson previously developed.” (That theme is David Fiderer’s favorite, as well as for several other sources.) ---”Looks like the big plan always was to do away with F&F, giving the primary and secondary markets to the TBTF banks.” (We may have a winner!) ---“Will Goldstein be deposed, if he hasn’t already?” ---“If the report was withheld, will Sen. Grassley go after the Treasury and DoJ for their shoddy antics?” ---“It says they should be reprivatized after getting recapitalized. But how can they get capital, if Treasury keeps taking….” (Naturally and par for the course in DC, on Friday night, as this blog was being drafted, there were rumors of additional “heretofore secret memos” circulating and soon to be revealed.) Maloni’s Take While I was delighted to see this document emerge, I sense the very smart lawyers at the big firms working this case know all about the memo and the issues contained. My conclusions don’t change, the Hill doesn’t care enough to do anything and likely can’t for the reasons we’ve been identifying for weeks. So far, the courts seem to think that hedge funds dwell in that the part of our economy doesn’t merit benefit of the laws. And, at the end of the day, the delays are only screwing Fannie and Freddie, right? Voters have no idea of what’s going on and how conservatorship will impact them. If/when it happens, the public won’t understand until it’s too late. The public will get upset when F&F are gone, which will be too late, and suddenly consumers find themselves paying more for fewer mortgage options—including much more for fixed rate financing, if its obtainable--and not liking the control lenders wield over them and their choices. Right now, it’s all about convincing those jurists still in the action—ultimately the SCOTUS--that the US government lied, bent and likely broke the HERA law, had little intention to preserve and restore Fannie Mae and Freddie Mac, made some really dumb financial and political moves--which they are having trouble hiding or disguising--and which they hope to slow walk long enough to let them get out of town and leave the mess in Hillary’s or Jeb’s lap (Oops, or Bernie’s?). Maybe some new disclosures will turn up the heat on the White House and the courts and maybe even Congress, but I ain’t betting the grandkids' college funds on it.

http://m.imgur.com/8XxUVHw ValueWalk ‏@valuewalk 25m25 minutes ago Ackman says no alternative to $FNMA and $FFMCC - the truth will prevail

Maybe the leaked document isnt as big of a deal as we thought..maybe fairlome knows about it already

Yup http://m.imgur.com/LVSdoKH

Anyone know when the next meeting is between fairlome and the govt and the judge is....what they call it is slipping my mind right now.

Leaked Treasury memo on Fannie, Freddie fuels fire for sweep critics Why wasn’t key document turned over in federal lawsuit? http://www.housingwire.com/articles/33740-leaked-treasury-memo-on-fannie-freddie-fuels-fire-for-sweep-critics

are you guys cool with me posting these news articles?

Leaked Fannie (FNMA), Freddie (FMCC) Memo May Include a 'Bombshell', Dick Bove Says http://www.streetinsider.com/Analyst+Comments/Leaked+Fannie+(FNMA),+Freddie+(FMCC)+Memo+May+Include+a+Bombshell,+Dick+Bove+Says/10507208.html Rafferty Capital analyst Dick Bove weighed in on the leaked memo related to Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC), highlighted earlier. "I have read the Treasury memo in question and it raises serious questions as to whether the Treasury is following the law and even if Judge Lamberth understands the law," Bove said. Bove highlights that one interesting point in the memo is that it suggests that F&F have capital ratios of 3% to 4%. This is substantially lower than current demands that they have capital ratios of 10%. Bove said the "bombshell" in the report is the following: "Ensure $275 billion of funding capacity after 2012 is not used to pay dividends. This may require converting preferred stock into common or cutting or deferring payment of the dividend … ." "This is directly contrary to the current practice whereby the Treasury is taking all of F&F’s profits as a dividend and driving the two companies into insolvency by doing so," Bove said. Further, Bove highlights that the memo describes Option 1 as part of the “End State Options” for F&F. The memo states: ”After becoming adequately capitalized during the Transition, the GSEs would exit the conservatorship as private companies..." "This is essentially the path laid out under HERA and the Paulson Treasury when the GSEs were put into conservatorship in September 2008," Bove said. "This quote is basically saying that this is the law." Bove said while there is much more in the memo it is up to Senator Grassley to pursue these issues. He also said the memo "should also let jurists like Judge Lamberth think about the fact that material information is being withheld by the Treasury. More importantly, whether it is the jurists’ responsibility to uphold the law or not."

Its almost as if they feel that the original terms didn't punish shareholders enough and now they are justifying more. To which they even admit that some of the criticisms have been alleviated. Key criticism of this system(which are partially mitigated through provisions in Dodd-Frank): Creates another set of private financial firrms that are too big to fail. Does not represent fundamental reform and does not "end GSEs." Replicates the pre-crisi system of "heads I win/tails you loose mentality of private shareholders. Inadequate taxpayer protections and abuse of the perception of government support. "This is essentially the path laid out under HERA and the Paulson Treasury when the GSEs were put into conservatorship in September 2008"

Exclusive: Leaked Treasury Memo Counters Legal Claims by Shawn McCoy April 29, 2015 http://www.insidesources.com/exclusive-leaked-treasury-memo-counters-legal-claims/ A leaked Treasury memo obtained by InsideSources may raise new questions about the government’s compliance in turning over documents to a U.S. District Court prior to a ruling made last fall in a case brought by shareholders of Fannie Mae and Freddie Mac. In September, U.S. District Judge Royce Lamberth dismissed a suit against the US Treasury over its seizure of all profits from the two Government-Sponsored Enterprises (GSEs). Lamberth’s decision is currently being appealed. Advertisement But during that case, Treasury was required to turn over all relevant materials to the court for review. The memo obtained by InsideSources, dated January 4, 2011, was never disclosed to the court as part of the Administrative Record. The memo was authored by Jeffrey Goldstein, the Undersecretary for Domestic Finance. While another memo by Goldstein from two weeks prior had been given to the court, the failure of Treasury to turn over a highly-relevant planning memo may raise doubts over whether Lamberth was given all of the relevant information prior to his decision. Besides its exclusion from the Administrative Record in the first place, the memo could create legal issues for Treasury, as it seems to argue against following the federal statute (HERA) that governs the conservatorship. Additionally, the memo raises other questions over Treasury’s favored reform—to “end the GSEs.” Efforts to wind down the GSEs are described as promoting a “bank-centric model” that “benefits larger institutions” and could exacerbate concerns over mortgage lenders being too big to fail. Borrowers at smaller institutions could expect higher costs. Treasury foresees reduced use of 30-year fixed rate mortgages, and the memo states, “markets would be subject to greater swings in spreads and liquidity and credit pricing would be more pro-cyclical.” The memo also contrasts public statements made by Treasury that the GSEs would need 10 percent capital ratios. Privately, it states that Treasury believes the number to be closer to between 3-4 percent. The legal implications in the disclosure of this memo are unclear. However, its exposure will probably raise questions about the existence of other undisclosed documents. Treasury simultaneously faces more than a dozen other lawsuits related to the profit sweep. The Treasury did not immediately respond to a request for comment.

More on Wheeler Judge seems skeptical of government's AIG bailout terms by Paul Davidson, USA TODAY http://archive.courier-journal.com/usatoday/article/26184917 Wheeler, however, said he remained "perplexed" by the government's treatment of AIG. "It doesn't really justify interest (rate) four times as high (as other firms) and an 80% stake," the judge said. "I mean nobody got that."

How long do you think it will take Judge Wheeler to rule?

'The other element I find funny—curious, not ha-ha--Treasury made its 2012 “sweep” investment decision to gobble up "all earnings (and subsequently draw about 20 lawsuits—owing to its fear of the GSEs could be possibly “borrowing from Treasury to pay borrowings from Treasury” (isn’t that lending terminology?)—but this fear/justification about a penniless Fannie and Freddie occurred just as both companies were about to revenue ripen and burst into significant profitability.'' From Bill Maloni's GSE Blog http://malonigse.blogspot.com/

http://www.nytimes.com/2015/04/23/business/supreme-court-hears-appeal-in-raisin-case.html Supreme Court hears appeal in Raisin "Taking" Case Chief Justice John G. Roberts Jr. said the program was “a historical quirk” that allowed the government to do more than regulate production. “You come up with the truck and you get the shovels and you take their raisins, probably in the dark of night,” the chief justice told a lawyer for the federal government, Edwin S. Kneedler.

Judge sees ‘dilemma’ in government defense of AIG bailout By Patrick Temple-West 4/22/15 5:38 PM EDT A federal judge on Wednesday leaned firmly against parts of the U.S. government’s closing argument in its fight with shareholders of American International Group Inc — led by former CEO Hank Greenberg — who are claiming $40 billion in damages stemming from the company’s bailout in September 2008. After 37 days of trial, attorneys for the shareholders and the Justice Department made their final pleas before Judge Thomas Wheeler in the case, which included star witnesses Ben Bernanke, Timothy Geithner and Henry Paulson. At one point during Wednesday’s hearing, Wheeler sounded skeptical of an argument by Justice Department attorney Kenneth Dintzer that there was no “regulatory taking” violation under the 5th Amendment when the government took an 80 percent stake in AIG. “There’s no question in anybody’s mind that there had been change in ownership … the government was running the show,” Wheeler said. “The dilemma I’m having, I’m listening to your arguments but nevertheless in that very first week the government is in control,” Wheeler said. “How can it be that there wasn’t some sort of illegal exaction of taking for that to have happened?” In a different exchange with Dintzer, Wheeler raised concerns with the government’s profit-taking after it acquired its AIG stake. “The government acquired the stock without paying anything for it and then pocketed the revenue,” Wheeler said. “I mean, c’mon.” Earlier in the day, the attorney for Greenberg and other AIG shareholders argued the government illegally extracted 80 percent of the company as a condition for a $85 billion loan during the September 2008. “Somebody had to be a scapegoat” so that 2008 presidential candidates Barack Obama and John McCain could “support the ‘TARP’ bailout,” said David Boies, chairman of the law firm Boies, Schiller & Flexner who is representing the AIG shareholders. “The government made a political statement … to demonize AIG.” During Boies’s arguments, Wheeler offered a favorable analogy for the shareholders, saying their situation sounded similar to a partial government seizure of a home: “We’re only going to let you live in the master bedroom.” Maurice “Hank” Greenberg, AIG’s ex-chairman and CEO, was in the courtroom but declined to answer questions after the hearing. A ruling in the case would come “in the relatively near future,” Wheeler said. But Boies said that decision is at least months away. To view online: https://www.politicopro.com/go/?id=46606

http://www.npr.org/blogs/money/2015/04/21/401259676/who-owns-fannie-mae-and-freddie-mac Who Owns Fannie Mae And Freddie Mac? APRIL 21, 2015 2:05 PM ET STACEY VANEK SMITH

Gaining Traction: Fannie and Freddie Flirt with Re-privatization Proff Susan Wachter. Wharton School of Business. http://knowledge.wharton.upenn.edu/article/gaining-traction-fannie-and-freddie-flirt-with-re-privatization/