Steve_Berk
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Posts posted by Steve_Berk
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i just listened to the argument. that was awful. I can't see how we prevail in the 6th circuit. The panel seems to want to do what's simplest and easiest
Another Judge that doesn't know left from right. Houston, we have an Iowa problem. Again!From Peter Chapman... A recording of the oral arguments presented to the Sixth Circuit today is now available at https://goo.gl/ZxmZxr at no charge.
As awesome as Thompson was the Judge appears not to understand the issues well enough.
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here is the article that cites mnuchin's spokesperson who says that he wants continued payments to the gov't as required under the NWS: https://www.bloomberg.com/news/articles/2017-05-02/fannie-freddie-profit-payments-should-continue-treasury-says
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aren't there still other court cases that are similar to perry that have been brought in other jurisdictions? Yes, most district court judges are going to follow the DC circuit, but I still am holding out hope that someone will draw a judge that will be persuaded by Brown's biting dissent. If we can get a split in the circuits then you'd get Supreme Court review (although given the current composition of the Court, I am doubting that the DC Circuit opinion would be overruled. People get confused between judicial conservatism and political conservatism. I think that Ginsburg is a judicial conservative.
So from the perspective of the APA claim, the remaining avenues are
1) other district court cases
2) en banc in DC circuit
3) Supreme Court
I know, not good at all, but please correct me if I'm wrong. I haven't read the whole opinion but it was just about as much of a smackdown as I could have imagined. Clearly my legal expertise did me no good here.
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Most of my work on this investment was on Perry. I was pretty confident that there would be at least a remand for a full record but I was never able to shake the nagging feeling that Ginsburg had more on his mind since he kept asking those jurisdictional questions. This was nearly a worst case scenario. BTW do the contract claims have any potential benefit to the common? I thought Hume at one point said potentially yes but o don't recall the details
Since I haven't been studying the takings claim, chezerca or merket or others can you summarize our likelihood of success and potential barriers. My guess without doing any research is that it's going to be very tough to establish.
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first step would be to ask for this to be heard en banc. Not sure that will happen. The dissent is pretty cutting--if that were the majority opinion, we'd be celebrating. But not sure that the DC circuit wants to get into this. I don't think the SC is going to hear this.... there isn't a split among the circuits and this was not really decided on something that is exactly a hot topic (specific jurisdictional ruling).
So much for that.... I guess we're down to the takings case, and scraps from the contract claim.
What is the likelihood that the Supreme Court reviews this?
Ps will ask for certiorari, and my guess is that scotus doesnt grant it. it has enough tough cases to decide
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Ridiculous that my portfolio is now influenced by this dumb policy. Oh well--if FNMA outperforms, then I have Fidelity's incompetence to thank
I had the same issue--they wouldn't accomodate. The only option are to buy FMCCL or FNMA. I chose FNMA.
Has anyone successfully bought the preferreds through a Fidelity account? My family and I have some accounts there and just tried purchasing preferreds today, and it didn't work. Called up Fidelity and apparently they have blocked ALL FNMA and FMCC preferreds from puchases from ALL clients, regardless of low or high net worth or type of account.... They told me since they don't pay dividends, they are considered too "high risk" and so they won't allow them. Yet they allow the common, and I settled for those. What a stupid policy.
I've bought through fidelity. Ask to be transferred to the fixed income desk and they'll let you buy. I told the guy I was a fund manager (which is true) and they stopped giving me so much shit.
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I had the same issue--they wouldn't accomodate. The only option are to buy FMCCL or FNMA. I chose FNMA.
Has anyone successfully bought the preferreds through a Fidelity account? My family and I have some accounts there and just tried purchasing preferreds today, and it didn't work. Called up Fidelity and apparently they have blocked ALL FNMA and FMCC preferreds from puchases from ALL clients, regardless of low or high net worth or type of account.... They told me since they don't pay dividends, they are considered too "high risk" and so they won't allow them. Yet they allow the common, and I settled for those. What a stupid policy.
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The way that it usually works is that the appeals court makes the decision and issues the opinion. They do not disseminate the opinion to the rest of the circuit before it's published. I do not think that the delay in issuing an opinion in perry has anything to do with this going en banc.
The standard process is for the three judges to send around drafts. The judges who are in agreement have the most work to do--they have to agree upon language in the opinion. If there is a dissenting judge, he/she can just write whatever without the approval of the others.
To those who think this has gone on for a long time, yes, it's been a while, but I don't think it's unprecedented.
If this thing is going en banc, then it IS possible that the dissenting judge is already lobbying the rest of the circuit and trying to prep them and rally them to have this heard by the entire circuit. If it's heard en banc then there is yet another round of briefing and even oral arguments in front of the entire circuit of judges.
My lawyer brought it up (he was a clerk on the 3rd C. Ct of Appeals some years ago). However, I don't want to ask him further questions about this.
Even if there is a delay related to en banc in the Perry case, I'm not worried about it. There are 7 Ds and 4 Rs that are active judges on the DC Circuit Ct. If they came out with a bad decision it would be catnip for The Donald and his crew in terms of overturning it administratively.
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Honestly the people who are freaking out over his testimony are either pretending in order to help manipulate the market or they are just not listening/ don't understand how politics work at all. Even if you read the very words that he stated, Mnuchin said nothing extraordinary. He only says that he's not for recap and release without any conditions whatsoever. I think we all knew that already, or at least should have. Although we all know that Fannie and Freddie weren't the cause of the mortgage crisis, I also think that most of us would agree that some conditions or restrictions are necessary and that it would be neither a politically feasible or even practically desirable solution to just go back to where we were before. I find nothing that he said surprising in the very least.
Very rough transcript again.
Senator Crapo: Mr. Mnuchin I want to try to cover 3 quick maybe not so quick questions. The first one is to return back to the discussion you were having with Senator Warner about Fannie Mae Freddie Mac and GSE reform housing policy. I’m sure you’re aware that Senator Warner and I and a number of other Senators on the banking committee have dealt with legislation to try to deal with this circumstance. We currently have a situation in which they are currently in receivership. The Federal Government is basically running them. The concern that Warner was referencing is a concern that this administration is having, not because we’re afraid of anything, but because we’re asking.. trying to find out, is that the administration may either believe it’s okay to keep them in receivership just continue to run as is and the status quo, or that it’s okay to recapitalize them and put them back into the housing market back without any reforms. And uhh.. I just wanted to ask you if you would and I realize you can’t comment on a specific plan yet but if you would comment on the fact as do you believe we need to have reform in our housing finance policy that would go further then reforming or simply keeping them in receivership.
Mnuchin: Again thank you for that I would comment that unlike medicare where I acknowledge I am not an expert, I am expert, I’ve been around these for 30 years, I understand these very well and thats why it would be one of my priorities to work with you. What I am focused on is We need housing reform and a solution. So I start with the standpoint that the status quo is not acceptable of just leaving them there. I think as you know there are two extremes on this and it’s something that I look forward to sitting down and talking to you with you and I believe whatever the outcome is one we don’t put the tax payers at risk, and two we don’t eliminate capital for the housing markets. I’ve very concerned that middle income people and moderate income who need mortgage loans and access to this capital in the mortgage market don’t lose it. [brief interruption by Crapo] I’m optimistic we can work together and hopefully figure out a bipartisan solution
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I think that there's been way too much other stuff to focus on for the media to make a lot of hay about this issue. Notably, very few news articles came out about this topic when Mnuchin commented on getting rid of the conservatorship. My guess is that the topic is too technical and complicated for any media to delve into this very deeply. You might get some of the expected refrains about how wall streeters are getting rich off the deal or something like that, but I'm thinking that it's not going to be a massive public outcry.
Mick Mulvaney picked for Budget Director. Trump is assembling pretty much the most GSE-friendly staff that I could possibly imagine, short of picking Berkowitz and Ackman.
Aaaaaaand another... Carl Icahn. According to CNBC and WSJ, Trump to name Carl Icahn as special advisor on regulatory overhaul; Icahn also playing role in selecting next SEC chief
These guys are going to get ripped apart by the liberal media when they do right for GSE stakeholders. Do we know if Carl Icahn still holds his stake in the GSEs?
Trump and his team will be ripped apart by the liberal media no matter what they do. Those that voted for him certainly don't care, and there were enough that didn't care to get him elected. I doubt those voters care what the media will say about him for the next four years. Trump will do what he thinks is the best thing to do.
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this is also what I don't understand and is pretty much the basis of my large stake in the common shares. I'm not that interested in the day to day market movement, although seeing everything go up 45% in one day was a real thrill. I still believe that we'll get a remand in Perry, and also find it hard to imagine a solution that completely wipes out the common, although maybe that's just the limits of my imagination.
BTW, if you consider full dilution from the warrants, what has been the general estimated range for the value of the common. I thought it was somewhere around $15 give or take, but not sure.
Seems probable that in this scenario (release, private recap, removal of govt guarantee), prefs are made whole and commons are likely wiped (short of favorable legal outcomes).
Why are commons wiped out in that scenario?
why would mnuchin or trump want to wipe out a position govt owns 80% of?
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this is such a crazy investment. I put in 100% of one of my main retirement accounts in this, solely for the purpose of investing in what I believed to be a high likelihood of a remand in Perry. I was planning on exiting post remand, depending on the strength of the opinion. This whole Trump thing has been a complete surprise to me, as I'm sure it's been to everyone. But I'll take it. I'm not taking anything off the board for now--this was always an investment that I promised myself I would only make if I were willing to lose it all, and I still am.
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i seriously doubt that the outcome will be materially affected by the adminstration. i think they already knew how they were going to decide the case before the election. however, i do actually agree that they may feel more emboldened to strengthen the language of the opinion to the extent that they want to criticize the adminstration.
Does the election of trump and recent stock price move reduce the urgency of the courts to side with the plaintiffs / people?
If clinton had won, the courts might have viewed themselves as the people's last big hope for justice, and more likely produced a plaintiff-friendly verdict, all things equal?
as we all know very smart people can disagree on merits of this case, leaving some level of subjectivity
In contrast I think the courts are waiting for the election results to decide how to rule so it can side with the administration.
If you followed the FBI investigation into Hillary's email scandal, you know there is no separation of power in the Obama administration.
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Why is Tim Howard so pessimistic about Trump and the GSE's? This is what he's saying on his blog:
"Needless to say the calculus in our epic battle has completely changed with the election of Donald Trump. At this moment it appears that the mandates and trust funds that we on this blog fought so hard to save are in grave peril.
It is becoming increasingly clear from sources close to Trump’s team that he will resolve the GSE issue early in his Presidency. He will claim much of the glory in declaring victory while setting the housing market on a path of growth. The Republicans will be sure to crush as much of the mandates and trust fund dollars as possible and cleverly lay the stage for their ultimate demise. Trump will lay claim to the increase in minority home ownership that will surely come as a result of releasing the GSEs and bringing private capital back into the market."
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yeah, same here. Previously, I was just waiting for the remand, and I was planning to sell on the spike. But now, I think I'm going to wait to see how things shake out with this new administration
Maria Bartiromo's twitter feed says it's either Dimon or Mnuchin and that Dimon has already said he's not interested. Announcement expected on Friday.
I don't buy the trump trade aspect. It sure would be. I've to get a ruling though.
there is a multiplier effect going on with "trump trade", in my mind.
i start from the proposition that perry remand (at least) is more likely than not. before trump, the question was what's next. answer was litigation (even assuming the priv docs are produced). my investment take was sell on the judicial news.
now with trump administration, i see much more likelihood of a settlement...if simply because the negotiating party on the other side has changed remarkably in appearance. so my investment take is to become much more of a holder post judicial decision.
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He's saying that he didn't seek it and is happy being in congress but agree it would be bad
Hensarling being floated for Treasury Sec. That can't be good.
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My thinking is that it's going to be really tough to accomplish this in the next few months and I don't know that it's really going to be a big priority when there are so many other things to do. Also, some presidents take their last months to be lame ducks, although bill Clinton didn't do that.
I also think that our board is way too overconfident to predict that trump is good for our position. Traditionally republicans hate the GSE's and want to get rid of them. I think there is a good chance that trump won't really care about this issue and will just let other republicans take the lead on it. I certainly don't think that Obama will just assume that trump will settle and blame him when republicans largely want to eliminate the GSE's.
Trumps campaign was very much about blaming Obama and Washington but now that he's been elected he's going to have to pivot to doing the things that he promised to focus on. And those things require political capital. Why would he spend that capital on something he's never demonstrated an interest in?
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Thanks Luke--will read this later but for the benefit of the board, here is the decision.
Attached image: potential impact to the Perry Appeal? Wouldn't the CFPB decision hint that the FHFA may also be unconstitutional? What would that mean for our case?
I would love some thoughts from people on this board... especially the lawyers. Thanks in advance!
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I may be completely bungling my answer to this question, but since part of the discovery requires a factual inquiry about whether the FHFA was improperly directed by the Treasury, it would seem perverse if they could avoid discovery and the production of an administrative record by simply claiming that they are acting as the conservator and not the government. So I would guess that since that are an agency, and the core question is whether in these circumstances they were acting improperly, they would have to produce. The only way that I could imagine that they could avoid this is if the court were to somehow conclude that the FHFA was not acting as the govt--and if they can conclude that without asking for a full record, then not sure this question matters.
Chezerca:
separate question for merk/steve/others: if fhfa is not the govt when acting as conservator, does it still need to produce an administrative record as to what fhfa considered?
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Millet was always a lost cause for us--she made it 100% clear, IMO, that she had no use for the arguments made by the plaintiffs. Brown's silence during Perry orals was what gave many of us some pause. I can't imagine that Brown will look favorably among arguments that there is absolutely no recourse in law even if the agency acted in bad faith. Maybe these stupid rulings at the district court level that take it to the extreme might even help us, by ruling in such a ridiculous way that it causes Brown to feel like she has to address this strongly. I am encouraged.
the dc circuit case posted today has brown writing majority opinion, joined by ginsburg, with millett writing dissent.
hhhmmmmm....
"In other words, administrative hubris does not get the last word under our Constitution. And citizens can count on it."
YES! quoting brown more fully where you read that luke:
"We recognize the [NLR]Board’s unimpeded
access to the public fisc means these modest fees can be
dismissed as chump change. But money does not explain the
Board’s bad faith; “the pleasure of being above the rest” does.
See C.S. Lewis, MERE CHRISTIANITY 122 (Harper Collins
2001). Let the word go forth: for however much the judiciary
has emboldened the administrative state, we “say what the law
is.” Marbury, 5 U.S. (1 Cranch) at 177. In other words,
administrative hubris does not get the last word under our
Constitution. And citizens can count on it."
i love judge brown
EDIT: the flipside is that even in a case where the nlrb is found to have acted in bad faith, millett cant see her way to award attys fees...meaning she is deep in the tank for the govt
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There are a bunch of options for the defendant to appeal the order, if they have indeed been ordered to turn over materials. They can appeal the disclosure order at the end of litigation (which of course isn't very appealing)--they'd typically do this and request to vacate any adverse judgment and remand for a new trial excluding the privileged material. Or they could ask the court to certify an interlocutory appeal and petition the court of appeals to accept it. Or they can petition an appellate court for a writ of mandamus. Or they can be really risky and just defy the disclosure order and get sanctioned and then appeal the sanction (obviously the riskiest move).
couple things.
first since order is sealed it isnt clear on its face which docs it applies to. but i have attached docket#272, which is the redacted motion for #270, which sweeney just granted. in #272, cooper & kirk argue against ALL assertions of privilege, so i dont think it is a leap to conclude that sweeney just struck down all govt privilege claims...full monty!
second, yes i think an order to govt explaining why attys fees should not be paid is a shot across the govt's bow, as in dont try an interlocutory appeal of this motion.
which gets me to three, @steve and @merk, can govt appeal before producing docs for Ps?
https://www.dropbox.com/s/zwdjcliu6d7qmua/redacted%20fairholme%20motion%20to%20compel.pdf?dl=0
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well at least one judge isn't just going to allow the govt to steamroll her. We really needed some good news
**SEALED** OPINION AND ORDER granting 270 Motion to Compel. By no later than October 14, 2016, defendant shall file a memorandum with the court explaining why the court should not require defendant to pay plaintiffs' reasonable expenses incurred in making the motion, including attorney's fees. Signed by Judge Margaret M. Sweeney. (sp) (Entered: 09/20/2016)
Anyone confirm?
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I do think that Sleet was saying that the jurisdictional issue could knock out the case entirely--but he said more than that. when he was saying that he didn't see how resolving the DE law was dispositive, he talked about the substantive issue regarding the legality of the FHFA acting within its authority as a conservator--he only later brought up the jurisdictional point to strengthen his conclusion. That's what makes it so disappointing.
As someone who was also asked in PM re percentages, my percentage estimates are closer to @Steve_Berk than @cherzeca -- though I have a much higher chance for breach of K to work out and therefore a concomitantly higher chance for reversal vs remand. Again, as much as I would like to believe judges are immune to the herd, I know that's not true -- so the last few days have been inauspicious for us.
I would also hazard to say that I think that Judge Sleet's view in Delaware is that even if Delaware law does not allow for the kind of dividend implicated here in the NWS, that may not matter if 4617(f) acts as a total removal of jurisdiction. (As opposed to there being some other provision that allows FHFA to create a NWS.) So that if there is a ruling showing that 4617(f) does not cover actions that are ultra vires, then he might then allow for certification.
FNMA and FMCC preferreds. In search of the elusive 10 bagger.
in General Discussion
Posted
I wish you would. I know some didn't like it, but I appreciated it. for those who don't like technical analysis, they can just skip it, right?