allnatural

Wiggins you are spot on in your interpretation of Lamberths ruling. We wanted clarity on transfer of rights and he provided it black and white imo. Claims don't disappear into thin air but survive and travel to new owners. Regarding what the monetary damages plaintiffs could be awarded... its anyones guess. Both parties will present what they believe is warranted and the courts will have to decide what's appropriate. Hopefully it doesnt get there and this ultimately prompts a recap release + settlement.

"it does not follow that the Plaintiffs could reasonably expect that the GSEs themselves - through the FHFA - would give away all of the Plaintiff's residual rights to dividends and liquidation surplus in exchange for no investment and no meaningful consideration at a time when the GSEs were highly profitable." 8)

The beauty of this case is even in the event that the NWS is deemed legal (thus far all courts agree it is), we are still owed compensation for our private party as whether it was legal or not, the NWS was still a taking of private shareholder property that had value. Im not so sure the relevance of HERA/the original bailout terms in this specific case. Other than new separation of powers theory being brought up with Sweeney which claims HERA itself which created FHFA is unconstitutional.

Just to clarify unlike the AIG case, this case has nothing to do with the original bailout terms, and everything to do with the net worth sweep. The action of the net worth sweep itself was the takings here (it was a nationalization). Therefore, a judge should be asking if there was expected value for shareholders at the time of the imposition of the net worth sweep (if there was any doubt, the evidence uncovered throughout the discovery process makes this clear as day), and not at the time of the original bailout terms (10% dividend + 79.99% equity via warrants), which shareholders ARE NOT disputing .

I meant if we lost both Mnuchin (our admin path) and sweeney (our legal path) simultaneously it would appear most doors shut in our face. Agreed if Demarco (or Hensarling) was tapped for FHFA head it would be not so great... The bloomberg reference was just a headline no further details unfortunately.

If Mnuchin steps down and we lose takings case. In other news, Phillips spoke at an event today. FANNIE-FREDDIE FIX IS FRONT OF THE DOCKET FOR MNUCHIN: PHILLIPS (Bloomberg)

https://www.cnbc.com/video/2018/09/11/former-fannie-mae-ceo-financial-crisis-mortgage-housing-crash-freddie-mac-mortgage-backed-securities-subprime.html "They need to be set back into the hands of their shareholders with the appropriate capital requirements and allowed to function. They're still the back bone of our housing system. They're still operating and very profitably. They never had a cash flow deficit in any year. So i think at some point well get past the politics and get to the practical and say these institutions are here to stay in one form or another. Let's recapitalize them at the appropriate risk based level and have them continue to serve the service the public service role that they had, perhaps without the large on balance sheet mortgages. But the guarantee business is the heart of the service they provide to the American homeowner. Well said.

Great to hear the 1 judge question in what world this was fair for shareholders post 2012. Gee thanks. Agree with your take seems like a 3-0. video/audio not yet posted Thank you for the link. Interesting to hear bewildered judges in search of an explanation that seems to forever escape them just when they are about to arrive to the right conclusion. I'd say these 3 judges will raise their eyebrows the Lamberth way and write a 3-0. Then, go home with a clear conscience that at least they felt deeply shocked by FHFA/Treasury's actions.

You guys still believe there is ANY chance that anything passes legislatively, especially one that involves unwinding the current system as we know it? Thesis is pretty simple: TINA (they can't replace the GSEs as is, or its too risky a proposition to do so), + Warrants ($100b+ for government to reap). with MoS (if there is such a thing here), being Sweeney/ongoing litigation.

"If Congress fails to act by early next year, the new director can still institute these reforms administratively—and I call on them to do so." Look's like the timeline is: Congress gets one more crack in Q1, then its admins turn from mid-2019 forward. (hopefully)

Fannie Mae's CEO, Freddie Mac's CEO, and FHFA's Director all out by year-end. Mnuchin must choose 3 successors within the next 4 months. Will be interesting to see who he picks. Should be telling.

Last few comments have been entertaining! Happy 10 year anniversary folks! I believe who is choosen to replace Watt in the near term will be a large indicator for the path forward. It will be Mnuchins second actual ACTION on the GSEs other than increasing the buffer to $3b.

Gary Hindes @ 1:40 mark.

Great recap. Seems like he believes Mnuchin should resolve this prior to Sweeney's decision. Wishful thinking... "If, as Treasury Secretary Steven Mnuchin has said repeatedly, the administration really is committed to getting Fannie and Freddie out of conservatorship, Trump & Co. could end up taking credit for making the best deal for America since the Louisiana Purchase. On the other hand, the opportunity is significantly diminished if Judge Sweeney allows the shareholders their day in court. "

Do you guys think Watt actually steps down ahead of his term expiring? Not that it changes much (4 month difference).

The federal court of claims is an interesting one because its saying even if the government was allowed to implement the NWS as the other courts have ruled, it still took private property for public use aka nationalization and we should be compensated. No court has ruled on that specific issue yet. And a formal nationalization (whether they use the word nationalization or not)- would crystalize this event. This would also require them to cancel all outstanding shares and require the government to consolidate the liabilities onto the national deficit, which is currently over $20t, by another $5t (this is a non-starter imo). Remember the only reason the government isnt required to consolidate the balance sheets today is because private shareholders still exist and they technically only own 79.99% of the equity (crossing 80 would require consolidation). And what happens in the next market downturn, who is on the hook? I just don't ever see that flying. So one of the options is nationalization, a status quo from today and the shortest and easiest path. All they need to do is cancel our shares and voila. The CBO report states that the advantage of that model, fully federal -carefully avoiding the negative impact of the word nationalization- gets all the benefits to the taxpayers. Sounds familiar? The groundwork has been laid out already, since 2012 (nws). Six full years of the same narrative. As the nws becomes validated, 'fully federal' starts to look better in everybody's eyes. And as long as the word nationalization is avoided, the public at large will ignore the issue. And we cannot rely on politicians. As court cases go and as we are discovering, it appears the government was legally allowed to do what it did without having to compensate anybody. This is a monster, remember? Courts won't even get close to compensation and all we are getting from them is 'tough luck'. So yes, it is the shortest and fastest path from where we are today. But I agree with you, I give the fully federal model little chance. Not because a shocking Mnuchin's about-face but because there is too much money involved and greed will make its way to set the companies free.

I wouldn't call it the shortest or easiest path. Issues with flat out nationalization- in no specific order of importance: 1) Which politician wants to go on stage and declare, great news, we just added ~5t to our national deficit. 2) It permanently puts the taxpayers on the hook. 3) It crystalizes the takings. It is no longer a question whether private property was taken or not. Shareholders should be owed monetary compensation for this. 4) Side point- completely inconsistent with everything Mnuchin has said to date, and he holds the keys to the outcome here. So one of the options is nationalization, a status quo from today and the shortest and easiest path. All they need to do is cancel our shares and voila.

3-0 8) Judge Stras footnote on constitutional issue: "The delegation is more harrowing still. The President can only remove the FHFA’s director for cause; Congress cannot control its budget through the normal appropriations process; and the judiciary cannot interfere with the exercise of its powers or functions as conservator. See Collins v. Mnuchin, No. 17-20364, 2018 WL 3430826, at *18 (5th Cir. July 16, 2018) (per curiam); see also 12 U.S.C. §§ 4512(b)(2), 4516(a), (f), 4617(f). But unlike the plaintiffs in Collins, the shareholders do not raise a constitutional challenge in this case. Rather, they ask us to decide only whether the FHFA has exceeded its statutory powers and functions."

Wiggins... you are spot on. This is a bizarre/hilarious twist. I believe most judges are on the same page, IF (big if) FHFA acts ultra-vires, it violates the statute and plaintiffs are entitled to relief. This question says that any relief might actually prevent FHFA from accomplishing its duties so it could be barred as well. Unbelievable and I don't expect this to stand in any court as crazy as the logic has been to date. I believe Cooper said it best during the Saxton oral argument... to paraphrase, he said of course i have standing because HERA authorized you to hear my plea today IF FHFA acted ultra-vires.

Although i'm holding out hope, I'm not sure Judge Stras is our man in Saxton. He was the one who thought NWS was a nationalization and that plaintiffs best argument was that FHFA was at the will of the Treasury. He didn't appear to bite on APA violation as he seemed to conclude that a conservator under HERA is a different beast than common law conservatorship, and was the one who pointed out that shall was used in other parts of HERA, so why not here. Unless Willet's dissent is enough to persuade him, his mind might already be made up on APA. I thought Judge Benton was better for us as he highlighted multiple times that the Cedarminn case was plaintiffs best argument and the defendants really had no response to him. Judge Kelly is the wild card I believe. She kept probing at what the outer-limits of the FHFA's powers was, and is there no situation where courts may question the business judgment of the FHFA? But she was appointed by Obama in 2013 and we know how politically driven our justice system is.

I think you are pretty spot on at this point. Owning the GSEs today is a bet that the admin will resolve the situation, not that we will win in court. What's interesting about the litigation is as you highlighted, no one gives it any weight these days and assigning close to zero probability for any favorable result (just look at the last 3 court cases we lost, almost zero price reaction). Meaning we may wake up one morning to a nice surprise (as low as a probability that may be...). There is also no denying that we are beginning to see a shift in the type of questioning the judges are beginning to ask the defendants (see Collins and Saxton). For example, when has a judge in oral argument blatantly concluded that this was a nationalization? That's not to lose focus of the purpose of the litigation. It's to let the government know we aren't going anywhere, and if we win one of these cases, lets do what's best for everyone and settle with a recap release that's beneficial to all parties involved (the government, the shareholders, and most importantly the American people/tax payers). "So you're telling me there's a chance!"

Do you know what remedy the All American case is seeking exactly? Is it similar to undoing a previous action while under a unconstitutional regime like the plaintiffs want with the NWS? If so that is indeed positive, assuming the 5th circuit takes up the issue.

What I found interesting about the Collin's decision is that the majority went to the extra effort of distinguishing FHFA from CFPB, claiming that FHFA has less oversight than the CFPB. So while they ruled that the FHFA was unconstitutional, the majority didn't seem to believe the same in regards to CFPB. I am not sure how the All American case is attempting to piggyback on the Collins decision when it might have actually weakened their argument? Regardless, it would be nice to see en banc review on either the separation of powers remedy issue, APA issue, or ideally both. Do you know when we should find out if the 5th circuit will agree to hear these issue(s) or not? Thank you Additionally, I believe the FHFA/Government has until Aug 30 (45 days from the decision) to petition for en banc review or 90 days from the decision for scotus review on the constitutional issues. Will be interesting to see which way the government goes here if any? excellent question. I think all American's motion makes it incrementally more likely that 5th cir does not hear appeal of APA claim or hears it separately en banc, since that would be the non-common claim of any consolidated appeal. just guessing though

Right there with ya bud.

I like where your head is at rros. What happened here was truly an embarrassment to our nation and it's all factual at this point. I would love to see the government lose in court but unfortunately we might have to agree to a settlement with no acknowledgement from the government of any wrongdoing. After all shareholders are paying Coopers fees... And they would be happy to walk away from this mess with a windfall and reprivatized GSEs.