allnatural

That all depends on how the government treats the Senior prefs. If they mark it to zero/paid off, all the lawsuits are naturally resolved (which is great). If they claim they can stop the sweep and recap the entities while having the senior prefs outstanding, good luck ever achieving a recap in that scenario (no rational investor will commit a penny) and the lawsuits will continue. What you're describing is a best care scenario for shareholders (assuming senior prefs are treated as paid down).

Post Trump/Mnuchin, the thesis shifted a bit to- Why should the Trump administration continue to protect and defend the illegal takings of the previous administration (Obama admin.)? There was potential for a quick win with Trump "solving" the GSE situation, something that the Obama administration wasn't able to achieve (+1 for Trump, -1 for Obama as you described), getting tax payers off the hook, earning close to $400b in a deal (~$300b in div payments to date + monetizing $100b in warrants), and not paying out a penny to shareholders in a settlement. Unfortunately we are now 18 months into the administration with no solution in sight other than some promises by Mnuchin (and continuing to vigorously defend the NWS action in courts)... Is it as simple as Mnuchin waiting for post midterms or cover by one of the courts before signing off on something administratively? Not sure...

"The Collins Plaintiffs have asked the Fifth Circuit for a larger number of judges to review the three-judge panel’s decision finding that FHFA is unconstitutionally structured and upholding the Net Worth Sweep." (http://www.glenbradford.com/wp-content/uploads/2018/08/17-20364-00514582948.pdf) The plaintiffs are asking for review on two issues: "The first is whether Congress has empowered the Federal Housing Finance Agency, as conservator of Fannie Mae and Freddie Mac, to effectively nationalize these highly profitable private companies, thus confiscating the equity of their private shareholders. This is an important question for this Nation’s economy and the rule of law generally. And it is a question that sharply divided the panel in this case. See Op. 58 (Willett, J., dissenting); see also Perry Capital v. Mnuchin, 864 F.3d 591, 635 (D.C. Cir. 2017) (Brown, J., dissenting). The second is whether Petitioners are entitled to any meaningful relief from an action taken by a federal agency operating contrary to the separation of powers. The panel answered no, but that answer provides insufficient protection to the separation of powers, and it is in significant tension with Supreme Court authority. See, e.g., Lucia v. SEC, 138 S. Ct. 2044, 2055 (2018)." It will be interesting to see if the government decides to go the same route (or go straight to SCOTUS) with regards to FHFA being constitutionally structured or not.

Hopefully her views haven't changed much. Not that I believe anything will actually get done legislatively in a material sense, but doesnt hurt to have another ally here.

Correct me if i'm wrong, but I think the surprising part of the DC circuits ruling is that defendants never even brought up or thought about the whole "may" shenanigans prior to the ruling. The judges pulled it out of their *** to justify the sweep. They had a set conclusion and they were willing to do anything to back into that conclusion, enter "may". It makes me wonder what brilliant Treasury staffer read that statute and said "wait, we could make a case that a four-corners reading allows a conservator to do anything!"

Im not sure why he said that. But Judge Benton I believe stopped him in his tracks and said, “This court says this distinction was specifically recognized in FIRREA, they were talking about FIRREA and congress says in this law (HERA) they copied FIRREA.”

https://www.jdsupra.com/legalnews/does-the-fifth-circuit-s-decision-71898/

TY for the clarity. I found the case here https://casetext.com/case/resolution-trust-v-cedarminn-bldg-ltd

The implications of the Cedarminn ruling is pretty straight forward. As highlighted by Judge Willet in his dissent, he cited the Cedarminn ruling as precedent when drawing his conclusion that FHFA violated its statutory obligations as conservator. The 8th circuit in Cedarminn already ruled that there are clear distinctions between a receivers and conservators duties in which you cannot blur the line, and its a conservators MANDATE to conserve and preserve. None of this "may" non-sense. Let's see if that's enough to convince 2 of the 3 judges in the 8th circuit. If they rule to dismiss, it will be interesting to see what rationale they come up with to justify going AGAINST their own circuits previous judgement on the matter. I think its our best shot in the case but time will tell. Wouldn't be surprised if we lose 0-3 at this point ::)

Typically takes 4-6 months from oral argument which was in May. So we are looking at a September to November window. Saxton case was alerted of the Collins verdict.

I understood it as cynical criticism as well... i wouldnt read much into this comment but maybe i'm wrong. Even so, I dont see how expectations of value can effect the Cedarminn precedent. I couldn't get where this was coming from (and I think neither did counsel), but my guess was that it was a cynical criticism of the D's position. may be wishful thinking Strass was the one that made that claim on FHFA direction.. he is also a Trump appointee (same as Willet).

Correct re: Collins, Willet was the only engaged judge asking 90% of the questions, the female judge asked 1 or 2 questions, and the other male judge stayed silent (he dissented from the majority on separation of powers) Re: Saxton- We had 3 engaged judges all expressing some degree of sympathy to plaintiffs, whether this is enough TBD. - One male judge thought the Cedarminn case was plaintiffs best argument. - Another male judge thought the NWS was a nationalization and that plaintiffs best argument was that FHFA was at the will of the Treasury. - The female judge kept trying to figure out 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? To which Treasury said no.

If you read the dissenting opinion on the APA statutory claim closely, Judge Willet cites the Cedarminn case from the 8th circuit as precedent for why the FHFA as a conservator MUST conserve and perserve. If you recall, plaintiffs are trying to persuade the 8th circuit by highlighting the Cedarminn case which should set the precedent in that circuit. From the Saxton oral argument: Judge: "Counsel, but now you gotta confront Cedarminn. What do you do with page 1454 of the Cedarminn opinion where we go to great lengths to distinguish a conservators job from a receiverships job, and it’s under the precedent statue (FIRREA) that congress copied ... This court says this distinction was specifically recognized in FIRREA, they were talking about FIRREA and congress says in this law (HERA) they copied FIRREA ... You want to comment on Cedarminn? That’s one of their best arguments.”

Simple, any resolution on GSE reform will have to strike down the NWS in its place as to settle/resolve all litigation overhang before new private capital is introduced. I think Mnuchin would like to see a policy driven resolution to housing reform, not be forced into court imposed solution. Timing is difficult, I don't believe this was the cover needed for Mnuchin, but its a positive development nonetheless. Hopefully the Saxton case goes better on the APA claims (and the judges there read both Judge Brown and Willets dissents carefully). I thought oral argument went better than Collins and we should expect a decision in the Fall.

https://www.c-span.org/video/?448021-1/treasury-secretary-mnuchin-testifies-international-financial-system

Re APA claims: SCOTUS declined to hear the Perry case. This was probably because the DC circuit was the only court to rule at the time and this specific APA case was still pending across various circuits (where hopes are currently looking up in Texas and Iowa). It's common for SCOTUS to allow multiple courts to rule on an issue before deciding to accept a case. If we were to win in Texas or Iowa SCOTUS would most definitely pick up the case. And even if we were to lose there is a chance they hear the case now that all the circuits have ruled. Re constitutional claims: Between the PHH case in the DC circuit, the recent SDNY ruling, and the recent Bhatti ruling, we now have split circuits on the issue of whether an independent agency's structure is constitutional due to it having a single director that is not removable at will. There is a high likelihood SCOTUS should hear this specific issue. Kavanaugh wrote the original appellate court decision in the PHH case where he ruled it was unconstitutional (and pointed to FHFA as having the same flaw). We are also awaiting the Texas court to rule on this matter as well. But SCOTUS already said they would not hear our case, no?

Trump is nominating federal appeals court Judge Kavanaugh as next US Supreme Court justice. Great day for U.S. and GSEs.

Unfortunate loss. We have an interesting few months ahead of us. Up next: Collins on appeal, Saxton on appeal, Jacobs/Hindes on appeal, Perry on remand, Rop (which will prob copy/paste the Bhatti ruling) 2019: Sweeney

Anything is possible right, including a zero.. But this is far from a binary investment that some make it out to be.

This is a key point many people miss due to the complexity of the situation. Once you come to the conclusion that the GSEs aren't going anywhere as they are the pillars behind US's housing economy, how do we get to zero? Are we going to see a new housing system built from scratch? Unlikely... Is the status quo sustainable? Sure until another downturn in the market and the government is on the hook for all future losses... Is the government going to be able to monetize its warrants by jumping over the Jr Pfds? No we are senior to them... Will congress ever pass anything? don't make me laugh... You say the government wants private capital back in the GSEs? Ok we are sitting in a pretty position then. How do we get there? that's another question. But between admin reform trending in our favor little by little and litigation as a backdrop- I don't think investors are risking much at current levels.

Ty Cameronfen. There is nothing wrong with healthy debate we are all friends here. Just one quick counter point bc its clear we won't see eye to eye on this topic. The Government didnt nationalize the GSEs for one reason and one reason only, if they took 0.01% more in equity (79.99%) than they did, they would have been required to consolidate the GSEs $5tn in liabilities to the governments balance sheet which was a big no no. Also if you read Hank Paulsons book, he orchestrated the GSE "conservatorship" bc he wanted to assure international investors (China) that the paper was money good. In fact the NWS is what truly nationalized the GSEs, and the judges in the Saxton case agree as they essentially force the government to admit this fact just last month. Recall that HERA authorized the government to act as a conservator (rehabilate the entities) or receiver (liquidate and unwind the affairs), no where was nationalization granted by congress. Shareholders hopes are looking up in various courts today with more and more judges beginning to ask the right questions. If you arent a troll which I dont think you are, and want a true understanding of what really happened, and I say this sincerely because I believe all Americans should be educated on this issue, read the latest amended brief by Fairholme in the Sweeney case and the Judge Brown dissent in the Perry case. A couple powerful passages from Judge Brown: "Plaintiffs—not all innocent and ill-informed investors, to be sure—are betting the rule of law will prevail. In this country, everyone is entitled to win that bet." "When assessing responsibility for the mortgage mess there is, as economist Tom Sowell notes, plenty of blame to be shared. Who was at fault? “The borrowers? The lenders? The government? The financial markets? The answer is yes. All were responsible and many were irresponsible.” THOMAS SOWELL, THE HOUSING BOOM AND BUST 28 (2009). But that does not mean more irresponsibility is the solution. Conservation is not a synonym for nationalization. Confiscation may be. But HERA did not authorize either, and FHFA may not do covertly what Congress did not authorize explicitly. What might serve in a banana republic will not do in a constitutional one." Best wishes!

There are indeed MANY intracacies to this story. Disregarging the fact that the GSEs infact did NOT need capital during the financial crisis if it wasnt for a few accounting tricks, the government did not take 100% stake in these entities as some might have you believe. They simpled infused them with capital in exchange for senior preferred shares with generous terms + recieved 80% of the equity. Private shareholders continued to exist. This also turned out to be one of the most successful investment in US history, invested $187.5b, earned $300b to date with another $100b to come if the government were to monetize its equity. Taxpayers are very fortunate for this deal. Shareholders are not disputing the original agreement, they are disputing when the government changed the terms of the agreement as the GSEs were about to hit a period a probability. They changed the fixed dividend term to instead capture all profits indefinitely, leaving nothing for private shareholders, contrary to the original statements that private shareholders will retain value. If this transaction were done between two private parties to side step shareholders, those private parties would be behind bars today. Combined with the fact that there is close to no alternative to what the GSEs provide the housing market today. Hopefully rule of law and common sense prevails. This should have played out no different than how AIG did with the government exiting their stake.

It's because Americans don't care about Fannie and Freddie (nor do they know what functions they even perform). No one is telling their congressmen to resolve this issue, and its too heavy of a lift for Congress to address even if they tried (see previous failed attempts). Only ones who can address this is the admin themselves, which seems to be the direction we are trending towards.

Good news if true. CFPB and FHFA are structured same way. Kavanaugh Emerges as Key Contender for Trump Supreme Court Pick "Kavanaugh, 53, a former White House lawyer for President George W. Bush confirmed in 2006 to the influential U.S. Court of Appeals in Washington, is on the list. He wrote the majority opinion for a three-judge panel that held the Consumer Financial Protection Bureau’s structure as an agency led by a single director was unconstitutional and that Trump could fire the director at will." https://www.google.com/amp/s/www.bloomberg.com/amp/news/articles/2018-06-27/trump-says-search-for-kennedy-replacement-to-begin-immediately

"The GSEs will never hold enough capital, and no government agency will ever charge adequate fees, to cover a major crisis without additional taxpayer support." Really... some people