merkhet
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Posts posted by merkhet
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My point is that these seem to be indirect claims given that it is unlikely that a dividend would have been paid out on the preferred shares without the nws anyway. So I understand that we will never get a dividend but and perhaps that is enough to make these direct claims. I just hat to see these cases thrown out on a technicality
Hume covered this in his oral arguments before the appeals court on April 15.
The issue is that prior to the NWS, if the government wanted more than its 10% dividend on the senior preferred, it would have had to declare dividends on the junior preferred first, and then collect the remainder based on its 79.9% ownership of the equity of the GSEs. Instead, they leapfrogged the junior preferred.
Alternatively, under a liquidation scenario, the government has essentially taken more than it was supposed to take under the original 10% dividend and repayment of the government preferred at par. If you plot out the cash flows based on this, you'll see that this also breaches the liquidation preference on the junior preferred shares based on their certificate.
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would someone please explain to the non-lawyers what happens if there is a split decision between the ACA claim and the other breach / fiduciary duty avenue? if both are losers, than that's obvious, and vice versa.
but what happens if one is affirmed and the other remanded, or even reversed?
thanks in advance for any thoughts.
What do you mean by split decision? If one of the claims is denied and the other claim is not, then that's the claim that goes through. I guess I don't understand the question. Alternatively, it may be difficult to provide an answer to the question because it's difficult to know which claim, under what reasoning, etc.
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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.
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This was always about Perry appeal and Sweeney. Not sure why the sideshows get so much airtime? I think it's going to boil down to Sweeney. It would be great to have a positive result come out of Perry appeal, but I'm not counting on it. My $$$ is on Sweeney. Time will tell.
It's better to have three uncorrelated bets than two -- and the merits on Delaware are incredibly easy.
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It's definitely a negative.
I was somewhat flabbergasted by the same thing that Steve pointed out about how knowing the general question as to whether DE law allows for this kind of a security does not answer the specific question. In fact, it seems like the judge might be hinting that FHFA might have been granted some ability to do something that is generally prohibited as a result of HERA.
My initial thought is that this sort of collapses the DE case into the same inquiry as the Perry case, which is unfortunate. In other words, what might have been two uncorrelated bets is now the same linked bet.
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wut?
"Indeed, the very fact that FHFA itself has not brought suit to enjoin the Treasury from the alleged coercion it was subjected to suggest that FHFA was an independent, willing participant in its negotiations with the Treasury. FHFA’s interest in proceeding independently, if it felt such interest was jeopardized, is precisely the zone of interests congress sought to protect. Accordingly, Plaintiff lacks standing to pursue a claim pursuant to Section 4617(a)(7)"
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Just to clarify, my comments on the judicial herd are meant to focus on the APA claims brought by the Institutional Plaintiffs. The Class Plaintiffs have made an argument concerning monetary damages due to a breach of contract, which are specifically carved out of 4617(f). So Judge Caldwell's decision, which leans heavily on the lack of equitable relief available to plaintiffs is inapplicable.
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In theory, no. This should not affect other cases. However, it makes it psychologically more difficult for the appeals judges to break from the herd.
I think the original plan was to file a bunch of lawsuits to see which one would stick, but the downside is that every time you lose one, the government lawyers will (shortly) petition the appeals court for judicial notice of that loss.
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Judge Steele filed to amend Hindes' complaint in the Delaware District Court
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If it was a simple affirm of Lamberth, would the court of appeals be taking this long? I ask because I'm reminded of when hamish hume said " the longer they take to make a decision, the better it is for us.."
I don't think we should be reading tea leaves. There are a number of variables that go into why things take a while in the courts -- any one of them could have a dominant effect.
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They all have the same/similar language in Section 9. Priority. Basically Series D can't possible have foreshadowed the existence of Series E/F/G, etc. So therefore, in each successive Series, there is language putting that Series on parity with the prior Series.
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From the Series S Circular:
The shares of Preferred Stock of Fannie Mae designated “5.25% Non-Cumulative Preferred Stock, Series D” (the “Series D Preferred Stock”), “5.10% Non-Cumulative Preferred Stock, Series E” (the “Series E Preferred Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series F” (the “Series F Preferred Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series G” (the “Series G Preferred Stock”), “5.81% Non-Cumulative Preferred Stock, Series H” (the “Series H Preferred Stock”), “5.375% Non-Cumulative Preferred Stock, Series I” (the “Series I Preferred Stock”), “5.125% Non-Cumulative Preferred Stock, Series L” (the “Series L Preferred Stock”), “4.75% Non-Cumulative Preferred Stock, Series M” (the “Series M Preferred Stock”), “5.50% Non-Cumulative Preferred Stock, Series N” (the “Series N Preferred Stock”), “Non-Cumulative Preferred Stock, Series O” (the “Series O Preferred Stock”), “Non-Cumulative Convertible Series 2004-1 Preferred Stock” (the “Series 2004-1 Preferred Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series P” (the “Series P Preferred Stock”), “6.75% Non-Cumulative Preferred Stock, Series Q” (the “Series Q Preferred Stock”), and “7.625% Non-Cumulative Preferred Stock, Series R” (the “Series R Preferred Stock”) shall be deemed to rank on a parity with shares of Series S Preferred Stock as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of Fannie Mae. Accordingly, the holders of record of Series D Preferred Stock, the holders of record of Series E Preferred Stock, the holders of record of Series F Preferred Stock, the holders of record of Series G Preferred Stock, the holders of record of Series H Preferred Stock, the holders of record of Series I Preferred Stock, the holders of record of Series L Preferred Stock, the holders of record of Series M Preferred Stock, the holders of record of Series N Preferred Stock, the holders of record of Series 2004-1 Preferred Stock, the holders of record of Series O Preferred Stock, the holders of record of Series P Preferred Stock, the holders of record of Series Q Preferred Stock, the holders of record of Series R Preferred Stock, and the Holders of Series S Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon dissolution, liquidation or winding up of Fannie Mae, as the case may be, in proportion to their respective dividend rates or amounts or liquidation prices, without preference or priority, one over the other. -
How long has sweeney had that motion to compel?
She's been doing in camera review of the documents that US treasury refused to turn over. Who know how long that's gonna take.
A little under three months since the June deadline for presidential privilege.
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I usually go for incompetence over conspiracy.
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Having just re-read Pagliara, I haven't the faintest clue how it would be possible to have standing to bring a direct claim... and yet not actually have the right to the direct claim itself. The whole point of the injury-in-fact prong of standing is that the plaintiff had a legally cognizable protected interest that was violated.
This is a really poorly written decision.
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@merk, Why would they not want to say that the direct claims were transferred? What's the benefit to them?
For the reasons @hardincap mentioned
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no surprise, but counsel for FHFA has sent a letter to the Perry court about the Pagliara decision. Emphasizing that the Pagliara court said that HERA evidences congress's intention to transfer as much power to the conservator as possible and that the court rejected any conflict-of-interest exception to the Conservator’s succession to stockholder rights to bring a derivative suit.
I notice that they stopped short of saying that direct claims were transferred.
I think there are too many cooks in this kitchen. On balance, the Pagliara thing is a negative. Not a huge one, but one we probably could have done without.
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@cherzeca, IIRC, there was no discussion that the direct claims were taken away because that would have automatically implicated the Takings clause
@hardincap, same response as above -- if the direct claims were taken, then based on Piszel, we have a Takings clause issue
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If it's a unanimous decision, I wouldn't be surprised to see Millett writing it. But there's no way to know who will be writing it beforehand.
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I would throw in a small point that other people haven't noted yet. The Court of the Federal Circuit is the appeals court to the Court of Federal Claims, which means that this Piszel case is direct precedent to the Fairholme case before Judge Sweeney.
Meaning that if the appellants lose the breach of K case because of the reasons that FHFA argues in terms of "all is all," then, automatically, the Fairholme case gets to move forward with their Takings claims.
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FHFA officials say this controversial arrangement -- instituted in 2012, the very year the GSEs returned to profitability -- make another rescue, however small, all but inevitable. The regulator has quietly examined whether it can suspend the payments unilaterally to build up the GSEs’ capital cushion, among other options.
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Geographical breakdowns are key. How much of this subprime business is the fallout from oil/mining related workers that are now having a hard time keeping up with their bills?
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FNMA and FMCC preferreds. In search of the elusive 10 bagger.
in General Discussion
Posted
Off the top of my head, Winstar. https://en.m.wikipedia.org/wiki/United_States_v._Winstar_Corp.
There are others, but I would have to dig.