merkhet

Sure hope so, let's get this decision in the books in August. Clerks don't start until September. One of my buddies from YLS is clerking for Judge Brown. :P

Sure hope so, let's get this decision in the books in August. Hopefully it's not just vacation time, lol.

That depends. In general, you'd be an unsecured claimant, but there are ways to get some priority through attaching a lien pre-petition.

Under what legal authority would this be allowed? I mean, if the Treasury wants to "intervene" by tendering for my junior preferred shares at or above par, then I'm happy to sell them to Treasury.

I would point you to Ginsburg's comment on salting the earth as to whether a liquidation has/is occurred/occurring.

Let's put it another way. If the Q is what would the junior preferred have received after the government preferred has been paid off, the answer isn't zero/very little. Why? Because the government has very graciously argued that they are not insolvent because under 4623(d), the line of credit from Treausry counts as capital. That's fine by me to draw from Treasury to pay me off.

When the GSEs transferred the possibility of any residual away from common & junior preferred to the government preferred, that is a breach. As Hamish Hume said, the issue is the economic situation shifted. They foreclosed the possibility of ever paying either group their par/residual.

I have no clue what happens to the common shares. That's why I own the preferred shares.

No, I mean the breach of K on the private preferreds should result in payments to holders of the private preferred shareholders of the par amount. The moment that the government implemented the Net Worth Sweep, they breached the K for the private preferred shareholders with respect to their liquidation preference. That should come immediately due. It is irrespective of the fact that there is $117 billion of government preferred in Fannie Mae that sits ahead of the private preferred and/or the logistics of the 10% government preferred yield. Imagine if you have $100,000 in the bank, you make $50,000 a year and you spend all of your after-tax income. If you get into a car wreck, and there's a judgment against you, you don't get to just not pay it. Recall that the government has spent some not inconsiderable amount of time arguing that they are not insolvent because of the fact that they have a line of credit from Treasury that they can draw on for losses. Well, that's great. They can draw on that line of credit to pay out the private preferred for their par.

A breach of the liquidation preference for preferreds should result in damages for the par amount. That's, IMO, much cleaner.

We should prefer to be paid out based on the liquidation preference via the breach of K claim.

I don't know that there is a outer bound, but maybe someone else has knowledge on this.

Courts are allowed to bring things up sua sponte (on their own motion) particularly when it comes to whether they have the power to adjudicate a case. Both §4623(d) and/or the question of waivers of sovereign immunity fall into this category. I'm not sure conspiracy is a rabbit hole worth going down. Moreover, if I were the appeals court, I don't think I'd look favorably upon the song and dance number that FHFA and FDIC just put on.

fdic states in brief that it can file amicus on its own motion. news to me They are relying on FRAP 29(a), which, plaintiffs indicate has been misapplied.

In case we were all wondering about why FDIC submitted that weird amicus... here's the response by Class Plaintiffs. 2016-07-23_Class_Plaintiffs_Brief_in_Response_to_FDIC.pdf 2016-07-23_Class_Plaintiffs_Motion_for_Leave_to_Respond_to_FDIC.pdf

a govt agency can be the govt for purposes of one statute, and not for another statute. here, fhfa apparently believes it must be consistent before both federal court and court of claims that it is not the govt. presumably, fhfa thought at beginning of this case that its largest exposure was in court of claims for a taking, hence the no govt position. but by taking that position, it opens fhfa up to suit in federal court. the federal courts have held that fhfa as conservator "steps into the shoes" of the GSEs, and the GSEs are clearly private parties, so i believe fhfa took the "right" position, and wasnt just trying to be strategic. which is why fairholme is seeking to prove that fhfa is subject to direction of treasury in court of claims, and therefore both fhfa and treas can be sued there +1

I have an amateur answer, so take it with a grain of salt. I think it's because it would hurt them in the Court of Claims. They've been trying to have their cake and eat it too with the "not the Govt/are the Govt" argument, and claiming immunity would destroy that argument. professional answer Agreed w/ @cherzeca

Class Plaintiffs eviscerated FHFA's reply, IMHO.

Fairholme responds to the 4623(d) argument in its supplemental brief. Still waiting on the Class Plaintiffs' reply. 2016-07-20_Fairholmes_Supplemental_Reply_Brief_in_Response_to_Order.pdf

Looks like we'll get to peak behind the curtain a little more with some more unsealed documents by this Friday. 2016-07-19_Order_Granting_Unopposed_Motion_to_Unseal_Fairholmes_First_Motion_for_Judicial_Notice.pdf

FHFA's supplemental brief is pretty favorable for shareholders, IMHO. See attached. (1) FHFA does not assert sovereign immunity. (2) FHFA argues that 4623(d) removes jurisdiction because any relief would "affect the effectiveness" of FHFA's regulatory action in enacting the Third Amendment. I think (2) is a HUGE stretch because paying out on a breach of K claim does not affect the regulatory regime enacted by the NWS. It will be the same as it was afterwards -- the only difference is that the shareholders would get paid for the breach. Moreover, I suspect that they came up w/ the argument in (2) because (A) they had no good arguments for withdrawal of jurisdiction and (B) they think the Court likes the idea of 4623(d) and might just go with it. Finally, and I hope Hume picks up on this and hammers it in -- FHFA argues in (1) that they do not have sovereign immunity because they acted as a conservator and not a regulator, and then in (2) asks for a withdrawal of subject matter jurisdiction because they are a regulator. Oops. 2016-07-13_Supplemental_Brief_for_the_FHFA.pdf

IIRC, this is the second time that Corker has sounded a warning on this in the last two months or so.

Is something afoot? http://www.corker.senate.gov/public/index.cfm/news-list?ID=B4B184A8-E2EC-459B-BD0A-A16337272736

the perry breach and jacobs claims share a common question of law, whether HERA preempts state law claims. now i dont think that defense flies, but i am guessing that you share my view on it Sure, but after that, the claims in Jacobs are easier to resolve than the claims in Perry, IMO.

The Jacobs claim is the easiest of all three, but the timeline is still up in the air.