merkhet
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Posts posted by merkhet
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so opinion writing time!
Sure hope so, let's get this decision in the books in August.
Hopefully it's not just vacation time, lol.
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That depends. In general, you'd be an unsecured claimant, but there are ways to get some priority through attaching a lien pre-petition.
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There is also nothing to prevent a UST intervention from simply calling/buying in everything > the 4% government rate
SD
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.
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I would point you to Ginsburg's comment on salting the earth as to whether a liquidation has/is occurred/occurring.
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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.
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.
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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.
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Forgive my ignorance on this, but perhaps merkhet or chezerca or really anyone else can help answer this -- if the NWS is deemed illegal, and Congress either dismantles or merges the two institutions, what happens to the common shares?
I have no clue what happens to the common shares. That's why I own the preferred shares.
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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.
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A breach of the liquidation preference for preferreds should result in damages for the par amount. That's, IMO, much cleaner.
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We should prefer to be paid out based on the liquidation preference via the breach of K claim.
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What is the amount of time a judge/judges can take to make a ruling? Is there a point when a ruling has been delayed so long that a party can claim that due process is being denied? Is there any remedy for a situation where a ruling is being sat on?
I don't know that there is a outer bound, but maybe someone else has knowledge on this.
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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.
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why is FDIC allowed to file the amicus brief without filing a motion to leave first？ I remember a while ago professor John Yoo had to file a motion along with the brief, and his motion got rejected by Sweeney.
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.
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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
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another amateur Q: Why can't FHFA be the government in one court but not the Gov't in another court? Hume said FHFA needs it that way for him to lose - is that not a possibility?
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
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I have an amateur question. Why doesn't FHFA claim sovereign immunity? It seems so convenient for them to do so, and FDIC and probably some other guys high up wanted them to do so.
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
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Class Plaintiffs eviscerated FHFA's reply, IMHO.
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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
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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
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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.
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IIRC, this is the second time that Corker has sounded a warning on this in the last two months or so.
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Is something afoot?
http://www.corker.senate.gov/public/index.cfm/news-list?ID=B4B184A8-E2EC-459B-BD0A-A16337272736
U.S. Senator Bob Corker (R-Tenn.), a member of the Senate Banking Committee, released the following statement today after authoring a bipartisan letter to the director of the Federal Housing Finance Agency (FHFA). The letter encouraged Director Mel Watt to avoid taking steps that may facilitate the release of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac out of conservatorship without comprehensive reform. Senators Mike Crapo (R-Idaho), Heidi Heitkamp (D-N.D.), Dean Heller (R-Nev.), Jon Tester (D-Mont.), and Mark Warner (D-Va.) coauthored the letter. -
The Jacobs claim is the easiest of all three, but the timeline is still up in the air.
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.
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The Jacobs claim is the easiest of all three, but the timeline is still up in the air.
FNMA and FMCC preferreds. In search of the elusive 10 bagger.
in General Discussion
Posted
Clerks don't start until September. One of my buddies from YLS is clerking for Judge Brown. :P