merkhet

His case would probably very quickly be dismissed by the precedent set by Judge Lamberth in the District Court of DC.

Looks like Ackman just voluntarily withdrew his case in the District Court of DC. 2014-10-31_Pershing_Notice_of_Voluntary_Dismissal.pdf

I don't know if it makes any difference, but it is worth noting that Berkeley and their subs have owned Jr preferred shares since the early 2000's. The key issue is whether there is privity between Berkeley & Continental Western -- which there might be -- but I think it will turn on whether the eager motion to dismiss from Lamberth would really count as a chance to "fully litigate" the matter given that he heard no arguments whatsoever.

Rosner is on CNBC and Bloomberg all the time. I suspect that it'll get to them, though I'm considering dropping off a copy of this to the Cooper & Kirk law firm -- I live a 15 minute walk from them. A couple of filings in the last few days. One in the Sweeney court and two in the Iowa Southern District. The essential gist of the filings is that they're claiming issue preclusion. (i.e. certain issues have already been decided in another court, and it's judicially inefficient to continue to litigate the same decided issues) And the defendants want either a dismissal or a stay pending appeal. A few problems that I can see: (1) While Continental Western is a subsidiary of Berkeley Insurance, it is not the same party, and an argument can be made that Continental Western deserves its day in court (2) There is the possibility of a miscarriage of justice given that the original claim was never actually litigated, which may fall in favor of the plaintiffs actually litigating things out (3) On the Takings claim in both the Sweeney and Iowa courts, there should be no issue preclusion because if you read the opinion carefully, Lamberth says that he doesn't have jurisdiction over the Takings claims and then proceeds, idiotically, to decide things on the Takings claims anyway For me, the main question in my head right now is -- why did the government wait for so long to file a brief on the issue preclusion case? The Lamberth opinion came down on September 30th, and they waited a damn long time (meanwhile producing documents in Sweeney's case) to file for a stay. EDIT: Sent Mr. Cooper an e-mail instead so that he gets the direct link. If I don't hear back after a few days, I'll drop off a hard copy at the office. 2014-10-30_Defendants_Supplemental_Motion_to_Dismiss.pdf 2014-10-28_Defendants_Motion_to_Stay_Proceedings_Pending_Appeal.pdf 2014-10-30_Defendants_Response_to_Plaintiffs_Supplemental_Brief_in_Opposition_to_Motion_to_Dismiss.pdf

I think people differentiate between quantitative and qualitative screens -- looking for stocks in the news is probably a qualitative screen -- but when people say "I don't screen" it probably means that they don't screen on quantitative factors like low P/E or low P/B, etc.

Normally how long does it take for Sweeney to respond? You previously mentioned to me that Lamberth's court is in D.C., so it is eligible to set as a precedence of other courts in D.C. venue, right? Does this apply to the Sweeney court? It is a federal court, not a district court though. My guess is that she'll respond by the end of the year. (That's the outside limit, IMO -- she might even respond earlier if she's pissed the government is delaying production.) Lamberth's court is in D.C. However, it is not in the same "chain" as the Court of Federal Claims (Sweeney's court) even though they are both in D.C. Therefore, Lamberth's opinion is not eligible as binding precedent in the Court of Federal Claims. Both Lamberth and Sweeney's courts are federal courts. As I said before, the complexities of the legal aspects and the policy aspects of this investment make it not terribly ideal for investors without a background in either.

Update on Sweeney proceedings. Defendants have entered a motion to stay proceedings pending the appeal of the Lamberth opinion. We'll see how the Sweeney court reacts to this... 2014-10-28_Defendants_Motion_to_Stay_Proceedings_Pending_Appeal.pdf

It's based on locations of the courts in various circuits, states, etc.

Thank you for helping me understand these matters. I am not from a law background, so it is hard for me. How would you expect the Lamberth ruling to set any precedence on the other cases? For the Sweeney case, I guess it may not have much impact as it is a different venue. But how about this Iowa court's case? Basically, the plantiffs in the Iowa court has to argue that Lamberth is wrong, and the judge in the Iowa court has to agree that Lamberth is wrong, in order to move forward, right? Is that why you call it a mini-appeal process? No problem. It's a complicated investment, and I'd actually caution most people to stay away unless they have (1) an understanding of the legal case, (2) an understanding of the policy rationales or (3) complete faith in the Berkowitz, et. al. crowd involved. Otherwise, you get people who mass-dump (i.e. October 1st) when they don't understand all the moving parts. The Lamberth ruling is precedence only for cases within D.C. Iowa is free to agree or disagree with it as they please, since they're not in a "direct line" of precedence with D.C. Iowa is a different venue from D.C. Yes, the Iowa court has to conclude that Lamberth is wrong to proceed, essentially. That's the reason why they asked for briefs on the Lamberth ruling from both plaintiffs and defendants.

Sorry I think I must have missed this. I didn't see anywhere in the previous posts about the Iowa court having already rejected Lamberth's suggestion that HERA bars all sorts of different claims. When did that happen? From the previous post on Oct 20th 2014, it looks like this is still being argued. http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/fnma-and-fmcc-preferreds-in-search-of-the-elusive-10-bagger/msg194079/?topicseen#msg194079 I think you misread what I wrote. If the Iowa court decides that it has jurisdiction, then they will have implicitly rejected the HERA bar to injunctions. They have not already rejected Lamberth's suggestion because they have yet to rule on the jurisdictional issue. Plaintiffs have filed briefs on the supplemental authority of the Lamberth decision, and the defendants will be filing a response brief by October 30, 2014. I expect a decision before the end of the year and possibly by the end of November. But they have not produced any documents either, right? What will happen next if they just delay the requests for production of documents forever? Maybe there is no document at all. If that's true, they cannot produce any documents unless they fake the documents. Will they eventually admit that there were no documents produced at that time? If they do, the defendants will surely lose the case, right? The case in the Federal Claims Court is currently in the discovery phase in which documents are being handed over. Mephistopheles is right. They have already been producing documents for about three months now in the Sweeney case. Why do you think that they haven't been producing documents? Faking documents is a pretty serious crime. You have to ask yourself about the principal agent problem because the upside and the downside risk are skewed. The upside risk goes to the people you're protecting. The downside risk goes to you. Usually, only the people implicated in wrong-doing would care enough to fake the documents, and, in this case, both DeMarco and Geithner have moved on -- they're not trying to keep their jobs here... Also, I think faking documents is so far beyond the pale that it's not likely in this case.

They have not been denying production of documents. If they started, I suspect that Sweeney will start fining lawyers and/or throwing officials in jail for contempt.

If the Iowa court determines that they have jurisdiction, they will have basically settled the HERA Injunction issues for the case in the Iowa court. This would then mean that the case in the Iowa court would proceed along the lines that I believed the Lamberth court would proceed (i.e. APA & securities claims) -- because they've rejected Lamberth's suggestion that HERA bars all sorts of different claims. That will make the government more likely to deal.

This is not that complicated a case. The AIG case was filed in 2011, and it'll be done soon. This case is no more complicated than that one, and it was filed last year.

The burden of proof is on different parties for different issues. In the Sweeney case, they are trying to figure out whether the Court of Federal Claims has subject matter jurisdiction for the case, and that's a matter for plaintiffs to prove. Since all the information is in the hands of the defendants, Sweeney granted jurisdiction. In the Lamberth case, if they had gotten past the various non-substantive challenges, then in the case of plaintiff's allegations of arbitrary and capricious decision-making, the defendants bear the initial burden of showing that they had a rational reason for making the decision. I think it would be supremely stupid for FHFA to fake an administrative record. You have various agent/principal problems to deal with in that situation. Fire the judge? You don't really fire judges... and Sweeney has been appointed to a 15 year term that ends in 2020, so there's not really much they could do.

The government's leverage is that the burden of proof lays with the plaintiff to show that FHFA was taking directives from Treasury, that they didn't exercise any modicum of judgment before enacting the Third Amendment, etc. I think that it's unlikely the government can interfere with discovery. They've tried before, and Sweeney was very unhappy with them -- threatening sanctions, etc.

Leverage re the recap or the litigation?

Yup. Sweeney allowing for jurisdictional discovery was a big deal. Additionally, their unwillingness to produce a whole administrative record combined with the stupidity of trying to say that the documents would have a destabilizing effect on the economy helped too. Why not produce the documents indicating your innocence and forego a lengthy trial process? Only if you have something to hide.

I'll quote what Marty Whitman once said to me when I asked him about conglomerate discounts. His response was "It's funny you mention that because I still remember conglomerate premiums." I suspect the answer to your question has to do with a combination of the subsidiary's expected growth rate, the subsidiary's capital intensity and the abilities of the capital allocator at the helm.

Philosophically, the WSJ believes that government involvement distorts the free market -- so Fannie & Freddie surviving will continue to impose a distortion on the mortgage market. They're not necessarily wrong, but it's also not necessarily an immoral thing to distort the market to allow ease of home ownership for those who are lower on the socioeconomic scale.

I think a settlement is a good possibility -- especially if the Iowa court determines soon that they have jurisdiction. (Basically, there is a mini-appeals process happening in the Iowa court right now.) Defendant briefs are due October 30th, and I expect a decision by the end of November. Again, as a disclaimer, I've been dead wrong so far on the litigation aspect of this case...

Now that Fannie & Freddie are opening up the spigot even more, the calls for shutting them down are going to be even more ridiculous. How do you shut them down when they're the only apparatus we have for securitizing mortgage markets?

How can you tell the difference?

Sweeney ruled to deny Tim Howard access to the privileged documents. (Attached) I was never really sure what value plaintiffs saw in giving him access to the documents in the first place... 2014-10-15_Order_Denying_Tim_Howard_Access.pdf

Viral mutation is less of a wild card than the media makes it out to be -- the article cobafdek linked to makes a very good point about that: Our air is really quite good for us as a species, but it's pretty terrible for whole swaths of other organisms out there. A lot of organisms find our air kind of toxic.

70% death rate in Africa where the healthcare is inadequate. No one knows what the death rate will be in the US if a large number of cases appear. Hopefully we don't need to find out, but I suspect it would be less than 70%. hardincap, what happened to your post? The fact of the matter remains that it's pretty unlikely and/or difficult to get infected with Ebola if you're not a healthcare worker in direct contact with an Ebola patient. (And even then, I suspect that someone missed a checklist item at that hospital which is why two nurses have now been infected.) When you say stuff like "If someone with ebola sneezes next to you, you have a real chance of becoming infected," it's pretty close to saying "If you buy a winning lottery ticket, you have a real chance of becoming a millionaire." Well... I suppose so, but the pre-conditions and/or assumptions that you are using have to be seen in the context of the full universe of possibilities. I don't know why you think I'm "getting so defensive about this." I am trying to inject some rationality into a discussion where rationality seems to be extremely lacking. If you want to call that "getting defensive," then by all means, please go ahead.