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FNMA and FMCC preferreds. In search of the elusive 10 bagger.


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To any attorneys (past or present) out there... do you agree with, disagree with, or have any additional comments about what Christian Herzeca (attorney that followed MBIA/BAC litigation closely via his blog) recently said?  Thanks in advance for your feedback!

 

https://groups.google.com/forum/#!topic/freddienfannie/chQ8Yy5V848

11-16-2015 at 12:33pm:

"the fhfa brief is striking in that i) it insists that shareholders do not have a right to bring a direct action, as well a derivative action: i am unaware of any court that has held that a shareholder cant bring a direct action: and ii) that as long as conservator exercises a conservator function (such as amending the SPSP agt,), the court inquiry must stop and court cannot examine whether conservator had power to cause issuance of invalid preferred stock.

 

of course, the exercise of one power (amend ag), which it does have, that leads the conservator to exercise another power (issue invalid stock), which it doesnt have, is an extremely bold reading of HERA, so bold as to give conservators ability to anything they want without court review.  fhfa is hanging its hat on this.

 

plaintiffs will simply argue that the conservator never had power to cause GSEs to issue invalid stock, and the anti-injunction provision only insulates conservator from inquiries into the exercise of conservator power, but the court certainly has power to review exercises of actions not within the power of conservator.  even lamberth made a (very cursory) inquiry into whether what conservator did was within conservator power, and argued that he was being asked to inquire into the reasons for the exercise of the power (bad faith etc). so this line of argument is to my mind even one step beyond lamberth."

11-16-2015 1:07pm:

"fhfa argument that federal law, not del corp law, applies to nws pref is extremely weak. cite that federal law applies to the SPSp agt. fine. fhfa doesnt (and cant) explain why that would make federal law apply to the validity of the nws pref. oh and by the way, there is no federal corp law to apply.."

 

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To any attorneys (past or present) out there... do you agree with, disagree with, or have any additional comments about what Christian Herzeca (attorney that followed MBIA/BAC litigation closely via his blog) recently said?  Thanks in advance for your feedback!

 

https://groups.google.com/forum/#!topic/freddienfannie/chQ8Yy5V848

11-16-2015 at 12:33pm:

"the fhfa brief is striking in that i) it insists that shareholders do not have a right to bring a direct action, as well a derivative action: i am unaware of any court that has held that a shareholder cant bring a direct action: and ii) that as long as conservator exercises a conservator function (such as amending the SPSP agt,), the court inquiry must stop and court cannot examine whether conservator had power to cause issuance of invalid preferred stock.

 

of course, the exercise of one power (amend ag), which it does have, that leads the conservator to exercise another power (issue invalid stock), which it doesnt have, is an extremely bold reading of HERA, so bold as to give conservators ability to anything they want without court review.  fhfa is hanging its hat on this.

 

plaintiffs will simply argue that the conservator never had power to cause GSEs to issue invalid stock, and the anti-injunction provision only insulates conservator from inquiries into the exercise of conservator power, but the court certainly has power to review exercises of actions not within the power of conservator.  even lamberth made a (very cursory) inquiry into whether what conservator did was within conservator power, and argued that he was being asked to inquire into the reasons for the exercise of the power (bad faith etc). so this line of argument is to my mind even one step beyond lamberth."

11-16-2015 1:07pm:

"fhfa argument that federal law, not del corp law, applies to nws pref is extremely weak. cite that federal law applies to the SPSp agt. fine. fhfa doesnt (and cant) explain why that would make federal law apply to the validity of the nws pref. oh and by the way, there is no federal corp law to apply.."

 

Moderately agree with the first point. It functions largely off the idea from Lamberth that actions of the conservator are beyond judicial review. Of course, the issue is whether the conservator can exercise power it doesn't have.

 

Completely agree with the second point. There was no federal preemption of Delaware corporate law.

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Moderately agree with the first point. It functions largely off the idea from Lamberth that actions of the conservator are beyond judicial review. Of course, the issue is whether the conservator can exercise power it doesn't have.

 

Completely agree with the second point. There was no federal preemption of Delaware corporate law.

 

Thank you, merkhet.

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Wow.

 

http://www.prnewswire.com/news-releases/hindes-asserts-white-house-cover-up-regarding-fannie-maefreddie-mac-300183707.html

WILMINGTON, Del., Nov. 24, 2015 /PRNewswire/ -- Calling it "arguably the most egregious example of attempted government secrecy since the Watergate scandal of the 1970s", Gary E. Hindes, chairman of The Delaware Bay Company, LLC and former chairman of the Delaware Democratic Party, asserts in a report published today on his firm's website (http://delawarebayllc.com/images/The_Mystery_Witness.pdf) that the Obama Administration may have tried to cover up its effort to block a key witness from testifying in one of the many lawsuits filed against it in connection with its de-facto 'nationalization' of Federal National Mortgage Association and Federal Mortgage Insurance Corporation.  The two government chartered, but privately owned, mortgage insurance companies were placed into conservatorship by the Bush Administration during the height of the financial crisis in September 2008 and were subsequently the recipients of $187 billion in government aid – since repaid with an additional $54 billion profit to the government.

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Wow.

 

http://www.prnewswire.com/news-releases/hindes-asserts-white-house-cover-up-regarding-fannie-maefreddie-mac-300183707.html

WILMINGTON, Del., Nov. 24, 2015 /PRNewswire/ -- Calling it "arguably the most egregious example of attempted government secrecy since the Watergate scandal of the 1970s", Gary E. Hindes, chairman of The Delaware Bay Company, LLC and former chairman of the Delaware Democratic Party, asserts in a report published today on his firm's website (http://delawarebayllc.com/images/The_Mystery_Witness.pdf) that the Obama Administration may have tried to cover up its effort to block a key witness from testifying in one of the many lawsuits filed against it in connection with its de-facto 'nationalization' of Federal National Mortgage Association and Federal Mortgage Insurance Corporation.  The two government chartered, but privately owned, mortgage insurance companies were placed into conservatorship by the Bush Administration during the height of the financial crisis in September 2008 and were subsequently the recipients of $187 billion in government aid – since repaid with an additional $54 billion profit to the government.

 

Wow, interesting connections here being that he was former chair of the DELAWARE DEMOCRATIC party. Same state as a current lawsuit and same political party.

 

I wonder who the witness is.

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Wow, interesting connections here being that he was former chair of the DELAWARE DEMOCRATIC party. Same state as a current lawsuit and same political party.

 

He's one of Steele's clients listed on the Delaware lawsuit.

 

I wonder who the witness is.

 

Hindes claims it's Egbert Perry.  Perry is either scheduled for a deposition or it has already taken place.  Perry's deposition order attached.

Egbert_Perry_Deposition_Oder_from_Sweeney_11-10-2015.pdf

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From Todd Sullivan over at VP.

 

http://www.valueplays.net/2015/11/24/democrat-compares-white-house-cover-up-in-gse-litigation-to-watergate/

 

 

When your own party starts accusing you of a coverup, things are going south pretty quick. While probably having only a short term effect now, this stuff can snowball and only lead to increasing the political pressure the government is feeling in these cases. It isn’t only Republicans who are upset, now it is Democrats also.
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Will be interesting when this hits newsstands...

 

Hold on to your hats!

 

Merk, anything we dont already know in the article?

 

It's this article in print http://fortune.com/2015/11/13/fannie-mae-freddie-mac-nationalize-housing-finance/

 

ahh its that article....l. This will be in every newsstand and every book store at every commuter station and airport in america....people will notice the headline when they get bored waiting for their departure. 

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Will be interesting when this hits newsstands...

 

Hold on to your hats!

 

Merk, anything we dont already know in the article?

 

It's this article in print http://fortune.com/2015/11/13/fannie-mae-freddie-mac-nationalize-housing-finance/

 

ahh its that article....l. This will be in every newsstand and every book store at every commuter station and airport in america....people will notice the headline when they get bored waiting for their departure. 

 

Yea, and for those who care, probably the Govt will gain their support vs. the hedge funds.

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Will be interesting when this hits newsstands...

 

Hold on to your hats!

 

Merk, anything we dont already know in the article?

 

It's this article in print http://fortune.com/2015/11/13/fannie-mae-freddie-mac-nationalize-housing-finance/

 

ahh its that article....l. This will be in every newsstand and every book store at every commuter station and airport in america....people will notice the headline when they get bored waiting for their departure. 

 

Yea, and for those who care, probably the Govt will gain their support vs. the hedge funds.

 

Let's hope that's the case. The price of the stocks get driven downward on the negative sentiment, and we can pick up more shares waiting for a logical judge to rule on the matter.

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Gov't has hired financial consultants from Economists Incorporated.  Filing attached.

 

The consultants:

Jonathan A. Neuberger: http://www.ei.com/viewprofessional.php?id=37

Stuart D. Gurrea: http://www.ei.com/viewprofessional.php?id=20

Yiting Ji: https://www.linkedin.com/in/yiting-ji-302168a6

Rachel Lin: https://www.linkedin.com/in/rachelclin

FNMAS_Economists_Incorporated_11-24-2015.pdf

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None of the information below is necessarily important, but it's good to have on the thread in case these names pop up again in the future.

 

Excerpts from bios...

Neuberger: "Dr. Neuberger specializes in financial economics, valuation, and damages analysis in complex commercial litigation assignments across a broad range of industries.  He has served as both a consulting and testifying expert."

Gurrea: "Dr. Gurrea’s consulting experience includes the analysis of antitrust matters, calculation of damages, analysis of the economics of punitive damages, and performing financial analyses."

 

You may recall back in April 2015 the gov't requested other "financial consultants" (same term used in yesterday's filing) to see protected documents for the possible purpose of assessing damages.  Somebody back then posted it seemed very early to retain a damages consultant.  It seems like they're looking for more help in this area.  Anyway, the consultants from April 2015 were from Navigant Consulting.

http://www.valueplays.net/2015/04/07/govt-preps-for-trial-before-sweeney/

 

There are at least 2 people currently working at Economists Incorporated that previously worked for Navigant Consulting.  Neither of these people have legal access to the protected documents.

Hal Singer, Principal: https://www.linkedin.com/in/haljsinger?trk=seokp-title_posts_secondary_cluster_res_author_name

Kevin Caves, Senior Economist: http://www.ei.com/viewprofessional.php?id=72

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Gov't has hired financial consultants from Economists Incorporated.  Filing attached.

 

The consultants:

Jonathan A. Neuberger: http://www.ei.com/viewprofessional.php?id=37

Stuart D. Gurrea: http://www.ei.com/viewprofessional.php?id=20

Yiting Ji: https://www.linkedin.com/in/yiting-ji-302168a6

Rachel Lin: https://www.linkedin.com/in/rachelclin

 

"Damages analyses"

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Gov't has hired financial consultants from Economists Incorporated.  Filing attached.

 

The consultants:

Jonathan A. Neuberger: http://www.ei.com/viewprofessional.php?id=37

Stuart D. Gurrea: http://www.ei.com/viewprofessional.php?id=20

Yiting Ji: https://www.linkedin.com/in/yiting-ji-302168a6

Rachel Lin: https://www.linkedin.com/in/rachelclin

 

"Damages analyses"

 

They provide a lot of other services, too.  Just guesswork as to why the gov't hired them but I wouldn't be surprised if they're assessing damages in the event Sweeney denies their motion to dismiss (i.e. we go to trial and the gov't wants to avoid that taking place).

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