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

[Luke 532]

Can Chris share your thoughts on this please?

 

I've talked with him over e-mail... he's reading it now.

[Guest cherzeca]

I'm still reading it, some 120 pages, but by i) 9-7 majority, 5thC en banc reversed the dismissal of the APA claim and remanded to DCt (meaning the Ps can go to trial to prove that the conservator did not have authority to adopt NWS), and ii) by a separate 9-7 majority ruled that the single fhfa director removable for cause only provision was unconstitutional but that Ps are entitled only to prospective relief (so NWS not invalid as a matter of constitutional law).

 

both parties will likely appeal.

 

 

[hardincap]

sure seems like courts stalled until the release of the treasury report. congrats everyone! glad I kept every single share, hah

[muscleman]

I'm still reading it, some 120 pages, but by i) 9-7 majority, 5thC en banc reversed the dismissal of the APA claim and remanded to DCt (meaning the Ps can go to trial to prove that the conservator did not have authority to adopt NWS), and ii) by a separate 9-7 majority ruled that the single fhfa director removable for cause only provision was unconstitutional but that Ps are entitled only to prospective relief (so NWS not invalid as a matter of constitutional law).

 

both parties will likely appeal.

 

so this ruling did not give plaintiffs any relief as they requested? Instead it is a remand to lower court like the Perry case?

[Luke 532]

I'm still reading it, some 120 pages, but by i) 9-7 majority, 5thC en banc reversed the dismissal of the APA claim and remanded to DCt (meaning the Ps can go to trial to prove that the conservator did not have authority to adopt NWS), and ii) by a separate 9-7 majority ruled that the single fhfa director removable for cause only provision was unconstitutional but that Ps are entitled only to prospective relief (so NWS not invalid as a matter of constitutional law).

 

both parties will likely appeal.

 

Christian, thank you for your input. Do you think this leads to a settlement?

[investorG]

hello cherzeca, what is the rationale for offering a remand (what we apparently received) vs a full reversal where the en banc decides the nws is illegal? thank you

[orthopa]

Am I missing where relief is discussed? If the relief is prospective does that mean as much if the NWS was going to be stopped soon anyway?

[Guest cherzeca]

I'm still reading it, some 120 pages, but by i) 9-7 majority, 5thC en banc reversed the dismissal of the APA claim and remanded to DCt (meaning the Ps can go to trial to prove that the conservator did not have authority to adopt NWS), and ii) by a separate 9-7 majority ruled that the single fhfa director removable for cause only provision was unconstitutional but that Ps are entitled only to prospective relief (so NWS not invalid as a matter of constitutional law).

 

both parties will likely appeal.

 

so this ruling did not give plaintiffs any relief as they requested? Instead it is a remand to lower court like the Perry case?

 

IT VACATED THE DISMISSAL.  CLAIM IS ALIVE AND BASED UPON DECISION'S MAJORITY OPINION, THIS IS A VERY WINNABLE CASE FOR PS IF IT WERE EVER TO PROCEED TO TRIAL.  sorry for all caps, but just saying...

[Guest cherzeca]

I'm still reading it, some 120 pages, but by i) 9-7 majority, 5thC en banc reversed the dismissal of the APA claim and remanded to DCt (meaning the Ps can go to trial to prove that the conservator did not have authority to adopt NWS), and ii) by a separate 9-7 majority ruled that the single fhfa director removable for cause only provision was unconstitutional but that Ps are entitled only to prospective relief (so NWS not invalid as a matter of constitutional law).

 

both parties will likely appeal.

 

Christian, thank you for your input. Do you think this leads to a settlement?

 

it certainly affects the fhfa/treasury negotiation.  if you guys read the opinion, which I encourage, check out the text to footnotes 178-180

[Guest cherzeca]

hello cherzeca, what is the rationale for offering a remand (what we apparently received) vs a full reversal where the en banc decides the nws is illegal? thank you

 

@IG

 

Ps win on law.  however in a trial, there are facts that need to be presented.  one gets summary judgment only if there are no facts that could be presented which would justify the NWS under the law as enunciated by this opinion.  I still haven't finished the opinion, but based on what I read so far, it is very hard to see how Ps could lose at trial.  but you are correct, this decision did not in and of itself vacate the NWS

 

edit: put another way, the DCt said that taking the Ps factual allegations as true, Ps lose.  en banc majority essentially says taking Ps factual allegations as true Ps win.

 

now are Ps factually allegations true?  that is for the DCt to decide on remand.

[Luke 532]

Christian, thank you for your continued legal analysis!  You are an incredibly valuable member of this community.

[investorG]

hello cherzeca, what is the rationale for offering a remand (what we apparently received) vs a full reversal where the en banc decides the nws is illegal? thank you

 

@IG

 

Ps win on law.  however in a trial, there are facts that need to be presented.  one gets summary judgment only if there are no facts that could be presented which would justify the NWS under the law as enunciated by this opinion.  I still haven't finished the opinion, but based on what I read so far, it is very hard to see how Ps could lose at trial.  but you are correct, this decision did not in and of itself vacate the NWS

 

edit: put another way, the DCt said that taking the Ps factual allegations as true, Ps lose.  en banc majority essentially says taking Ps factually allegations as true Ps win.

 

now are Ps factually allegations true?  that is for the DCt to decide on remand.

 

thank you.  one more, please - unless the constitutional side is appealed and overturned at the supreme court, Calabria could / would get kicked out in jan2021 if a democrat wins the election?

[SnarkyPuppy]

Appreciate the timely insight cherz. 

 

Cheers to all.  Yet another foot forward in the right direction.  Just a matter of time. 

[Guest cherzeca]

hello cherzeca, what is the rationale for offering a remand (what we apparently received) vs a full reversal where the en banc decides the nws is illegal? thank you

 

@IG

 

Ps win on law.  however in a trial, there are facts that need to be presented.  one gets summary judgment only if there are no facts that could be presented which would justify the NWS under the law as enunciated by this opinion.  I still haven't finished the opinion, but based on what I read so far, it is very hard to see how Ps could lose at trial.  but you are correct, this decision did not in and of itself vacate the NWS

 

edit: put another way, the DCt said that taking the Ps factual allegations as true, Ps lose.  en banc majority essentially says taking Ps factually allegations as true Ps win.

 

now are Ps factually allegations true?  that is for the DCt to decide on remand.

 

thank you.  one more, please - unless the constitutional side is appealed and overturned at the supreme court, Calabria could / would get kicked out in jan2021 if a democrat wins the election?

 

who the F knows.  there is a split in the circuits...DC circuit upheld removable for cause en banc after a merits opinion invalidating it written by.....then judge kavaugh

[investorG]

hello cherzeca, what is the rationale for offering a remand (what we apparently received) vs a full reversal where the en banc decides the nws is illegal? thank you

 

@IG

 

Ps win on law.  however in a trial, there are facts that need to be presented.  one gets summary judgment only if there are no facts that could be presented which would justify the NWS under the law as enunciated by this opinion.  I still haven't finished the opinion, but based on what I read so far, it is very hard to see how Ps could lose at trial.  but you are correct, this decision did not in and of itself vacate the NWS

 

edit: put another way, the DCt said that taking the Ps factual allegations as true, Ps lose.  en banc majority essentially says taking Ps factually allegations as true Ps win.

 

now are Ps factually allegations true?  that is for the DCt to decide on remand.

 

thank you.  one more, please - unless the constitutional side is appealed and overturned at the supreme court, Calabria could / would get kicked out in jan2021 if a democrat wins the election?

 

who the F knows.  there is a split in the circuits...DC circuit upheld removable for cause en banc after a merits opinion invalidating it written by.....then judge kavaugh

 

ok, thanks.  seems like supreme court will need to decide this area whether the prez can fire the fhfa head for any reason.

[investorG]

cherzeca, last ones please (i think):?

 

what's the next step if no settlement - back to circuit court or govt appeal en banc to supreme court? 

 

if it goes back to circuit court, does it matter adversely to us that the judge is Clinton democrat?

 

thank you

[Gregmal]

For those of you who don't believe the game is rigged, is it odd that the same trading day of the announcement to release comes out, a court decision now emerges that gives even those most opposed to the release a reason to compromise?

[muscleman]

I'm still reading it, some 120 pages, but by i) 9-7 majority, 5thC en banc reversed the dismissal of the APA claim and remanded to DCt (meaning the Ps can go to trial to prove that the conservator did not have authority to adopt NWS), and ii) by a separate 9-7 majority ruled that the single fhfa director removable for cause only provision was unconstitutional but that Ps are entitled only to prospective relief (so NWS not invalid as a matter of constitutional law).

 

both parties will likely appeal.

 

so this ruling did not give plaintiffs any relief as they requested? Instead it is a remand to lower court like the Perry case?

 

IT VACATED THE DISMISSAL.  CLAIM IS ALIVE AND BASED UPON DECISION'S MAJORITY OPINION, THIS IS A VERY WINNABLE CASE FOR PS IF IT WERE EVER TO PROCEED TO TRIAL.  sorry for all caps, but just saying...

 

Thank you! I appreciate it!

 

[Guest cherzeca]

cherzeca, last ones please (i think):?

 

what's the next step if no settlement - back to circuit court or govt appeal en banc to supreme court? 

 

if it goes back to circuit court, does it matter adversely to us that the judge is Clinton democrat?

 

thank you

 

both parties will seek writ of certiorari from SCOTUS.  Ps lost relief on const claim 7-9 so it will want to have SCOTUS hear this, and fhfa will want to have SCOTUS hear both claims.  I expect

SCOTUS to grant cert on both claims.  if it does, then the 5th C decision is held in abeyance pending SCOTUS determination.  if SCOTUS doesn't grant cert, then it is unclear whether fhfa director is removable only for cause (circuit split), and the DCt holds a trial on Ps alleged facts on the APA claim

[Guest cherzeca]

For those of you who don't believe the game is rigged, is it odd that the same trading day of the announcement to release comes out, a court decision now emerges that gives even those most opposed to the release a reason to compromise?

 

I have alternative theory.  one of the 9 judges in the APA majority was hesitant to so rule if treasury came out with a 4thA...one judge asked about this in oral argument.  once he saw the treasury plan had nothing, he said ok let it go

[investorG]

cherzeca, last ones please (i think):?

 

what's the next step if no settlement - back to circuit court or govt appeal en banc to supreme court? 

 

if it goes back to circuit court, does it matter adversely to us that the judge is Clinton democrat?

 

thank you

 

both parties will seek writ of certiorari from SCOTUS.  Ps lost relief on const claim 7-9 so it will want to have SCOTUS hear this, and fhfa will want to have SCOTUS hear both claims.  I expect

SCOTUS to grant cert on both claims.  if it does, then the 5th C decision is held in abeyance pending SCOTUS determination.  if SCOTUS doesn't grant cert, then it is unclear whether fhfa director is removable only for cause (circuit split), and the DCt holds a trial on Ps alleged facts on the APA claim

 

ok, thanks.  not good.  waiting til may/june for a sc ruling puts too many eggs in 1 basket too late in the presidential term.

[allnatural]

@cherzeca, thank you for all your insight.

 

I just finished the APA section (count 1) that ruled in plaintiffs favor. My quick take is that its a very powerful and poetically written ruling by Willet (not surprising considering his dissent). As I understand, the majority ultimately agreed that the NWS violated HERA and no different set of facts can change that, based off this quote, "Transferring substantially all capital to Treasury, without limitation, exceeds FHFA's power to put the GSEs in a "sound an solvent condition," "carry on their business," and "preserve and conserve their assets and property." We ground this holding in statutory interpretation, not business judgment."

 

The majority does go on to say there are factual discrepancies between the parties so its up to the lower circuit to decide if they want to get the facts straight for the record or just rule a summary judgement (presumably against the government), "the district court may decide if the fact issues require trial or if summary judgement should be granted." But the point the majority makes very clear to me is no set of facts can justify the NWS, and that you need not look further than the statue to determine this. Very positive on that point that should be driven home to all observers IMO.

 

So it appears this remand for potential fact checks is more procedural than anything, and ultimately the district court should fall in line with the Majority judges ruling that facts aren't necessarily relevant to the analysis of whether the NWS violated HERA and can just issue a summary judgment. Either way you slice it, the government is in a loss/loss scenario on this APA opinion, and plaintiffs surviving the motion to dismiss is a nightmare scenario for them. I wonder if the judges held off on summary judgment here in order to give the government an opportunity to save face and settle this ahead of time (after all Trump did nominate many of these judges). Regardless, shareholders now have a substantial amount of leverage at the negotiating table as that pending decision is now a ticking time bomb for the government. Curious what you think of my view @cherzeca. Thanks.

 

Great day for all shareholders. Congrats to everyone.

 

“We are delighted that the court has made clear that the net worth sweep will not be allowed to stand,” the shareholders’ lawyer, David Thompson, said of Friday’s ruling.

 

[Guest cherzeca]

cherzeca, last ones please (i think):?

 

what's the next step if no settlement - back to circuit court or govt appeal en banc to supreme court? 

 

if it goes back to circuit court, does it matter adversely to us that the judge is Clinton democrat?

 

thank you

 

both parties will seek writ of certiorari from SCOTUS.  Ps lost relief on const claim 7-9 so it will want to have SCOTUS hear this, and fhfa will want to have SCOTUS hear both claims.  I expect

SCOTUS to grant cert on both claims.  if it does, then the 5th C decision is held in abeyance pending SCOTUS determination.  if SCOTUS doesn't grant cert, then it is unclear whether fhfa director is removable only for cause (circuit split), and the DCt holds a trial on Ps alleged facts on the APA claim

 

ok, thanks.  not good.  waiting til may/june for a sc ruling puts too many eggs in 1 basket too late in the presidential term.

 

think about it. if SCOTUS denies cert on APA claim, Ps are ready for trial.  all their prep has been done and submitted in other cases.  Ps would ask for expedited trial.

[Guest cherzeca]

@cherzeca, thank you for all your insight.

 

I just finished the APA section (count 1) that ruled in plaintiffs favor. My quick take is that its a very powerful and poetically written ruling by Willet (not surprising considering his dissent). As I understand, the majority ultimately agreed that the NWS violated HERA and no different set of facts can change that, based off this quote, "Transferring substantially all capital to Treasury, without limitation, exceeds FHFA's power to put the GSEs in a "sound an solvent condition," "carry on their business," and "preserve and conserve their assets and property." We ground this holding in statutory interpretation, not business judgment."

 

The majority does go on to say there are factual discrepancies between the parties so its up to the lower circuit to decide if they want to get the facts straight for the record or just rule a summary judgement (presumably against the government), "the district court may decide if the fact issues require trial or if summary judgement should be granted." But the point the majority makes very clear to me is no set of facts can justify the NWS, and that you need not look further than the statue to determine this. Very positive on that point that should be driven home to all observers IMO.

 

So it appears this remand for potential fact checks is more procedural than anything, and ultimately the district court should fall in line with the Majority judges ruling that facts aren't necessarily relevant to the analysis of whether the NWS violated HERA and can just issue a summary judgment. Either way you slice it, the government is in a loss/loss scenario on this APA opinion, and plaintiffs surviving the motion to dismiss is a nightmare scenario for them. I wonder if the judges held off on summary judgment here in order to give the government an opportunity to save face and settle this ahead of time (after all Trump did nominate many of these judges). Regardless, shareholders now have a substantial amount of leverage at the negotiating table as that pending decision is now a ticking time bomb for the government. Curious what you think of my view @cherzeca. Thanks.

 

Great day for all shareholders. Congrats to everyone.

 

“We are delighted that the court has made clear that the net worth sweep will not be allowed to stand,” the shareholders’ lawyer, David Thompson, said of Friday’s ruling.

 

great question, that I have been thinking about as well.  if the holding is based on statutory interpretation and not business judgment then how can fhfa win, what facts could it present to win?...why didn't en banc give summary judgment?

 

as you intimate there is not a lot that fhfa can do to escape summary judgment at the DCt or a verdict after a very quick trial. 

 

but remember that both parties will seek cert from SCOTUS, so even if en banc granted summary judgment this holding would be suspended pending SCOTUS consideration.

[orthopa]

I'm still reading it, some 120 pages, but by i) 9-7 majority, 5thC en banc reversed the dismissal of the APA claim and remanded to DCt (meaning the Ps can go to trial to prove that the conservator did not have authority to adopt NWS), and ii) by a separate 9-7 majority ruled that the single fhfa director removable for cause only provision was unconstitutional but that Ps are entitled only to prospective relief (so NWS not invalid as a matter of constitutional law).

 

both parties will likely appeal.

 

Christian, thank you for your input. Do you think this leads to a settlement?

 

it certainly affects the fhfa/treasury negotiation.  if you guys read the opinion, which I encourage, check out the text to footnotes 178-180

 

So they cite Calabria himself huh? Interesting.