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

[hardincap]

these docs are not newly discovered materials correct? sweeney has made them public but they were already accessible by perry cap, fairholme and jacobs lawyers, and presumably included in redacted briefs?

[Guest cherzeca]

these docs are not newly discovered materials correct? sweeney has made them public but they were already accessible by perry cap, fairholme and jacobs lawyers, and presumably included in redacted briefs?

 

these docs are withheld by govt under claim of privilege.  no one has seen them

[hardincap]

i see the motion requesting for the removal of the "protected information" designation from these discovery materials, but the motion also says "counsel for robinson was previously granted access to protected information"

 

http://gselinks.com/Court_Filings/Fairholme/13-465-0322.pdf

 

cooper, steele, gibson were all granted access to protected information, so am i correct to assume they and the judges in these cases have seen these docs already?

[onyx1]

Can't imagine what is in the remaining 11,000 documents. Must be explosive stuff!

 

You can be sure that there are scores of email exchanges of those involved taking victory laps and giving high-fives to each other for the expected government sweep windfall.  WH staffers and TSY officials rarely find themselves in a situation where a little financial engineering alleviates the pain of a financial problem that rises to the Presidential level.  It's the holy grail and a once-in-a-career opportunity. 

 

The general model to gain standing as a government employee is (1) avoid association any perceived failure, and (2) promote and attach yourself to any perceived success.

 

In the case of the NWS, there will be no shortage of bureaucrats employing #2 all the way up to the oval office.  It's what they do.  And it will be explosive.

[Guest cherzeca]

i see the motion requesting for the removal of the "protected information" designation from these discovery materials, but the motion also says "counsel for robinson was previously granted access to protected information"

 

http://gselinks.com/Court_Filings/Fairholme/13-465-0322.pdf

 

cooper, steele, gibson were all granted access to protected information, so am i correct to assume they and the judges in these cases have seen these docs already?

 

@hardincap

 

sorry, misunderstood your question.

 

there is no way of knowing for sure whether these newly-unsealed docs were (will be) read by perry merits panel, but you would think they were part of the cooper filing for judicial notice.  one wonders however, why perry counsel didnt seek to have the seal lifted with respect to them all...likely because they hadnt planned on referring to all of them in oral argument, which was the reason proffered by perry counsel in first place.  which perplexes me a bit, since i would have referred to 8 golden years of profitability in my oral argument (were i to feebly give it)

[Guest cherzeca]

Can't imagine what is in the remaining 11,000 documents. Must be explosive stuff!

 

You can be sure that there are scores of email exchanges of those involved taking victory laps and giving high-fives to each other for the expected government sweep windfall.  WH staffers and TSY officials rarely find themselves in a situation where a little financial engineering alleviates the pain of a financial problem that rises to the Presidential level.  It's the holy grail and a once-in-a-career opportunity. 

 

The general model to gain standing as a government employee is (1) avoid association any perceived failure, and (2) promote and attach yourself to any perceived success.

 

In the case of the NWS, there will be no shortage of bureaucrats employing #2 all the way up to the oval office.  It's what they do.  And it will be explosive.

 

all to be read soon by judge sweeney in her jammies with a cup of cocoa...

[doughishere]

Can't imagine what is in the remaining 11,000 documents. Must be explosive stuff!

 

You can be sure that there are scores of email exchanges of those involved taking victory laps and giving high-fives to each other for the expected government sweep windfall.  WH staffers and TSY officials rarely find themselves in a situation where a little financial engineering alleviates the pain of a financial problem that rises to the Presidential level.  It's the holy grail and a once-in-a-career opportunity. 

 

The general model to gain standing as a government employee is (1) avoid association any perceived failure, and (2) promote and attach yourself to any perceived success.

 

In the case of the NWS, there will be no shortage of bureaucrats employing #2 all the way up to the oval office.  It's what they do.  And it will be explosive.

 

 

 

There it is again, the carrot.

[Mephistopheles]

Cherzeca, any thoughts on the below?

 

Here is a link that contains "Exhibit 1" that Sweeney is referring to which is a list of the sample documents:

 

http://gselinks.com/Court_Filings/Fairholme/13-465-0272-1.pdf

 

Several of these documents are marked Presidential Communications Privilege. Does this mean that the sworn affidavit must come from the President himself?

[Guest cherzeca]

Potus will be able to delegate

[Mephistopheles]

Got it, thanks

[randallchsu]

What's the take on Mr. Carney's latest article?

 

http://blogs.wsj.com/moneybeat/2016/05/20/behind-the-veil-of-the-governments-plan-to-wind-down-fannie-and-freddie/

[hardincap]

there is no way of knowing for sure whether these newly-unsealed docs were (will be) read by perry merits panel, but you would think they were part of the cooper filing for judicial notice.  one wonders however, why perry counsel didnt seek to have the seal lifted with respect to them all...likely because they hadnt planned on referring to all of them in oral argument, which was the reason proffered by perry counsel in first place.  which perplexes me a bit, since i would have referred to 8 golden years of profitability in my oral argument (were i to feebly give it)

 

that confuses me as well. it would have been useful to refer to these docs in response to millett's questioning of where's the conflict of interest

[hardincap]

tim howard on the unsealed docs

 

https://howardonmortgagefinance.com/2016/05/02/getting-from-here-to-there/#comment-849

[Steve_Berk]

It almost seems like he's ignoring information on purpose. I particularly found his citation to lamberth's opinion that motivation is irrelevant rather stunning since he was using it to prove that the documents don't help the plaintiffs. I mean if he's going to take that part of the lamberth opinion as unassailable then there is no conceivable document that plaintiffs could ever use no matter what it said. And if this is the case then why even bother evaluating the documents, as Carney tried to do? Also he doesn't even seem remotely aware of the legal arguments regarding the limits of the scope of a conservatorship. Not sure why he is so motivated to ignore any and all evidence. Seems so far from objective

 

What's the take on Mr. Carney's latest article?

 

http://blogs.wsj.com/moneybeat/2016/05/20/behind-the-veil-of-the-governments-plan-to-wind-down-fannie-and-freddie/

[Mephistopheles]

It almost seems like he's ignoring information on purpose. I particularly found his citation to lamberth's opinion that motivation is irrelevant rather stunning since he was using it to prove that the documents don't help the plaintiffs. I mean if he's going to take that part of the lamberth opinion as unassailable then there is no conceivable document that plaintiffs could ever use no matter what it said. And if this is the case then why even bother evaluating the documents, as Carney tried to do? Also he doesn't even seem remotely aware of the legal arguments regarding the limits of the scope of a conservatorship. Not sure why he is so motivated to ignore any and all evidence. Seems so far from objective

 

What's the take on Mr. Carney's latest article?

 

http://blogs.wsj.com/moneybeat/2016/05/20/behind-the-veil-of-the-governments-plan-to-wind-down-fannie-and-freddie/

 

Viewership. He's like the only journalist who's against the Plaintiffs in favor of the Defendents. He's monopolized the "journalism" supporting that side of the argument.

 

It's also probably about pride and saving face at this point.

[hardincap]

I particularly found his citation to lamberth's opinion that motivation is irrelevant rather stunning since he was using it to prove that the documents don't help the plaintiffs. I mean if he's going to take that part of the lamberth opinion as unassailable then there is no conceivable document that plaintiffs could ever use no matter what it said.

 

unfortunately lamberth basically said as much - that no document matters (in regards to motivation) because that would constitute a why not what analysis (the what analysis being whether the Third Amendment actually resulted in a de facto receivership). lamberth further said that changing the flow of profits from private shareholders to the treasury "is in no way sufficient to reclassify a conservatorship into a receivership."

 

edit: where these documents do help in lamberth's framework is to support the argument that FHFA violated hera's prescription “not [to] be subject to the direction or supervision of any other agency of the United States... in the exercise of the rights, powers, and privileges of the Agency.”

[doughishere]

Fannie and Freddie.

 

Here's how I think about the bailout/nationalization/whatever of Fannie Mae and Freddie Mac. Once upon a time they were quasi-public utilities where the government took the ultimate risk of guaranteeing mortgages but gave the profits to private shareholders. Then, in 2008, they collapsed, and the government had to bail them out. This seemed very unfair to people at the time, and so they naturally assumed that shareholders would lose their entire investment. If the government was going to take all the downside in Fannie and Freddie, it would take all the upside too.

 

But for reasons having to do with, basically, accounting, when the government took over Fannie and Freddie it took about 80 percent of the ownership, not 100 percent. At the time -- September 2008 -- this seemed like a trivial difference. Things were crazy in September 2008! It was hard to imagine getting through the next week, never mind getting back to a place where Fannie Mae and Freddie Mac were profitable and anyone wanted to argue over that 20 percent of the stock. (Plus some preferred stock.) But eventually things did get better, and the government realized that it had left 20 percent of Fannie and Freddie's stock in private hands, and so, in mid-2012, it more or less grabbed it. (This is called the "Third Amendment.") Then the shareholders sued.

 

This is not the official story, and probably no one on either side would entirely agree with it, but I think it's more or less right. The government will tell you that things never really got better, and that even today Fannie and Freddie aren't really profitable, but this is an extremely boring argument about, again, accounting. (How do you compute how much preferred stock is outstanding and paying coupons? What is the proper fee for the government to charge for support? What about deferred tax assets?) No one quite believes that the government took over all of Fannie and Freddie in the 2012 Third Amendment out of pure disinterested concern for the companies' well-being. Everyone assumes that zeroing the shareholders was also an important motivation.

 

Anyway here is Gretchen Morgenson on some newly uncovered e-mails and stuff making it really clear that zeroing the shareholders was also an important motivation:

 

An email from Jim Parrott, then a top White House official on housing finance, was sent the day the so-called profit sweep was announced. It said the change was structured to ensure that the companies couldn’t “repay their debt and escape as it were.”

 

This cannot really be a surprise to anyone, but the government has spent the last few years, bizarrely, denying that punishing the shareholders was a motivation for the Third Amendment. It does not strike me as legally all that important, but honestly the legalities of the Fannie/Freddie lawsuits are a bit beyond me. I am a bit torn about the justice of the situation, though. On the one hand, in 2008, it really was probably fair for Fannie and Freddie shareholders to lose their entire investment. But they didn't. And once the government had left 20 percent of the companies in shareholders' hands in 2008, it was a bit rough to take it back in 2012.

 

 

 

Bloomberg View

Matt Levine's Money Stuff

[Guest cherzeca]

I particularly found his citation to lamberth's opinion that motivation is irrelevant rather stunning since he was using it to prove that the documents don't help the plaintiffs. I mean if he's going to take that part of the lamberth opinion as unassailable then there is no conceivable document that plaintiffs could ever use no matter what it said.

 

unfortunately lamberth basically said as much - that no document matters (in regards to motivation) because that would constitute a why not what analysis (the what analysis being whether the Third Amendment actually resulted in a de facto receivership). lamberth further said that changing the flow of profits from private shareholders to the treasury "is in no way sufficient to reclassify a conservatorship into a receivership."

 

edit: where these documents do help in lamberth's framework is to support the argument that FHFA violated hera's prescription “not [to] be subject to the direction or supervision of any other agency of the United States... in the exercise of the rights, powers, and privileges of the Agency.”

 

@hardincap

 

one thing that i have tried to hear (and read) in the perry oral argument is any judge's willingness to accept lamberth's view that motivation doesn't matter and that only the what, not why, is subject to judicial inquiry.  and frankly i found nothing.  even millett who comes closest to taking up the lamberth view, asks questions that seek to validate the why. millett never says, for example, "hey fhfa entered into an amendment of a contract, that is a conservator power, end of story"

[Jurgis]

This is not the official story, and probably no one on either side would entirely agree with it, but I think it's more or less right.

...

 

I think that's one of the best and least biased descriptions of what happened. :) So I'll +1 on it even if nobody else does. :)

[hardincap]

agreed, just pointing out that the carney article is largely consistent with lamberth's legal framework. it'll be interesting to see how carney responds if/when we get a remand, essentially voiding lamberth's framework

[doughishere]

"I'll put my money on Secretary of State for Corker,"  Republican U.S. Rep. Scott DesJarlais, R-Tenn., told the Times Free Press on Saturday at the Bradley County Republican Party's annual Lincoln Day gathering.

 

 

Chattanooga Times Free Press

http://www.timesfreepress.com/news/politics/elections/story/2016/may/23/desjarlasees-cabinet-post-corker-trump-admini/366982/

[doughishere]

Some of the commentary...myself included.

 

 

Leslie Luk over at SeekingAlpha:

This is huge! All our price targets thus far have been too low. If further documents show that there was clear unambiguous intent to gut the GSEs, then I don't think Treasury would be justified in exercising the warrants. Why should the government be able to acquire 80% of the common stock for an amount approximating $10,000 - $15,000 (according to Hamish Hume) given how they have acted? To still exercise the warrants now would constitute a further taking in my opinion.

 

 

Cant wait for the parade of commentary to come out after Fridays revelations.

[merkhet]

What's interesting to me is that Berkowitz's e-mail said 53 documents were released into the wild. But we've only seen 27 pages from Morgenson. So... where are the other documents? Will we see another article in a few days?

[Luke 532]

What's interesting to me is that Berkowitz's e-mail said 53 documents were released into the wild. But we've only seen 27 pages from Morgenson. So... where are the other documents? Will we see another article in a few days?

 

Somebody somewhere said releasing them and writing about them slowly but surely is best to let each set of documents really sink in.  That might be the approach that is being taken and I think it makes sense.

 

Chinese water torture instead of dumping a bucket of water on their head.

[Steve_Berk]

agree that Carney isn't completely wrong about his interpretation of the Lamberth opinion. But my point is that what he's doing in his latest blog at best lacks rigor. He's pretending to evaluate the newly released documents and saying that they don't prove anything, but he can only reach this point by citing Lamberth's sweeping opinion. So in reality he's not evaluating the substance of the documents at all, even though he's trying to make it seem like that's what he's doing.

 

I particularly found his citation to lamberth's opinion that motivation is irrelevant rather stunning since he was using it to prove that the documents don't help the plaintiffs. I mean if he's going to take that part of the lamberth opinion as unassailable then there is no conceivable document that plaintiffs could ever use no matter what it said.

 

unfortunately lamberth basically said as much - that no document matters (in regards to motivation) because that would constitute a why not what analysis (the what analysis being whether the Third Amendment actually resulted in a de facto receivership). lamberth further said that changing the flow of profits from private shareholders to the treasury "is in no way sufficient to reclassify a conservatorship into a receivership."

 

edit: where these documents do help in lamberth's framework is to support the argument that FHFA violated hera's prescription “not [to] be subject to the direction or supervision of any other agency of the United States... in the exercise of the rights, powers, and privileges of the Agency.”