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

[muscleman]

@MM

 

yes. 9th cir case is not binding in 3rd cir where sleet sits, and he could do the goose/gander switch.  but district ct judges are essentially looking for pathways...except lamberth, who cut through the jungle with a machete.  so sleet "should" find aurora loans "helpful"

 

Got it! Thank you!

[merkhet]

Oh God, I agree with John Yoo on something. That makes me uncomfortable. *sigh*

 

http://www.sfchronicle.com/opinion/article/Will-feds-wall-of-secrecy-in-Fannie-Mae-case-6885976.php

 

Note, John Yoo is Mr. Torture Memo -- so that's where my unease falls.

[tthompson]

Bethany McLean has a great (long) piece out in Washington Monthly. One of the pieces being promoted in the print edition.

 

http://www.washingtonmonthly.com/magazine/marchaprilmay_2016/features/mend_dont_end_fannie_and_fredd059896.php?page=all

[doughishere]

Matt Levine - Bloomberg Money Stuff

 

Fannie and Freddie.

 

Here is Bethany McLean arguing for some form of "recap and release" of Fannie Mae and Freddie Mac, in which they "would operate as utilities, much like your electric utility, with a cap on the return they are allowed to earn, and regulated as such by a competent regulator with real teeth," and would (in Josh Rosner's words) be "countercyclical providers of liquidity." My long-held view on Fannie and Freddie has been that:

 

The conservatorship status quo -- in which Fannie and Freddie operate as government agencies, implement government policy, subsidize mortgage rates and earn profits that accrue to the government -- is pretty good: There is no constituency in the government, and few constituencies in the market (other than disgruntled Fannie/Freddie shareholders), that would prefer a re-privatized system to the status quo.

The status quo is embarrassing, sure -- the government is not supposed to own the housing market! -- and could eventually run into problems, which is why everyone in the government has to periodically pay lip service to the idea that it is temporary and one day the mortgage market will be re-privatized.

There is no particular reason to think that will be soon.

 

 

[Guest cherzeca]

as far as i am concerned, if govt wants GSEs they can buy them, just not steal them.  levine is smarter than that.

[doughishere]

as far as i am concerned, if govt wants GSEs they can buy them, just not steal them.  levine is smarter than that.

 

Yeah I thought he was selling on that one also. His daily memos are more geared towards the antidotal side of wall street. Thought Id just post it anyways.

[enoch01]

as far as i am concerned, if govt wants GSEs they can buy them, just not steal them.  levine is smarter than that.

 

i just think levine nailed the reasons why the ONLY chance of recovery for private holders is through the courts.  he just explained it from a different perspective.

[doughishere]

as far as i am concerned, if govt wants GSEs they can buy them, just not steal them.  levine is smarter than that.

 

i just think levine nailed the reasons why the ONLY chance of recovery for private holders is through the courts.  he just explained it from a different perspective.

 

 

I dont think its revolutionary that most of wall street, main street and k street are content with the status quo.  But yeah he does have some good prose.

[Guest cherzeca]

pagliara lawsuit attached:

 

"75. HERA authorizes FHFA, “by regulation or order,” to “provide for the

exercise of any function by any stockholder, director, or officer of any regulated

entity for which the Agency has been named conservator or receiver.” HERA

§ 1367(b)(2)©, 12 U.S.C. § 4617(b)(2)© (2008).

 

76. Using this authority, FHFA reconstituted Fannie Mae’s Board on

November 24, 2008 and re-delegated to the Board the powers of the Board to

which FHFA had succeeded when the Conservatorship took effect. FHFA

announced that the Board would fulfill the same role as a typical corporate board,

including overseeing compensation, audits and governance."

 

so the suit is first, seeking books and records, then

 

"167. The Stockholder has credible bases to believe that the Board and

others breached fiduciary, statutory and contractual duties in connection with both

the Third Amendment and Net Worth Sweep and Fannie Mae’s investments in

CSS, the CSP and the Single Security."

 

once books and records produced, then claims will likely be made re breach of fiduciary duty of bd etc.

 

the key here seems to me that fhfa reconstituted and reinstalled bd of directors.  bd may be in worst of all positions, not having power to say no to fhfa as conservator, but also in its place of responsibility under state corporate law. 

 

real deal delaware plaintiffs law firm signing complaint

[Luke 532]

Pagliara Files Suit in Delaware

http://www.valueplays.net/2016/03/14/pagliara-files-suit-in-delaware/

[merkhet]

The pressure seems to be turned up a bit...

[Guest cherzeca]

Section XI of pagliara complaint relates to the CSP, and how it involves corporate waste not in interest of fnma...interesting and first time that CSP is being attacked

[doughishere]

Epstein - Paraphrase: "the lawsuits chalenging the inital bail out are more powerfull than I initally thought." About the 49min mark.

 

 

After how many years he could do this speech in his sleep.

[Luke 532]

Epstein - Paraphrase: "the lawsuits chalenging the inital bail out are more powerfull than I initally thought." About the 49min mark.

 

 

After how many years he could do this speech in his sleep.

 

Which likely makes the NWS cases that much easier to win... which is all I care about as a pref holder.

[merkhet]

Seems like we have a lot of stuff all coming to a head in the next one or two months

 

Motion to Compel in Sweeney Court

Motion to Dismiss & Application for Certification in Delaware

Perry Appeal in the DC appeals court

Complaint for Access to Records

[Guest cherzeca]

Seems like we have a lot of stuff all coming to a head in the next one or two months

 

Motion to Compel in Sweeney Court

Motion to Dismiss & Application for Certification in Delaware

Perry Appeal in the DC appeals court

Complaint for Access to Records

 

agreed.  but i read pagliara to be a precursor to a suit based upon DGCL S.170 for invalid declaration of dividends, so this is not just a records case, but what is in essence a hindes/jacobs II

[doughishere]

Peter Chapman 8.40PM Central:

 

FHFA and Treasury filed their Reply Briefs in support of their Motions to Dismiss Robnson v. FHFA today, and copies of those filings are attached to this e-mail message.

 

HERA, FHFA contends, insulates it from any challenge to anything by anybody. Treasury says that HERA precludes shareholders' ability to question FHFA and Treasury's actions.

 

The government's motions to dismiss are now fully briefed and Judge Thapur will convene a hearing if he wishes to and rule on them when he's ready to do so.

 

[muscleman]

Peter Chapman 8.40PM Central:

 

FHFA and Treasury filed their Reply Briefs in support of their Motions to Dismiss Robnson v. FHFA today, and copies of those filings are attached to this e-mail message.

 

HERA, FHFA contends, insulates it from any challenge to anything by anybody. Treasury says that HERA precludes shareholders' ability to question FHFA and Treasury's actions.

 

The government's motions to dismiss are now fully briefed and Judge Thapur will convene a hearing if he wishes to and rule on them when he's ready to do so.

 

I've never heard of this case. With so many cases going on, I wonder if there are any run by below average lawyers and could unexpectedly deal a blow to us?

[Guest cherzeca]

Peter Chapman 8.40PM Central:

 

FHFA and Treasury filed their Reply Briefs in support of their Motions to Dismiss Robnson v. FHFA today, and copies of those filings are attached to this e-mail message.

 

HERA, FHFA contends, insulates it from any challenge to anything by anybody. Treasury says that HERA precludes shareholders' ability to question FHFA and Treasury's actions.

 

The government's motions to dismiss are now fully briefed and Judge Thapur will convene a hearing if he wishes to and rule on them when he's ready to do so.

 

I've never heard of this case. With so many cases going on, I wonder if there are any run by below average lawyers and could unexpectedly deal a blow to us?

 

you do need a scorecard.

 

i will say that there are two reasons why this case is worthwhile. first, it is a good firm repping plaintiffs.  second, they have access to fairholme discovery, so getting another shot at a judge with better factual allegations to support claims is worthwhile.  having said that, the perry appeal with fairholme discovery in the appeal and hindes/jacobs are the two lead horses, imo.

[Jurgis]

Bethany McLean has a great (long) piece out in Washington Monthly. One of the pieces being promoted in the print edition.

 

http://www.washingtonmonthly.com/magazine/marchaprilmay_2016/features/mend_dont_end_fannie_and_fredd059896.php?page=all

 

McLean writes rather well argued and level-headed articles, especially when she gets big-enough word count. Although parts of this are probably recap from her book.

[merkhet]

Agree that the Pagliara thing is probably a precursor filing to something else, but it will also provide a significant amount of information that I think we won't be getting from Fairholme Discovery?

 

Once again, keep in mind my terrible record of timing predictions in this particular case and my inherent long bias, but I can't imagine that with so many cases coming to a head in the next two months that (A) plaintiffs aren't reaching out to try and discuss a settlement and (B) defendants aren't thinking about it just a little bit.

[Guest cherzeca]

about pagliara case

 

Delaware Corporate Law Once Again Invoked In Fannie Mae And Freddie Mac Litigation  http://seekingalpha.com/article/3958463-delaware-corporate-law-invoked-fannie-mae-freddie-mac-litigation

[TwoCitiesCapital]

I just finished reading Fooling Some People All of the Time about Einhorn's saga with Allied Capital. I was quite surprised to see the total disregard from the SEC, SBA, USDA, and DoJ in regards to that matter. They literally ignored his warnings/evidence for the better part of a decade and then when the whole thing blew up, they didn't want to move forward to collect damages because of the embarrassment it would cause federal agencies. Lastly, it seems like a lot of laws/rules were changed to bar Einhorn from following up in court himself.

 

This was a case where the gov't was the victim of fraud and they still did everything in their power to let it happen/continue and the losses ballooned just so the gov't could attempt to save face.

 

Will the outcome be any better when the gov't is the one perpetrating the theft? I definitely have a renewed appreciation for how hard it will be to win against the gov't in court....

[Guest cherzeca]

@merkhet/2cities

 

the strongest force in the universe is inertia, and when acting upon govt officials, it is truly a wondrous physical force.

 

which is why, merkhet, i dont see any settlement discussions before the next round of judicial decisions.  govtal officials dont care, it's not their money, and no one wants to be the first to use common sense.

 

but why 2cities i think you might see govt action once the NWS is invalidated...cause then govt officials will have the cover of a judge saying you need to fix this little $90B issue (re fnma alone)

[Jurgis]

I think I asked this before, but just in case you legal types want to think about it: what is the "maturity" distribution of court decisions including appeals? The same way you look at debt maturities, I'd say you should look at court decision maturities and possible appeals all the way (to Supreme Court?). Then you can build up the best-cases (without settlements which can't be guessed), average cases and worst cases.

 

Very roughly, if your worst case maturity is ~3 years, this is possibly great investment. If it's 5 years, it's becoming so so. If it's 8-10 years, then it's not that good (and also adding risk of any financial complications during that timeframe - although I am not a lawyer and I can't evaluate how these would affect judgement of actions preceding the complications).