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

[deadspace]

The judges can reach whatever conclusion that they want -- but if the reason 4623 is important is that if they reach the conclusion that suspending capital classifications means that shareholders cannot argue what is and is not safe and sound, then that's bad for the shareholders.

 

Of course, as @doughishere immediately pointed out, just a few months ago, Mel Watt publicly mentioned the lack of capital in the Enterprises as making them very risky -- which would be a very strange thing to say if the suspension of the capital classifications made the Enterprises safe and sound.

 

Thanks.

 

Exactly right.  I'm sure somewhere in the written documents with the judges there is a reference to Watts recent speech which suggests that the conservator in this situation is held hostage along with the stock holders

[Luke 532]

Rolling Stone picked up the story?  http://www.rollingstone.com/politics/news/why-is-the-obama-administration-trying-to-keep-11-000-documents-sealed-20160418#ixzz46D5RemLP

 

Might be time for them to settle before this really gets out of hand before elections.

[doughishere]

Rolling Stone picked up the story?  http://www.rollingstone.com/politics/news/why-is-the-obama-administration-trying-to-keep-11-000-documents-sealed-20160418#ixzz46D5RemLP

 

MATT TAIBBI, Luke a few months ago i was a grouch on how the media circus has picked up...you said things were....Mea culpa......i was wrong things are picking up.

[Mephistopheles]

Rolling Stone picked up the story?  http://www.rollingstone.com/politics/news/why-is-the-obama-administration-trying-to-keep-11-000-documents-sealed-20160418#ixzz46D5RemLP

 

Might be time for them to settle before this really gets out of hand before elections.

 

It's surprising that Matt Taibi is on our side. I would have expected him to chastise the hedge funds trying to "profit off the taxpayers"

[doughishere]

Rolling Stone picked up the story?  http://www.rollingstone.com/politics/news/why-is-the-obama-administration-trying-to-keep-11-000-documents-sealed-20160418#ixzz46D5RemLP

 

Might be time for them to settle before this really gets out of hand before elections.

 

It's surprising that Matt Taibi is on our side. I would have expected him to chastise the hedge funds trying to "profit off the taxpayers"

 

 

Yeah....well ill take him over carney any day.

[rros]

Exactly right.  I'm sure somewhere in the written documents with the judges there is a reference to Watts recent speech which suggests that the conservator in this situation is held hostage along with the stock holders

 

Held hostage is an appropriate word. Imagine the regulator first order of business being hand-cuffing the conservator telling him not to correct the capital situation. But then, having had the capital from the activation of DTAs would have forced the then conservator (DeMarco) to suspend the suspension :)

[merkhet]

It's surprising that Matt Taibi is on our side. I would have expected him to chastise the hedge funds trying to "profit off the taxpayers"

 

If you read the article, it's easy to see why. Taibbi hates the big banks, and it's the big banks that are trying to expropriate the GSEs' business.

[doughishere]

It's surprising that Matt Taibi is on our side. I would have expected him to chastise the hedge funds trying to "profit off the taxpayers"

 

If you read the article, it's easy to see why. Taibbi hates the big banks, and it's the big banks that are trying to expropriate the GSEs' business.

 

I would say he has a strong dislike for the big banks

 

 

The Great American Bubble Machine

http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405

 

 

The Vampire Squid Strikes Again: The Mega Banks' Most Devious Scam Yet

http://www.rollingstone.com/politics/news/the-vampire-squid-strikes-again-the-mega-banks-most-devious-scam-yet-20140212

[Guest cherzeca]

 

Anyway, tl;dr, winner winner chicken dinner. At the very least, I think we get a remand for a complete administrative record. Base case, I think we win on breach of K. Bull case, I think we win on APA.

 

From what I gather, you mean base case is a win for the prefs, and bull case is win for prefs+commons?

 

 

 

It's not that cut and dry, but that's the gist of it. A breach of K claim, IMO, is easier to find in the junior preferreds than in the common. I know what my liquidation amount is on my junior preferred: par. What's the liquidation amount on the common? ¯\_(ツ)_/¯

 

@merkhet

 

the breach claim re common would be for fiduciary duty, not K.  hume went out of his way to point out where in complaint he pled breach of fiduciary duty (or in alternative be permitted to amend under liberal amendment principles in federal court) , and millett seemed to accede to that.

 

so, by the way, as fiduciary duty is an equitable doctrine rather than s statutory corporate law provision, wouldn't plaintiffs be entitled to rescission of the NWS as a remedy for breach of fiduciary duty?

[merkhet]

@merkhet

 

the breach claim re common would be for fiduciary duty, not K.  hume went out of his way to point out where in complaint he pled breach of fiduciary duty (or in alternative be permitted to amend under liberal amendment principles in federal court) , and millett seemed to accede to that.

 

so, by the way, as fiduciary duty is an equitable doctrine rather than s statutory corporate law provision, wouldn't plaintiffs be entitled to rescission of the NWS as a remedy for breach of fiduciary duty?

 

Yes, and that has the possibility to be worse? There are multiple forms of equitable relief other than recession -- but let's assume that recession is the only one. In that case, wouldn't you have to contend with the 4617(f) bar? You'd have to decide whether breaching your fiduciary duty was an allowable thing under conservatorship, and if it was, then you'd have no remedy because your remedy isn't monetary?

 

Alternatively, recession is not the only remedy under equitable doctrine, and, as a result, you'd have to consider monetary damages. Then you're in the woods because your par value is useless, and I haven't the faintest idea how to calculate those damages.

 

Breach of K for the junior preferreds is just easier and cleaner.

[eclecticvalue]

Can someone list the ticker symbols?

 

 

I am looking at the bill. If I interpret it correctly. The Bill will help Fannie and Freddie get out conservatorship and it will operate independent.

 

Edit: I read the bill again. And this would not help shareholders. So hopefully the courts can make a better decision.

[Guest cherzeca]

@merkhet

 

the breach claim re common would be for fiduciary duty, not K.  hume went out of his way to point out where in complaint he pled breach of fiduciary duty (or in alternative be permitted to amend under liberal amendment principles in federal court) , and millett seemed to accede to that.

 

so, by the way, as fiduciary duty is an equitable doctrine rather than s statutory corporate law provision, wouldn't plaintiffs be entitled to rescission of the NWS as a remedy for breach of fiduciary duty?

 

Yes, and that has the possibility to be worse? There are multiple forms of equitable relief other than recession -- but let's assume that recession is the only one. In that case, wouldn't you have to contend with the 4617(f) bar? You'd have to decide whether breaching your fiduciary duty was an allowable thing under conservatorship, and if it was, then you'd have no remedy because your remedy isn't monetary?

 

Alternatively, recession is not the only remedy under equitable doctrine, and, as a result, you'd have to consider monetary damages. Then you're in the woods because your par value is useless, and I haven't the faintest idea how to calculate those damages.

 

Breach of K for the junior preferreds is just easier and cleaner.

 

all fair points.  i have listened to the audio now, and i think i am a tad more bullish than you.  i agree base case is vacate for more fact finding/ad record, bull case is reversal, and i think the direct and derivative claims will be sustained.  i just "read" ginsburg as struggling to get to the reversal stage, and i would expect brown to follow if he does.  my fear is that he might want a unanimous ruling and to get that from millett he may walk himself back to vacate alone.  of course if millett is a lost cause and votes to affirm, then maybe that might just liberate ginsburg to go full monty.  i know i am reading alot into his questioning.  also apparent that he has a much better grasp on facts and applicable law than other two

[Luke 532]

I know that none of us know exactly what will happen, but it's good to see the bottom-line/takeaway/assessment comments from merkhet and cherzeca regarding the oral arguments. 

(emphasis added in bold is mine)

 

after having heard the arguments live, then having read and thought about this assiduously, acknowledging your bias as you do, do you now still agree with yourself after the argument that this is winner winner...

 

Yes, I still agree with my initial assessment of winner winner chicken dinner.

 

...

 

Anyway, tl;dr, winner winner chicken dinner. At the very least, I think we get a remand for a complete administrative record. Base case, I think we win on breach of K. Bull case, I think we win on APA.

 

i have listened to the audio now, and i think i am a tad more bullish than you.  i agree base case is vacate for more fact finding/ad record, bull case is reversal, and i think the direct and derivative claims will be sustained.  i just "read" ginsburg as struggling to get to the reversal stage, and i would expect brown to follow if he does.  my fear is that he might want a unanimous ruling and to get that from millett he may walk himself back to vacate alone.  of course if millett is a lost cause and votes to affirm, then maybe that might just liberate ginsburg to go full monty.  i know i am reading alot into his questioning.  also apparent that he has a much better grasp on facts and applicable law than other two

[Guest cherzeca]

@merkhet

 

i am still thinking through whether if the court vacates and remands for more fact finding, it must necessarily hold that anti-injunction bar does not apply.  as i think ginsburg and brown are strongly in favor of at least that holding, then this is an important crux.

 

what would more fact finding accomplish if the anti-injunction bar is not held to be inapplicable?  the APA relief sought is to vacate the NWS.  the production of the administrative record is an APA obligation.  would the judges (or at least a judge as smart as ginsburg) order relief such as production of the administrative record without the possibility of allowing the APA relief sought by means of the process of having further fact finding?

 

i think in millett's mind, it may be that the anti-injunction bar may only not apply if there was bad faith on the part of conservator.  hence some of her hypos re what if facts that you discover shows that there was no other way out, she asks olson would that support the NWS, to which olson says no.  but isn't the whole endeavor, to produce the record, an endeavor that necessarily means that the court has jurisdiction to see if the conservator exercised an ultra vires power (as brown says)?  the court may still end up saying the NWS stands at end of fact finding exercise, but that would be as a result of the court considering that it has jurisdiction to see if the NWS was valid. 

 

while olson wants the NWS to be invalidated as a matter of law, it seems even millett might agree that the court has jurisdiction to see if the NWS should be invalidated on the facts.  at least as lamberth sees things, to make that inquiry is to cross the bar posed by the anti-injunction provision.

 

i suppose what i am saying is that the court could hold that the anti-inj provision doesnt bar jurisdiction, more facts and admin record needs to be produced, and it may or may not enunciate what the standard is that would apply to the NWS once the facts are produced.  but to order this fact finding mission and then say that whatever the facts are, we can't order relief?

 

while this might seem to be a theoretical question, i think it is important for the other cases, and those other judges will be influenced (to a great degree) by this holding even if cases not consolidated.

 

what you think?

[Guest cherzeca]

@merkhet

 

i am still thinking through whether if the court vacates and remands for more fact finding, it must necessarily hold that anti-injunction bar does not apply.  as i think ginsburg and brown are strongly in favor of at least that holding, then this is an important crux.

 

what would more fact finding accomplish if the anti-injunction bar is not held to be inapplicable?  the APA relief sought is to vacate the NWS.  the production of the administrative record is an APA obligation.  would the judges (or at least a judge as smart as ginsburg) order relief such as production of the administrative record without the possibility of allowing the APA relief sought by means of the process of having further fact finding?

 

i think in millett's mind, it may be that the anti-injunction bar may only not apply if there was bad faith on the part of conservator.  hence some of her hypos re what if facts that you discover shows that there was no other way out, she asks olson would that support the NWS, to which olson says no.  but isn't the whole endeavor, to produce the record, an endeavor that necessarily means that the court has jurisdiction to see if the conservator exercised an ultra vires power (as brown says)?  the court may still end up saying the NWS stands at end of fact finding exercise, but that would be as a result of the court considering that it has jurisdiction to see if the NWS was valid. 

 

while olson wants the NWS to be invalidated as a matter of law, it seems even millett might agree that the court has jurisdiction to see if the NWS should be invalidated on the facts.  at least as lamberth sees things, to make that inquiry is to cross the bar posed by the anti-injunction provision.

 

i suppose what i am saying is that the court could hold that the anti-inj provision doesnt bar jurisdiction, more facts and admin record needs to be produced, and it may or may not enunciate what the standard is that would apply to the NWS once the facts are produced.  but to order this fact finding mission and then say that whatever the facts are, we can't order relief?

 

while this might seem to be a theoretical question, i think it is important for the other cases, and those other judges will be influenced (to a great degree) by this holding even if cases not consolidated.

 

what you think?

 

sorry, one more point.

 

ginsburg and olson have an exchange that i think is on point.  ginsburg points out that lamberth stated that conservator motivation doesnt apply (meaning lamberth's interpretation of anti-inj bar means that courts may not inquire as to motivation), but G goes on to say that we (meaning he and olson) have come up with two instances where motivation is relevant.  this would auger for at least more fact finding.  and if motivation is relevant, then what the anti-inj bar must mean (at the least) is not that courts cant review and enjoin, but that they can review and enjoin only for some reason.

[doughishere]

Significant Lawsuits Concerning Fannie Mae & Freddie Mac Net Worth Sweep  Updated April 18, 2016

 

http://bankrupt.com/gselitigation201604.pdf

[hardincap]

i could be reading too much into it, but it seems ginsburg tipped his hand in that exchange:

 

"if you get an opportunity to fully explore [their motivations]"...  then after establishing that motivations matter, g closes with "I dont know why we should go further than that."

 

[merkhet]

@merkhet

 

i am still thinking through whether if the court vacates and remands for more fact finding, it must necessarily hold that anti-injunction bar does not apply.  as i think ginsburg and brown are strongly in favor of at least that holding, then this is an important crux.

 

what would more fact finding accomplish if the anti-injunction bar is not held to be inapplicable?  the APA relief sought is to vacate the NWS.  the production of the administrative record is an APA obligation.  would the judges (or at least a judge as smart as ginsburg) order relief such as production of the administrative record without the possibility of allowing the APA relief sought by means of the process of having further fact finding?

 

i think in millett's mind, it may be that the anti-injunction bar may only not apply if there was bad faith on the part of conservator.  hence some of her hypos re what if facts that you discover shows that there was no other way out, she asks olson would that support the NWS, to which olson says no.  but isn't the whole endeavor, to produce the record, an endeavor that necessarily means that the court has jurisdiction to see if the conservator exercised an ultra vires power (as brown says)?  the court may still end up saying the NWS stands at end of fact finding exercise, but that would be as a result of the court considering that it has jurisdiction to see if the NWS was valid. 

 

while olson wants the NWS to be invalidated as a matter of law, it seems even millett might agree that the court has jurisdiction to see if the NWS should be invalidated on the facts.  at least as lamberth sees things, to make that inquiry is to cross the bar posed by the anti-injunction provision.

 

i suppose what i am saying is that the court could hold that the anti-inj provision doesnt bar jurisdiction, more facts and admin record needs to be produced, and it may or may not enunciate what the standard is that would apply to the NWS once the facts are produced.  but to order this fact finding mission and then say that whatever the facts are, we can't order relief?

 

while this might seem to be a theoretical question, i think it is important for the other cases, and those other judges will be influenced (to a great degree) by this holding even if cases not consolidated.

 

what you think?

 

sorry, one more point.

 

ginsburg and olson have an exchange that i think is on point.  ginsburg points out that lamberth stated that conservator motivation doesnt apply (meaning lamberth's interpretation of anti-inj bar means that courts may not inquire as to motivation), but G goes on to say that we (meaning he and olson) have come up with two instances where motivation is relevant.  this would auger for at least more fact finding.  and if motivation is relevant, then what the anti-inj bar must mean (at the least) is not that courts cant review and enjoin, but that they can review and enjoin only for some reason.

 

I think you're overcomplicating it.

 

Recall that Millett's line of questioning is geared towards the same Q as Ginsburg. Does motivation matter? If we were to have the worst case scenario, what does that mean? What if there was an innocuous reason? Those were both Millett's questions (to Stern and Olson, respectively), and they completely mirror Ginsburg's exchange at the end of Olson's opening arguments.

 

Let me phrase your question in a different way. The question is not necessarily "does the anti-injunction bar apply?" but rather "what does 4617(f) say?" And I think Ginsburg's view is necessarily that it is not a jurisdiction stripping provision because motivation is relevant. I think, too, that Millett is exploring that option but I'm unclear on where she settled. Brown's clarifying remarks that appellants view this as an ultra vires application of FHFA powers likely reveals her preference as well.

 

Anyhow, that's why I think the bear case is a remand for a full trial w/ the production of the full and complete administrative record.

 

I also agree that Ginsburg is trying hard to find a way to invalidate the NWS as a step beyond the FHFA's powers, but he might back off if Millett feels particularly strongly about it. We'll see.

 

As for the implications of viewing 4617(f) as a remedies provision versus a jurisdiction stripping provision, I think that would have very interesting ramifications for the other cases. Not the LEAST of which is that the MDL is trying to consolidate all the cases in the federal courts of D.C. Well, consider the following -- if we get a favorable ruling in terms of 4617(f) not being a jurisdictional bar, then all the plaintiffs in those cases should immediately drop their objection to consolidation!

 

So the big question now is -- does the Perry appeals decision come before or after May 26th?

[Guest cherzeca]

@merkhet

 

"Anyhow, that's why I think the bear case is a remand for a full trial w/ the production of the full and complete administrative record."

 

sorry to be complicating, but i just want to be clear in my thinking.  i agree with you that this is the bear case.  i simply believe that you cannot vacate and have a full trial if 4617f is a judicial bar, not only just jurisdictionally, but also at a substantive level.  the appeals court in vacating would be telling the district court to find out based on the facts whether the NWS is a valid conservator action, given the proper understanding of the scope of the conservator's powers....and to do this, i would assume that the appeals court would have to set forth some standard by which the district court would determine what a valid conservator action was.

 

and if i am right, this does have persuasive or, if consolidated, binding effect on the other cases.  of course, the mdl panel may very well issue their decision before the dc appeals court does...

[doughishere]

The supplemental briefings that are due out on Friday...are we going to be able to see that?

[merkhet]

@merkhet

 

"Anyhow, that's why I think the bear case is a remand for a full trial w/ the production of the full and complete administrative record."

 

sorry to be complicating, but i just want to be clear in my thinking.  i agree with you that this is the bear case.  i simply believe that you cannot vacate and have a full trial if 4617f is a judicial bar, not only just jurisdictionally, but also at a substantive level.  the appeals court in vacating would be telling the district court to find out based on the facts whether the NWS is a valid conservator action, given the proper understanding of the scope of the conservator's powers....and to do this, i would assume that the appeals court would have to set forth some standard by which the district court would determine what a valid conservator action was.

 

and if i am right, this does have persuasive or, if consolidated, binding effect on the other cases.  of course, the mdl panel may very well issue their decision before the dc appeals court does...

 

Yea, I'm agree with you that they're unlikely to view 4617(f) as a judicial bar (or, in my terms, jurisdictional stripping). And yes, it would have persuasive/binding effect on other cases.

 

The supplemental briefings that are due out on Friday...are we going to be able to see that?

 

Should be able to see them -- or at least redacted versions eventually.

 

Can someone list the ticker symbols?

 

I am looking at the bill. If I interpret it correctly. The Bill will help Fannie and Freddie get out conservatorship and it will operate independent.

 

Which symbols? FNMA & FMCC are the common. FNMAS is Series S preferreds for Fannie. There's a list way earlier on in the thread somewhere.

[merkhet]

Again, I know I sound like a broken tape at this point, but with the scathing Sweeney order to unseal the seven documents, the pending motion to compel in front of Sweeney, the pending Perry decision & the fact that they, stupidly, tried to consolidate cases through the MDL in DC without waiting to see who the judges were in DC... I can't imagine that the government isn't looking at a settlement.

[hardincap]

So the big question now is -- does the Perry appeals decision come before or after May 26th?

 

Consolidation or no consolidation, a favorable decision by perry appeals re: 4617f should be huge for those cases, no?

[Guest cherzeca]

Again, I know I sound like a broken tape at this point, but with the scathing Sweeney order to unseal the seven documents, the pending motion to compel in front of Sweeney, the pending Perry decision & the fact that they, stupidly, tried to consolidate cases through the MDL in DC without waiting to see who the judges were in DC... I can't imagine that the government isn't looking at a settlement.

 

a rational businessman would. govtal officials?

[doughishere]

Again, I know I sound like a broken tape at this point, but with the scathing Sweeney order to unseal the seven documents, the pending motion to compel in front of Sweeney, the pending Perry decision & the fact that they, stupidly, tried to consolidate cases through the MDL in DC without waiting to see who the judges were in DC... I can't imagine that the government isn't looking at a settlement.

 

a rational businessman would. govtal officials?

 

Im so vested in this now I want to actually know what the truth is.....with that kind of attiude why not just go the distance? ;)