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

[Steve_Berk]

you have an impressive level of knowledge of the DC circuit. did you clerk there? Or just have done a lot of research. have really enjoyed your posts lately about past decisions and info of the judges

 

i have heard of appellate judges who let opinions sit for years... I don't really know the personalities of these three. Ginsburg seems like he would want to turn it around in a reasonable amount of time--just a hunch.

 

we should take bets on when the opinion comes out. I'll go with late September

 

I'll take September, too... circa 2025.  ;)

 

fwiw, the amtrak case took a little over five months:  https://www.cadc.uscourts.gov/internet/opinions.nsf/7DB0A5319D2F70D385257FA4004FAB2B/$file/12-5204-1611061.pdf

 

i choose that as an example because brown wrote opinion, and it was an "important" case, invalidating a statute

 

of course, it also spanned the year end holiday season

[Guest cherzeca]

you have an impressive level of knowledge of the DC circuit. did you clerk there? Or just have done a lot of research. have really enjoyed your posts lately about past decisions and info of the judges

 

i have heard of appellate judges who let opinions sit for years... I don't really know the personalities of these three. Ginsburg seems like he would want to turn it around in a reasonable amount of time--just a hunch.

 

we should take bets on when the opinion comes out. I'll go with late September

 

I'll take September, too... circa 2025.  ;)

 

fwiw, the amtrak case took a little over five months:  https://www.cadc.uscourts.gov/internet/opinions.nsf/7DB0A5319D2F70D385257FA4004FAB2B/$file/12-5204-1611061.pdf

 

i choose that as an example because brown wrote opinion, and it was an "important" case, invalidating a statute

 

of course, it also spanned the year end holiday season

 

just alot of time on my hands....

 

see http://investorsunite.org/wp-content/uploads/2016/05/The-Government%E2%80%99s-Seizure-of-Private-Property-Behind-a-Veil-of-Secrecy-1.pdf for va. law prof on sweeney's big decision

[Guest cherzeca]

wonder if the good va. law prof was paid by all of that hedge fund lobbying money...

[TonyG]

question for the lawyers,

if the mdl panel chooses not to consolidate hindes/jacobs, how fast does that come to a decision being that, i believe, they are fully briefed?

[hardincap]

wonder if the good va. law prof was paid by all of that hedge fund lobbying money...

 

i find it hard to believe he and others (helfman, yoo, etc) would volunteer their time to write articles and do investor conference calls without something in it for them. stern had one thing right - everyone wants money for themselves

[merkhet]

question for the lawyers,

if the mdl panel chooses not to consolidate hindes/jacobs, how fast does that come to a decision being that, i believe, they are fully briefed?

 

Timing is very tricky, but I think the Delaware case could be resolved a few months after the MDL consolidation decision.

[Guest cherzeca]

question for the lawyers,

if the mdl panel chooses not to consolidate hindes/jacobs, how fast does that come to a decision being that, i believe, they are fully briefed?

 

Timing is very tricky, but I think the Delaware case could be resolved a few months after the MDL consolidation decision.

 

agreed. there is a double dip timing issue: first, fed judge has to decide to refer del corp law question to del supreme ct; then the del sup ct has to decide if it gets referred. while the issue is fully briefed, del s ct may want additional briefing (so actually triple dip).  but i would agree with merkhet that, assuming the fed judge hasnt been sitting around with his thumb up it, he should be ready to move quickly

[Luke 532]

Judge orders ethics classes for 'deceptive' DOJ attorneys

http://www.washingtonexaminer.com/judge-orders-ethics-classes-for-deceptive-justice-dept.-attorneys/article/2591815

[TonyG]

Did sweeney unseal more docs?

 

?http://www.nytimes.com/2016/05/22/business/how-freddie-and-fannie-are-held-captive.html?ref=business

[Luke 532]

Gretchen Morgenson's latest...

 

How Freddie and Fannie Are Held Captive

http://www.nytimes.com/2016/05/22/business/how-freddie-and-fannie-are-held-captive.html?_r=0

[doughishere]

Gretchen Morgenson's latest...

 

How Freddie and Fannie Are Held Captive

http://www.nytimes.com/2016/05/22/business/how-freddie-and-fannie-are-held-captive.html?_r=0

 

 

 

Made damn sure that Pilate Washed his hands and sealed his fate.....theres more to come. Have a good friday every one.....i dont need to know whats in there.

[Steve_Berk]

What?! When did we see this email?

 

quoting from NYT article:

Preventing the companies from using their profits to rebuild a strong capital position was an explicit goal of the Obama administration, the newly unsealed materials show. In an email sent the day the profit sweep was announced, Mr. Parrott [economic adviser to Obama] said diverting Fannie’s and Freddie’s profits would eliminate “the possibility that they ever go (pretend) private again.”

 

Sending a message to Fannie’s and Freddie’s shareholders that they should have no hope of profiting from the companies’ recovery was top of mind to Mr. Parrott, the documents show. In another email sent the day the sweep was disclosed, he assured Treasury officials that “all the investors will get this very quickly.”

 

Gretchen Morgenson's latest...

 

How Freddie and Fannie Are Held Captive

http://www.nytimes.com/2016/05/22/business/how-freddie-and-fannie-are-held-captive.html?_r=0

[Guest cherzeca]

http://www.nytimes.com/interactive/2016/05/22/business/document-Fannie-Mae-and-Freddie-Mac-Unsealed.html?version=meter+at+11&contentId=&mediaId=&referrer=http%3A%2F%2Fwww.cornerofberkshireandfairfax.ca%2Fforum%2Fgeneral-discussion%2Ffnma-and-fmcc-preferreds-in-search-of-the-elusive-10-bagger%2F3460%2F&priority=true&action=click&contentCollection=Business%20Day&module=RelatedCoverage&region=EndOfArticle&pgtype=article

 

one month before NWS, GSE official referred to next 8 years as the golden years of GSE profits in memo distributed to fhfa demarco ugoletti etc

[Steve_Berk]

So much for Grant Thornton:

 

from NYT:

 

But the documents released on Wednesday indicate that financial projections for Fannie and Freddie the judge received were significantly out of date. These projections, showing large losses in the near term were produced to the court by the Treasury in a document dated June 2012, but they actually contained figures from September 2011, when the companies’ operations had not yet begun to turn around.

 

Those projections, produced by Grant Thornton for the Treasury to use in valuing its investment in Fannie and Freddie, did not account for improvements in the housing market that took place in late 2011 and early 2012. As the unsealed materials show, Treasury officials knew in the summer of 2012 that Fannie and Freddie had turned the corner and appeared to be well on their way to a strong recovery.

[TonyG]

With these new emails, and with common and preferred barely reacting, curious if anyones adding or is everyone already maxed out?

[Steve_Berk]

I don't know, but in my opinion, these emails are big. Yes, I know that they may be viewed as cumulative to other things we've seen before, but I haven't seen anything that so clearly establishes: 1) the Treasury's obvious involvement and influence, 2) the clear intent to shut down the GSE's and never let them recapitalize, 3) an explanation for why Grant Thornton (and maybe even the 10Q's) doesn't adequately defeat the argument that the Treasury knew the GSE's would become profitable. Biggest points scored on 1&2. Before I thought there was no way we'd get reversal on the APA claim--now, I think there's hope.

 

With these new emails, and with common and preferred barely reacting, curious if anyones adding or is everyone already maxed out?

[merkhet]

What intrigues me now is what Ginsburg said about the 10-Q. Before the 3rd Amendment, the GSEs had published quarterlies saying that things were doom and gloom ahead -- but this memo shows that's not what they thought at all... so... securities fraud? Things are getting serious very quickly.

[Guest cherzeca]

so, i am confused.

 

P robinson put a motion in with sweeney to unseal more docs. then 5/19 she withdraws motion as per docket. then NYT comes out with these docs which i guess sweeney just unsealed, but i see no order by her doing so.

 

@tonyG  i agree with steve_B that these new docs are important, and this is just more smoke to add to the there must be fire meme.  i think the market will digest and shares will go higher.  do you think this adds to likelihood that sweeney grants (at least in part) motion to compel?  if so...

 

EDIT:  fnma just moved up 9%

[hardincap]

agree @steve_berk, if we continue to see things like this at some pt it'll be in the govts best interest to settle

[Steve_Berk]

The 10-Q really confuses me now. If it's securities fraud, then how would that play out for the lawsuits? It's mind bending to think about.

 

What intrigues me now is what Ginsburg said about the 10-Q. Before the 3rd Amendment, the GSEs had published quarterlies saying that things were doom and gloom ahead -- but this memo shows that's not what they thought at all... so... securities fraud? Things are getting serious very quickly.

[colinwalt]

Here's a link to a pdf of the latest unsealed docs:

 

https://assets.documentcloud.org/documents/2839971/Fannie-Mae-and-Freddie-Mac-Unsealed.pdf

[Steve_Berk]

Are you guys reading the docs?  I kind of can't believe what I'm reading. Take a look at the email exchange between Chris Russell and Jim Parrott. Russell works in communications for the White House and Parrott is an economic adviser to Obama.

 

After the NWS, Parrott sends Russell (p23 of the pdf) a statement from a Congressman who says that the NWS is an example of the Obama administration kicking the can down the road and that the reduction of the dividend means that taxpayers will be on the hook for the foreseeable future.

 

P says to R, "this caught me by surprise. we're not reducing their dividend but including in it every dime these guys make going forward and ensuring that they can't recapitalize." WHAT?!!! That ain't preserve and conserve much less bringing the GSE to a sound and solvent state. So to me that means that the FHFA and the Treasury HAVE to win the argument that the statue allows the conservator to act as a receiver. I previously thought that they could prove that their actions achieved some kind of middle ground--like pressing pause and conserving in a different way. But you can't ignore this exchange.

 

But wait, there's more.... R says to P "It MIGHT be net positive WHEN they r turning a profit. But based on the discussions I had this morning with other experts in the field, the consensus is that this essentially removes any pressure points to do something eventually with them and puts it well after 16. As u well know, politicians sometimes don't act unless they are forced to."

 

In a later email R says to P, "Preference is not to have two defacto public utilities with a $274 bill capital cushion. Where is the impetus now to deal with the issue? The dividends were initially set like that for a reason. In regards to them keeping additional profits, in my mind that is only an accounting issue, gov recoups now (per new method) or later when we liquidate them and then realize those gains for the taxpayer.'

 

OK, so obviously the purpose of the NWS is to set up the liquidation of the GSE's--they distinctly recognize the possibility that they will turn a profit, but the overall purpose is to wind down, so they can either take the money now and realize $ for taxpayers or liquidate later and realize gains for taxpayer. This sounds completely and utterly contrary to the whole death spiral explanation. I wonder if they can try to submit supplemental briefing in Perry in light of these documents. In any case, surely the judges in Perry are taking a close look here.

 

 

Here's a link to a pdf of the latest unsealed docs:

 

https://assets.documentcloud.org/documents/2839971/Fannie-Mae-and-Freddie-Mac-Unsealed.pdf

[Eye4Valu]

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

[Guest cherzeca]

,Not sure if these docs were part of judicial notice filing in perry.

[doughishere]

agree @steve_berk, if we continue to see things like this at some pt it'll be in the govts best interest to settle

 

Put them in the grave.