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

[Guest cherzeca]

lets remember that while appeals court could as a matter of law vacate nws for lack of fhfa or T authority, they will not be reaching the damages question even if they reverse on question of breaches

 

was there no discussion re the other 11000 docs in sweeney's opinion?

[Guest cherzeca]

The idea is that if you hold preferreds issued in 2007 that have paid out $4, then maybe you restitution is $21 (par minus dividends) whereas if you hold preferreds issued in 2008 that have never paid out, then your restitution is $25.

 

@merk

 

i dont get this. restitution is unjust enrichment, which doesnt look to what is lost, but what is improperly obtained.

[merkhet]

The idea is that if you hold preferreds issued in 2007 that have paid out $4, then maybe you restitution is $21 (par minus dividends) whereas if you hold preferreds issued in 2008 that have never paid out, then your restitution is $25.

 

@merk

 

i dont get this. restitution is unjust enrichment, which doesnt look to what is lost, but what is improperly obtained.

 

I'm just quoting the guy from Cooper & Kirk *shrug*

[investorG]

with only 5 cases left, any strong opinions on the securities prices post-announcement under the 3 core scenarios?

 

I'll go with 80 cents, $3.25, and $7 for affirm / remand / reverse, respectively, for the common and double each price for the 25-par preferred.

 

 

 

[doughishere]

http://www.forbes.com/sites/richardepstein/2016/10/06/discovery-made-simple-in-fannie-and-freddie/#7f6cb51c3637

 

Prof. Epstein.

[Guest cherzeca]

with only 5 cases left, any strong opinions on the securities prices post-announcement under the 3 core scenarios?

 

I'll go with 80 cents, $3.25, and $7 for affirm / remand / reverse, respectively, for the common and double each price for the 25-par preferred.

 

if you look at prices before lamberth decision, you will see 4ish for common and 8ish for pref...anticipating a P win no doubt.  but if you get a remand from appeals ct, i dont know why the price action wouldnt go higher than that (at least confirmation that lamberth was wrong is more valuable than optimism pre-lamberth, no?)...and of course much higher if reversal

[Mephistopheles]

Notes from today's call:

 

The United States District Court of DC has heard 308 cases, and we've got 303 opinions. Really should be any day now.

 

 

I know you're just quoting here but 308 cases in what time frame? I've been keeping track of Mar-May hearings and we have heard back from roughly only 50% of them.

[Luke 532]

Notes from today's call:

 

The United States District Court of DC has heard 308 cases, and we've got 303 opinions. Really should be any day now.

 

I know you're just quoting here but 308 cases in what time frame? I've been keeping track of Mar-May hearings and we have heard back from roughly only 50% of them.

 

 

"The DC Circuit has an informal term that runs from September through May.  From September 2015 through May 2016 there were 308 cases, by my count, that were argued and we have 303 decisions. As you can tell the court tries to get those opinions out prior to the next term.  (reason for delay) Our best guess, and it's just a guess, is that a dissent is being written and that's why it's seeping into the next term."

[Luke 532]

Audio of the call: http://investorsunite.org/iu-audio-cleanup/

[Luke 532]

with only 5 cases left, any strong opinions on the securities prices post-announcement under the 3 core scenarios?

 

I'll go with 80 cents, $3.25, and $7 for affirm / remand / reverse, respectively, for the common and double each price for the 25-par preferred.

 

if you look at prices before lamberth decision, you will see 4ish for common and 8ish for pref...anticipating a P win no doubt.  but if you get a remand from appeals ct, i dont know why the price action wouldnt go higher than that (at least confirmation that lamberth was wrong is more valuable than optimism pre-lamberth, no?)...and of course much higher if reversal

 

https://seventeenmile.com/2015/06/23/special-situations-fannie-mae-raisins-analysis-june-2015/

 

FNMAS has traded since August 2012 (FNMA’s PPS is in parentheses):

 

    Pre-NWS (August 10, 2012): $2.30 ($.28)

    Post-NWS (October 5, 2012): $.83 ($.28)

    Pre-Fairholme (March 8, 2013): $1.87 ($.29)

    Post-Fairholme MT High (May 24, 2013): $6.14 ($2.97)

    Pre-Lamberth High (March 7, 2014): $12.31 ($5.33)

    Post-Lamberth Low (October 8, 2014): $3.35 ($1.72)

    Post-Lamberth High (May 1, 2015): $5.06 ($2.82)

    Most Recent PPS (June 22, 2015): $3.81 ($2.43)

 

[doughishere]

with only 5 cases left, any strong opinions on the securities prices post-announcement under the 3 core scenarios?

 

I'll go with 80 cents, $3.25, and $7 for affirm / remand / reverse, respectively, for the common and double each price for the 25-par preferred.

 

if you look at prices before lamberth decision, you will see 4ish for common and 8ish for pref...anticipating a P win no doubt.  but if you get a remand from appeals ct, i dont know why the price action wouldnt go higher than that (at least confirmation that lamberth was wrong is more valuable than optimism pre-lamberth, no?)...and of course much higher if reversal

 

https://seventeenmile.com/2015/06/23/special-situations-fannie-mae-raisins-analysis-june-2015/

 

FNMAS has traded since August 2012 (FNMA’s PPS is in parentheses):

 

    Pre-NWS (August 10, 2012): $2.30 ($.28)

    Post-NWS (October 5, 2012): $.83 ($.28)

    Pre-Fairholme (March 8, 2013): $1.87 ($.29)

    Post-Fairholme MT High (May 24, 2013): $6.14 ($2.97)

    Pre-Lamberth High (March 7, 2014): $12.31 ($5.33)

    Post-Lamberth Low (October 8, 2014): $3.35 ($1.72)

    Post-Lamberth High (May 1, 2015): $5.06 ($2.82)

    Most Recent PPS (June 22, 2015): $3.81 ($2.43)

 

You know I dont think ive looked at the price in over a year.... Ive had general idea of where it is/was but never actively looked it up.

[doughishere]

http://www.forbes.com/sites/richardepstein/2016/10/06/discovery-made-simple-in-fannie-and-freddie/#7f6cb51c3637

 

Prof. Epstein.

 

In the United States Court of Federal Claims, the only permissible relief is just compensation for the property taken, plus interest from the time of the taking.

 

 

This Epstein article is great.

 

 

A quick look at the above list of demanded documents makes it clear, however, that none of Fairholme’s requests asked the government to turn over anything that involves the give-and-take of various public officials in formulating the policy.  Whatever the officials said among themselves remains private.But what Fairholme did demand was to see the documents that were supplied to the government as the basis for their deliberation. It is only through access to these documents that it is possible to see whether the government in fact had any materials that supported its aggressive defense of the NWS sweep, which of course has been stated publicly many times.

 

 

The argument was not lost on Judge Sweeney, who repeatedly concluded that “Defendant Has Not Shown That the Documents Are Deliberative but, for the Purpose of Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such a Showing.”

 

Huge Respek(what movie) for Judge Sweeney .

 

On the other side, the information contained in these documents did not include reference to the statements or memos prepared by government officials at the time.  Indeed, they all pertained to events that ran their course with the adoption of the NWS over four years ago in August 2012.

 

 

The government’s case is still weaker because, as Judge Sweeney repeatedly stressed, it is an interested party in the litigation that has a lot to gain financially by keeping this information out of court.

 

 

In the end, the case is so one-sided that there is no mystery why Judge Sweeney concluded her opinion by demanding bluntly: “defendant, by no later than October 14, 2016, shall file a memorandum with the court explaining why the court should not require defendant “to pay [plaintiffs’] reasonable expenses incurred in making the motion, including attorney’s fees.”  Note that the plaintiffs had not asked for this remedy, and they were not asked to file a responsive memorandum.

 

Even though this decision is correct, there is a question, however, of whether it goes far enough.  Here are some of the disturbing features about the disposition. The plaintiff filed its complaint on July 9, 2013.  Even if we allow some time for the inevitable pretrial wrangling, it is hard to see why it takes over three years to brief issues and conduct hearings in order to deny a government motion that is laughingly weak on the facts.  In addition, it is puzzling as to, why it is necessary to conduct this discovery analysis individually for each of the 56 documents referenced in the (presumably only the first of more to come) motion to compel, when the analysis is virtually the same with respect to all these documents, and all these privileges, regardless of any subtle distinctions between them.  The balance in this case was as just clearly in favor of the plaintiffs by the end of 2013—nearly 18 months after the NWS—as it is today.

 

 

Epstein stays on the attack:

 

Finally, there is the further question of why the entire set of documents is not immediately open to the public at large, and made available to parties in and courts hearing all the other cases now ongoing, including Perry Capital v. Lew, presently on appeal to the D.C. Circuit Court.  My guess is that the information contained in these documents would influence greatly the analysis of the key underlying issues common to the cases: whether the Federal Housing Finance Agency and the Department of Treasury were in breach of their fiduciary duties in concocting the NWS.  The Obama Administration has repeatedly publicly claimed that it aspires to be the most transparent administration in history.  Now is a good time to prove it.

 

 

Anyone know if Epstein and Obama taught at UChicago together back before the President was the President? I dont think this is just about the shareholders of Freddie and Freddie.....this is a mental joust between 2 legal scholars.

 

 

Edit:I just asked a friend, who attended UChicago Laws School, about Obamas time as an adjunct. They may have taught together.

 

"His formal title was "senior lecturer," but the University of Chicago Law School says he "served as a professor" and was "regarded as" a professor." http://www.factcheck.org/2008/03/obama-a-constitutional-law-professor/

 

 

 

If I have seen further it is by standing on the shoulders of giants. - Newton

[Grenville]

Just listened to the call.

 

The thing that stood out for me was that plaintiffs have not seen any of the 56 documents sampled and may get a better idea on Monday on when they can see them. This just shows what an uphill battle this has been and will continue to be.

 

In relation to the other 11k documents or more, in the motion to compel there was a requirement that the defendants go back and reexamine their privilege and update the logs to be more accurate. This just adds to the continued delay tactics that the government has used and will continue to use to slow this thing down. If and when plaintiffs get access to those 11k documents then they have to sit down and go through them which will also take time….

 

Sweeney's ruling is a huge win along with the motion to pay legal fees, but this continues to be a huge uphill battle that continues to take valuable time.

[muscleman]

What do you guys think of this?

 

http://www.tennessean.com/story/news/politics/2016/10/07/donald-trump-names-bob-corker-security-advisory-council/91745690/

 

"Corker with Trump ,Corker has hinted that he may be interested in a cabinet post within a Trump administration, either as U.S. Secretary of State or Secretary of the Treasury."

 

 

The disgusting Corker always wanted power..........

[Luke 532]

Attached image: potential impact to the Perry Appeal?  Wouldn't the CFPB decision hint that the FHFA may also be unconstitutional?  What would that mean for our case?

 

I would love some thoughts from people on this board... especially the lawyers.  Thanks in advance!

 

 

[Steve_Berk]

Thanks Luke--will read this later but for the benefit of the board, here is the decision.

 

Attached image: potential impact to the Perry Appeal?  Wouldn't the CFPB decision hint that the FHFA may also be unconstitutional?  What would that mean for our case?

 

I would love some thoughts from people on this board... especially the lawyers.  Thanks in advance!

cfpb.pdf

[Luke 532]

Thanks Luke--will read this later but for the benefit of the board, here is the decision.

 

 

Steve, thanks for posting full decision.

 

Interesting note: Ted Olson was the lead attorney in the CFPB case and is the lead attorney in the Perry case as well.

[onyx1]

Attached image: potential impact to the Perry Appeal? 

 

From the CFPB Opinion, page 33:

 

"Third, the CFPB cited Congress’s 2008 creation of a

single head of the new Federal Housing Finance Agency. See

Housing and Economic Recovery Act of 2008, Pub. L. No.

110-289, § 1101, 122 Stat. 2654, 2662 (codified at 12 U.S.C.

§§ 4511-4512). That agency is a contemporary of the CFPB

and merely raises the same question we confront here. A

body created only in 2008 obviously does not constitute a

historical precedent for the CFPB."

[Luke 532]

Heck, even Carney thinks FHFA is unconstitutional...

"This part of today's big CFPB case creates the possibility that FHFA could survive constitutional scrutiny.  But that seems a stretch."

https://twitter.com/carney/status/785930805222764544

 

[Guest cherzeca]

Heck, even Carney thinks FHFA is unconstitutional...

"This part of today's big CFPB case creates the possibility that FHFA could survive constitutional scrutiny.  But that seems a stretch."

https://twitter.com/carney/status/785930805222764544

 

problem is, the phh dc circuit court panel gave very narrow relief in the case of the cfpb, merely excising the provision from statute that insulated coddrey from removal by potus except for cause.  ct didnt say that everything he has done is void.

 

so if someone brought a piggyback action against fhfa, i suspect there would be the same result, just making watt removable at discretion of potus

 

EDIT: fwiw, as i recall, this case was argued a few days before perry

[merkhet]

Heck, even Carney thinks FHFA is unconstitutional...

"This part of today's big CFPB case creates the possibility that FHFA could survive constitutional scrutiny.  But that seems a stretch."

https://twitter.com/carney/status/785930805222764544

 

problem is, the phh dc circuit court panel gave very narrow relief in the case of the cfpb, merely excising the provision from statute that insulated coddrey from removal by potus except for cause.  ct didnt say that everything he has done is void.

 

so if someone brought a piggyback action against fhfa, i suspect there would be the same result, just making watt removable for cause

 

Except... HERA requires that the Director be independent... ergo, HERA might be unconstitutional on this basis. Having an independent director and having a director be removable at will seems irreconcilable.

[Guest cherzeca]

Heck, even Carney thinks FHFA is unconstitutional...

"This part of today's big CFPB case creates the possibility that FHFA could survive constitutional scrutiny.  But that seems a stretch."

https://twitter.com/carney/status/785930805222764544

 

problem is, the phh dc circuit court panel gave very narrow relief in the case of the cfpb, merely excising the provision from statute that insulated coddrey from removal by potus except for cause.  ct didnt say that everything he has done is void.

 

so if someone brought a piggyback action against fhfa, i suspect there would be the same result, just making watt removable for cause

 

Except... HERA requires that the Director be independent... ergo, HERA might be unconstitutional on this basis. Having an independent director and having a director be removable at will seems irreconcilable.

 

the cfpb director was independent (couldnt have his budget lowered by congress) and removable only for cause, and ct simply severed unconst. provision relating to removal only for cause.  ct placed great reliance on the existence of a severability clause in dodd/frank statute.  showed congressional intent for cfpb to continue even if a single provision is struck down. 

 

is there a severability clause in HERA? (i couldnt find it after a quick look)

[Guest cherzeca]

i think this is a big deal, and it's a little surprising since gibson dunn briefed and olson argued both the cfpb case and perry.

 

if FHFA is structured as an independent agency with a single director who is not removable at will of POTUS, and it seems the DOJ and judge kavanaugh think it is, and if HERA has no severability clause (i havent found one, and its existence in Dodd Frank is what saved cfpb from being voided out of existence),  then i dont see how fhfa action shouldn't be voided as an unconstitutional delegation of article II exec power (after reading the phh opinion).

[investorG]

would they make a $100bn+ decision to overturn the NWS on a reporting and chain of command technicality that was easily fixed in the PHH case? the FHFA was 'barely' mentioned in a 100 page document, it's not like this was a central part of the opinion. 

[Guest cherzeca]

would they make a $100bn+ decision to overturn the NWS on a reporting and chain of command technicality that was easily fixed in the PHH case? the FHFA was 'barely' mentioned in a 100 page document, it's not like this was a central part of the opinion.

 

i get the big money point but that is a problem in the perry case as argued. 

 

the "reporting and chain of command technicality" is actually an important constitutional issue, and yes fhfa was mentioned only once....but look who raised it? it was DOJ trying to justify the delegation of power in the case with cfpb.

 

didnt work for DOJ, and it was only the severability clause in dodd frank which saved cfpb. and i still cant find a severability clause in HERA.

 

sometimes a legal issue can come from nowhere to bite you in the ass