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

[merkhet]

The government's leverage is that the burden of proof lays with the plaintiff to show that FHFA was taking directives from Treasury, that they didn't exercise any modicum of judgment before enacting the Third Amendment, etc.

 

I think that it's unlikely the government can interfere with discovery. They've tried before, and Sweeney was very unhappy with them -- threatening sanctions, etc.

[muscleman]

The government's leverage is that the burden of proof lays with the plaintiff to show that FHFA was taking directives from Treasury, that they didn't exercise any modicum of judgment before enacting the Third Amendment, etc.

 

I think that it's unlikely the government can interfere with discovery. They've tried before, and Sweeney was very unhappy with them -- threatening sanctions, etc.

 

Thank you! On page 61, you said:

Well, briefs are written to be persuasive...

 

A ruling on most of the other things will seem to go a little further than is necessary. Most judges dislike making rulings that are too far beyond necessity because it opens them up to reverse on appeal, and judges, having egos like the rest of us, dislike being told that they are wrong.

 

My sense is that a ruling, if it comes to that, will come on the fact that the government has failed to satisfy the burden of proving that it had a rational reason for its decision given that there is no evidentiary trail. So the most likely outcome, IMO, is that they will rule on the lack of meeting this burden of proof without necessarily ruling on any of the other claims.

 

So why is the burden of proof on the plantiffs side now? If there is no administrative record for the sweep decision, isn't it the FHFA's turn to prove that they made a rational decision?

In addition, how likely is it that the FHFA fake an administrative record right now, and show it to the judge?

Is it possible that the government somehow finds an excuse to fire this judge and let someone else take over? Is my mind going too crazy? :P

[merkhet]

The burden of proof is on different parties for different issues.

 

In the Sweeney case, they are trying to figure out whether the Court of Federal Claims has subject matter jurisdiction for the case, and that's a matter for plaintiffs to prove. Since all the information is in the hands of the defendants, Sweeney granted jurisdiction.

 

In the Lamberth case, if they had gotten past the various non-substantive challenges, then in the case of plaintiff's allegations of arbitrary and capricious decision-making, the defendants bear the initial burden of showing that they had a rational reason for making the decision.

 

I think it would be supremely stupid for FHFA to fake an administrative record. You have various agent/principal problems to deal with in that situation.

 

Fire the judge? You don't really fire judges... and Sweeney has been appointed to a 15 year term that ends in 2020, so there's not really much they could do.

[Mephistopheles]

The Sweeney trial, in the Court of Federal Claims, will be done by the end of next year -- if it even gets that far -- which I doubt.

 

 

This is a beginner law, perhaps naive, question; why would it end so quickly? Don't complicated cases that involve serious matters and tons of money last much longer?

 

Like for example, didn't the BP case(s) last like 3-4 years? I know the Exxon Valdez one went on for well over a decade. I cite these two because I had invested in BP when the spill happened, so they're the first that come to mind.

[merkhet]

This is not that complicated a case.

 

The AIG case was filed in 2011, and it'll be done soon. This case is no more complicated than that one, and it was filed last year.

[muscleman]

I think a settlement is a good possibility -- especially if the Iowa court determines soon that they have jurisdiction. (Basically, there is a mini-appeals process happening in the Iowa court right now.) Defendant briefs are due October 30th, and I expect a decision by the end of November.

 

Again, as a disclaimer, I've been dead wrong so far on the litigation aspect of this case...

 

Why would a settlement become more likely if the Iowa court determines that they have jurisdiction? I am confused.

[merkhet]

If the Iowa court determines that they have jurisdiction, they will have basically settled the HERA Injunction issues for the case in the Iowa court. This would then mean that the case in the Iowa court would proceed along the lines that I believed the Lamberth court would proceed (i.e. APA & securities claims) -- because they've rejected Lamberth's suggestion that HERA bars all sorts of different claims.

 

That will make the government more likely to deal.

[muscleman]

If the government keeps denial of producing documents for the discovery phase, what will happen next?

[merkhet]

They have not been denying production of documents.

 

If they started, I suspect that Sweeney will start fining lawyers and/or throwing officials in jail for contempt.

[muscleman]

If the Iowa court determines that they have jurisdiction, they will have basically settled the HERA Injunction issues for the case in the Iowa court. This would then mean that the case in the Iowa court would proceed along the lines that I believed the Lamberth court would proceed (i.e. APA & securities claims) -- because they've rejected Lamberth's suggestion that HERA bars all sorts of different claims.

 

Sorry I think I must have missed this. I didn't see anywhere in the previous posts about the Iowa court having already rejected Lamberth's suggestion that HERA bars all sorts of different claims. When did that happen? From the previous post on Oct 20th 2014, it looks like this is still being argued.

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/fnma-and-fmcc-preferreds-in-search-of-the-elusive-10-bagger/msg194079/?topicseen#msg194079

[muscleman]

They have not been denying production of documents.

 

If they started, I suspect that Sweeney will start fining lawyers and/or throwing officials in jail for contempt.

 

But they have not produced any documents either, right? What will happen next if they just delay the requests for production of documents forever? Maybe there is no document at all. If that's true, they cannot produce any documents unless they fake the documents. Will they eventually admit that there were no documents produced at that time? If they do, the defendants will surely lose the case, right?

[Mephistopheles]

They have not been denying production of documents.

 

If they started, I suspect that Sweeney will start fining lawyers and/or throwing officials in jail for contempt.

 

But they have not produced any documents either, right? What will happen next if they just delay the requests for production of documents forever? Maybe there is no document at all. If that's true, they cannot produce any documents unless they fake the documents. Will they eventually admit that there were no documents produced at that time? If they do, the defendants will surely lose the case, right?

 

The case in the Federal Claims Court is currently in the discovery phase in which documents are being handed over.

[merkhet]

If the Iowa court determines that they have jurisdiction, they will have basically settled the HERA Injunction issues for the case in the Iowa court. This would then mean that the case in the Iowa court would proceed along the lines that I believed the Lamberth court would proceed (i.e. APA & securities claims) -- because they've rejected Lamberth's suggestion that HERA bars all sorts of different claims.

 

Sorry I think I must have missed this. I didn't see anywhere in the previous posts about the Iowa court having already rejected Lamberth's suggestion that HERA bars all sorts of different claims. When did that happen? From the previous post on Oct 20th 2014, it looks like this is still being argued.

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/fnma-and-fmcc-preferreds-in-search-of-the-elusive-10-bagger/msg194079/?topicseen#msg194079

 

I think you misread what I wrote. If the Iowa court decides that it has jurisdiction, then they will have implicitly rejected the HERA bar to injunctions. They have not already rejected Lamberth's suggestion because they have yet to rule on the jurisdictional issue.

 

Plaintiffs have filed briefs on the supplemental authority of the Lamberth decision, and the defendants will be filing a response brief by October 30, 2014. I expect a decision before the end of the year and possibly by the end of November.

 

They have not been denying production of documents.

 

If they started, I suspect that Sweeney will start fining lawyers and/or throwing officials in jail for contempt.

 

But they have not produced any documents either, right? What will happen next if they just delay the requests for production of documents forever? Maybe there is no document at all. If that's true, they cannot produce any documents unless they fake the documents. Will they eventually admit that there were no documents produced at that time? If they do, the defendants will surely lose the case, right?

 

The case in the Federal Claims Court is currently in the discovery phase in which documents are being handed over.

 

Mephistopheles is right. They have already been producing documents for about three months now in the Sweeney case. Why do you think that they haven't been producing documents?

 

Faking documents is a pretty serious crime. You have to ask yourself about the principal agent problem because the upside and the downside risk are skewed. The upside risk goes to the people you're protecting. The downside risk goes to you. Usually, only the people implicated in wrong-doing would care enough to fake the documents, and, in this case, both DeMarco and Geithner have moved on -- they're not trying to keep their jobs here...

 

Also, I think faking documents is so far beyond the pale that it's not likely in this case.

[muscleman]

If the Iowa court determines that they have jurisdiction, they will have basically settled the HERA Injunction issues for the case in the Iowa court. This would then mean that the case in the Iowa court would proceed along the lines that I believed the Lamberth court would proceed (i.e. APA & securities claims) -- because they've rejected Lamberth's suggestion that HERA bars all sorts of different claims.

 

Thank you for helping me understand these matters. I am not from a law background, so it is hard for me.

How would you expect the Lamberth ruling to set any precedence on the other cases? For the Sweeney case, I guess it may not have much impact as it is a different venue. But how about this Iowa court's case?

Basically, the plantiffs in the Iowa court has to argue that Lamberth is wrong, and the judge in the Iowa court has to agree that Lamberth is wrong, in order to move forward, right? Is that why you call it a mini-appeal process?

[merkhet]

If the Iowa court determines that they have jurisdiction, they will have basically settled the HERA Injunction issues for the case in the Iowa court. This would then mean that the case in the Iowa court would proceed along the lines that I believed the Lamberth court would proceed (i.e. APA & securities claims) -- because they've rejected Lamberth's suggestion that HERA bars all sorts of different claims.

 

Thank you for helping me understand these matters. I am not from a law background, so it is hard for me.

How would you expect the Lamberth ruling to set any precedence on the other cases? For the Sweeney case, I guess it may not have much impact as it is a different venue. But how about this Iowa court's case?

Basically, the plantiffs in the Iowa court has to argue that Lamberth is wrong, and the judge in the Iowa court has to agree that Lamberth is wrong, in order to move forward, right? Is that why you call it a mini-appeal process?

 

No problem. It's a complicated investment, and I'd actually caution most people to stay away unless they have (1) an understanding of the legal case, (2) an understanding of the policy rationales or (3) complete faith in the Berkowitz, et. al. crowd involved. Otherwise, you get people who mass-dump (i.e. October 1st) when they don't understand all the moving parts.

 

The Lamberth ruling is precedence only for cases within D.C. Iowa is free to agree or disagree with it as they please, since they're not in a "direct line" of precedence with D.C. Iowa is a different venue from D.C.

 

Yes, the Iowa court has to conclude that Lamberth is wrong to proceed, essentially. That's the reason why they asked for briefs on the Lamberth ruling from both plaintiffs and defendants.

[muscleman]

If the Iowa court determines that they have jurisdiction, they will have basically settled the HERA Injunction issues for the case in the Iowa court. This would then mean that the case in the Iowa court would proceed along the lines that I believed the Lamberth court would proceed (i.e. APA & securities claims) -- because they've rejected Lamberth's suggestion that HERA bars all sorts of different claims.

 

Thank you for helping me understand these matters. I am not from a law background, so it is hard for me.

How would you expect the Lamberth ruling to set any precedence on the other cases? For the Sweeney case, I guess it may not have much impact as it is a different venue. But how about this Iowa court's case?

Basically, the plantiffs in the Iowa court has to argue that Lamberth is wrong, and the judge in the Iowa court has to agree that Lamberth is wrong, in order to move forward, right? Is that why you call it a mini-appeal process?

 

No problem. It's a complicated investment, and I'd actually caution most people to stay away unless they have (1) an understanding of the legal case, (2) an understanding of the policy rationales or (3) complete faith in the Berkowitz, et. al. crowd involved. Otherwise, you get people who mass-dump (i.e. October 1st) when they don't understand all the moving parts.

 

The Lamberth ruling is precedence only for cases within D.C. Iowa is free to agree or disagree with it as they please, since they're not in a "direct line" of precedence with D.C. Iowa is a different venue from D.C.

 

Yes, the Iowa court has to conclude that Lamberth is wrong to proceed, essentially. That's the reason why they asked for briefs on the Lamberth ruling from both plaintiffs and defendants.

 

 

Thank you! So how do the judges decide what cases can set as precedences and what cannot? Is that merely based on the location of the court (D.C. vs Iowa)?

[merkhet]

It's based on locations of the courts in various circuits, states, etc.

[CorpRaider]

Dude is trying to get a free JD on the interwebs.  ;D

[muscleman]

It's based on locations of the courts in various circuits, states, etc.

 

Thank you!

[muscleman]

Dude is trying to get a free JD on the interwebs.  ;D

 

That would not be easy for me. My first language is not even English.

[merkhet]

Update on Sweeney proceedings.

 

Defendants have entered a motion to stay proceedings pending the appeal of the Lamberth opinion. We'll see how the Sweeney court reacts to this...

2014-10-28_Defendants_Motion_to_Stay_Proceedings_Pending_Appeal.pdf

[muscleman]

Update on Sweeney proceedings.

 

Defendants have entered a motion to stay proceedings pending the appeal of the Lamberth opinion. We'll see how the Sweeney court reacts to this...

 

Normally how long does it take for Sweeney to respond? You previously mentioned to me that Lamberth's court is in D.C., so it is eligible to set as a precedence of other courts in D.C. venue, right? Does this apply to the Sweeney court? It is a federal court, not a district court though.

[merkhet]

Update on Sweeney proceedings.

 

Defendants have entered a motion to stay proceedings pending the appeal of the Lamberth opinion. We'll see how the Sweeney court reacts to this...

 

Normally how long does it take for Sweeney to respond? You previously mentioned to me that Lamberth's court is in D.C., so it is eligible to set as a precedence of other courts in D.C. venue, right? Does this apply to the Sweeney court? It is a federal court, not a district court though.

 

My guess is that she'll respond by the end of the year. (That's the outside limit, IMO -- she might even respond earlier if she's pissed the government is delaying production.)

 

Lamberth's court is in D.C. However, it is not in the same "chain" as the Court of Federal Claims (Sweeney's court) even though they are both in D.C. Therefore, Lamberth's opinion is not eligible as binding precedent in the Court of Federal Claims.

 

Both Lamberth and Sweeney's courts are federal courts.

 

As I said before, the complexities of the legal aspects and the policy aspects of this investment make it not terribly ideal for investors without a background in either.

[muscleman]

Update on Sweeney proceedings.

 

Defendants have entered a motion to stay proceedings pending the appeal of the Lamberth opinion. We'll see how the Sweeney court reacts to this...

 

Normally how long does it take for Sweeney to respond? You previously mentioned to me that Lamberth's court is in D.C., so it is eligible to set as a precedence of other courts in D.C. venue, right? Does this apply to the Sweeney court? It is a federal court, not a district court though.

 

My guess is that she'll respond by the end of the year. (That's the outside limit, IMO -- she might even respond earlier if she's pissed the government is delaying production.)

 

Lamberth's court is in D.C. However, it is not in the same "chain" as the Court of Federal Claims (Sweeney's court) even though they are both in D.C. Therefore, Lamberth's opinion is not eligible as binding precedent in the Court of Federal Claims.

 

Both Lamberth and Sweeney's courts are federal courts.

 

As I said before, the complexities of the legal aspects and the policy aspects of this investment make it not terribly ideal for investors without a background in either.

 

Thank you! This is indeed hard for me to fully understand, but I am not afraid of challenges.  :)

[onyx1]

 

Looks like information is leaking out about what we suspected all along.  Namely that the UST (and WH) are the puppeteers and the FHFA is the puppet.  I hope the leaker is in touch with Cooper & Kirk lawyers. 

 

Evidence of outside control of FHFA duties is a so damaging to the government's legal case, and potentially so embarrassing to the politicians, that I wonder if the FHFA (with encouragement from their puppeteers of course) will come to the politically-expedient conclusion that the best course of action is to release the GSEs and end the discovery process.