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

[Midas79]

The Rafter and Fairholme plaintiffs asked Judge Sweeney to add Fannie and Freddie themselves as defendants. FHFA/Treasury opposes the motion.

 

http://www.gselinks.com/Court_Filings/Fairholme/13-465-0403.pdf

 

What's the angle here? I don't see how this changes anything, but I don't have a law background so I could be missing any number of things.

[rros]

The Rafter and Fairholme plaintiffs asked Judge Sweeney to add Fannie and Freddie themselves as defendants. FHFA/Treasury opposes the motion.

 

http://www.gselinks.com/Court_Filings/Fairholme/13-465-0403.pdf

 

What's the angle here? I don't see how this changes anything, but I don't have a law background so I could be missing any number of things.

I find this hard to believe. In cship, the conservator steps into their shoes. Same reason why Berkowitz letter to the Boards many years ago was completely ignored.

[locutusoftexas]

The Rafter and Fairholme plaintiffs asked Judge Sweeney to add Fannie and Freddie themselves as defendants. FHFA/Treasury opposes the motion.

 

http://www.gselinks.com/Court_Filings/Fairholme/13-465-0403.pdf

 

What's the angle here? I don't see how this changes anything, but I don't have a law background so I could be missing any number of things.

I find this hard to believe. In cship, the conservator steps into their shoes. Same reason why Berkowitz letter to the Boards many years ago was completely ignored.

 

Obviously, I know nothing about law per se, but that apparently is not enough to keep me quiet. I believe that this is less about the law and more about strategy. By bringing all of the major players in as defendants -- even the companies -- the plaintiffs force Treasury, FHFA, and the companies to explain to the court their roles and activities in housing finance under HERA, as well as the roles of the private shareholders. More importantly, the judge must understand (and thereby must confront any issues regarding) who is actually in charge of the companies, who is actually receiving the money at issue, what the conservator is doing and should be doing, what the companies are doing, what power the private shareholders should have and actually do have, how long this can legally continue (forever), and how much the private shares are worth ($0 under the status quo, i.e., "in perpetuity").

 

One thing that is evident in the various decisions so far is that the courts/justices/judges have maintained a very narrow view of the cases and their jurisdiction, thereby avoiding any decisions regarding the rights of shareholders and duties of conservators, i.e. how the law has been implemented. At least when self-evident, the judicial system is there to decide what is right and to judge accordingly. This is one of those situations, and the various judges have hidden their heads in the sand rather than earning their salaries. With all of the players in front of her, Judge Sweeney will not be able to avoid this, as she will be forced to understand precisely what is going on. Also this will be on the official, publicly available court record and will be accessible and interpretable by news services. Business news services might be able and willing to discuss (publicize) the truth, vis a vis private shareholders.

[muscleman]

Does anyone know what happens if a case is dragging on for too long and the judge's 15 year term ends? Sweeney's appointed in 2005 so that means she will finish the term in 2020. Will she be appointed again or will maybe someone else will take her place?

Why is the Federal court of claims case dragging for so much longer than other cases?

[Luke 532]

Courtesy of Peter A. Chapman...

Fairholme filed a redacted copy of its amended complaint in the U.S. Court of Federal Claims this evening, and a copy of the redacted 92-page complaint is attached to this e-mail message. 

13-465-0404.pdf

[allnatural]

@muscleman

 

The Sweeney case has dragged out because discovery took 4 years to complete. This was bc the  defendants fought tooth and nail to keep ~11,000 documents private by claiming boogus privelage claims. Now that discovery wrapped up a few months back with plaintiffs in possession of all the evidence needed, the case is back on schedule where the final filing is due in Dec. and a ruling expected sometime in 2019.

[Guest cherzeca]

my best guess is that FnF are sought to be added for the derivative claims asserted by mr. barrett.  if not done, then the case is simply by certain named Ps (most prominent fairholme) and other nonP shareholders are not able to benefit

[rros]

my best guess is that FnF are sought to be added for the derivative claims asserted by mr. barrett.  if not done, then the case is simply by certain named Ps (most prominent fairholme) and other nonP shareholders are not able to benefit

Chris, do you think the conservator swipes everybody's rights, inlcuding Board and management? Then, at the conservator discretion, some tasks can be chosen to be delegated. Like day to day operations and some functioning of the board. This means FF really do not really exist, only FHFA in their place, as long as there is a conservatorship. Am I reading the law the wrong way? Also, doesn't a derivative suit happen only when the principal actor is unable to suit? Meaning, FF can't sue so shareholders seek a derivative suit but if FF are included, this denies "derivative". I haven't read the filing so I am speaking out my behind :)

Oh, and like Locus.. I can't keep quiet.

[Guest cherzeca]

my best guess is that FnF are sought to be added for the derivative claims asserted by mr. barrett.  if not done, then the case is simply by certain named Ps (most prominent fairholme) and other nonP shareholders are not able to benefit

Chris, do you think the conservator swipes everybody's rights, inlcuding Board and management? Then, at the conservator discretion, some tasks can be chosen to be delegated. Like day to day operations and some functioning of the board. This means FF really do not really exist, only FHFA in their place, as long as there is a conservatorship. Am I reading the law the wrong way? Also, doesn't a derivative suit happen only when the principal actor is unable to suit? Meaning, FF can't sue so shareholders seek a derivative suit but if FF are included, this denies "derivative". I haven't read the filing so I am speaking out my behind :)

Oh, and like Locus.. I can't keep quiet.

 

as to derivative actions, all shareholder suits against fhfa should have a derivative component, because even though HERA says fhfa steps into shareholder shoes, fhfa cant be expected to sue fhfa...though 2 frigging judges on dc circuit court held otherwise.  since fairholme in ct claims is not class action, amending complaint to add a derivative component makes sense

[muscleman]

@muscleman

 

The Sweeney case has dragged out because discovery took 4 years to complete. This was bc the  defendants fought tooth and nail to keep ~11,000 documents private by claiming boogus privelage claims. Now that discovery wrapped up a few months back with plaintiffs in possession of all the evidence needed, the case is back on schedule where the final filing is due in Dec. and a ruling expected sometime in 2019.

 

 

thank you! In theory if there is some dark force dragging this case beyond 2020 when Sweeney’s term ends, what will happen? Do judges all try and get their cases wrapped before their term ends?

 

[allnatural]

The derivatives actions in these suits always baffles me. Yes shareholders are suing on behalf of the GSEs, if they won't, who else will? That's because the FHFA is in bed with the UST, and the GSEs are controlled by the FHFA, which is an inherent conflict of interest.  In what world would the FHFA ever be expected to sue itself (on behalf of the GSEs) for an agreement it entered into on its own free will (or forced into) with the UST? There is legal precedent that plaintiffs cite that when a conflict of interest such as this presents itself, shareholders should be able to sue on behalf of the harmed entity (GSEs).

 

@muscleman

 

I'm not sure what happens in that scenario. Let's hope we don't have to find out. If this isn't resolved by 2019 then Mnuchin really dropped the ball on an issue he has repeatedly claimed he will address time and time again.

[Luke 532]

Courtesy of Peter A. Chapman...

The Saxton case was argued before the Eighth Circuit this morning, and an audio recording of the 40-minute hearing is available at http://media-oa.ca8.uscourts.gov/OAaudio/2018/5/171727.MP3 at no charge. 

[rros]

Courtesy of Peter A. Chapman...

The Saxton case was argued before the Eighth Circuit this morning, and an audio recording of the 40-minute hearing is available at http://media-oa.ca8.uscourts.gov/OAaudio/2018/5/171727.MP3 at no charge.

Thank you!

[HalfMeasure]

Courtesy of Peter A. Chapman...

The Saxton case was argued before the Eighth Circuit this morning, and an audio recording of the 40-minute hearing is available at http://media-oa.ca8.uscourts.gov/OAaudio/2018/5/171727.MP3 at no charge.

Thank you!

 

Thanks. Anyone have any thoughts on how the arguments went? Listening now.

[Luke 532]

Courtesy of Peter A. Chapman...

The Saxton case was argued before the Eighth Circuit this morning, and an audio recording of the 40-minute hearing is available at http://media-oa.ca8.uscourts.gov/OAaudio/2018/5/171727.MP3 at no charge.

 

Sounds like Treasury argued there are paths to shareholder recovery.  Questioning about limits to FHFA's power is also encouraging.  I'm not the only one that heard that, as Peter A. Chapman suggested the same (he listened to it before I did, and I thought it was noteworthy as well).

 

I was planning on adding to my GSE positions this week anyway, and I didn't hear anything in the oral arguments that would change my mind.

[DRValue]

Courtesy of Peter A. Chapman...

The Saxton case was argued before the Eighth Circuit this morning, and an audio recording of the 40-minute hearing is available at http://media-oa.ca8.uscourts.gov/OAaudio/2018/5/171727.MP3 at no charge.

 

Sounds like Treasury argued there are paths to shareholder recovery.  Questioning about limits to FHFA's power is also encouraging.  I'm not the only one that heard that, as Peter A. Chapman suggested the same (he listened to it before I did, and I thought it was noteworthy as well).

 

I was planning on adding to my GSE positions this week anyway, and I didn't hear anything in the oral arguments that would change my mind.

 

I noticed this too. I was very pleased to hear it and personally thought it was a massive mistake on her part, almost to the point that she was arguing against herself. Although previous defence lawyers had a somewhat plausible (sounding) argument, this would worry me enormously if she was defending me!

[Midas79]

Courtesy of Peter A. Chapman...

The Saxton case was argued before the Eighth Circuit this morning, and an audio recording of the 40-minute hearing is available at http://media-oa.ca8.uscourts.gov/OAaudio/2018/5/171727.MP3 at no charge.

 

Thanks for posting this. For some reason it kept crashing my browser and I got tired of having to find my place, so I went here

http://media.ca8.uscourts.gov/cgi-bin/oaByPa.pl?last_name=saxton&first_name=thomas&getOA=Search

and downloaded the file.

 

At the beginning Cooper said that he was making the same arguments in front of a different court, hoping for a different result. Where do appeals panels fall in the spectrum of hearing the case anew, even to the point of disagreeing with established decisions, to following precedent from the other courts?

[Guest cherzeca]

Courtesy of Peter A. Chapman...

The Saxton case was argued before the Eighth Circuit this morning, and an audio recording of the 40-minute hearing is available at http://media-oa.ca8.uscourts.gov/OAaudio/2018/5/171727.MP3 at no charge.

 

Sounds like Treasury argued there are paths to shareholder recovery.  Questioning about limits to FHFA's power is also encouraging.  I'm not the only one that heard that, as Peter A. Chapman suggested the same (he listened to it before I did, and I thought it was noteworthy as well).

 

I was planning on adding to my GSE positions this week anyway, and I didn't hear anything in the oral arguments that would change my mind.

 

treasury counsel said that very much out of school, and then she refused to identify any limits to fhfa's authority as conservator when asked by judge whether a criminal act would be, saying she did not want to go out on a limb, in effect, realizing no doubt her prior faux pas.

 

my question re treasury counsel's argument is to what degree will judges discount her advocacy based upon her floundering.

[DocSnowball]

My computer screen and headphones shed tears listening to the argument and reading the draft of the arguments.

 

Judge comments that the Third amendment effectively nationalized the companies. He also questions "So what value is left for shareholders after the Third amendment?". Defense argues that the companies were already worthless at the time of the third amendment...Judge comments "its worth nothing then, and its worth nothing now - zero then, zero now...zero in the future"..."they are investors and they are crazy enough to keep doing that..."

 

Judge "Could you give me a scenario where there could be value (for the shareholders) under the third amendment?"...@31 minutes...listen to the response for what it's worth

[Guest cherzeca]

Courtesy of Peter A. Chapman...

The Saxton case was argued before the Eighth Circuit this morning, and an audio recording of the 40-minute hearing is available at http://media-oa.ca8.uscourts.gov/OAaudio/2018/5/171727.MP3 at no charge.

 

Thanks for posting this. For some reason it kept crashing my browser and I got tired of having to find my place, so I went here

http://media.ca8.uscourts.gov/cgi-bin/oaByPa.pl?last_name=saxton&first_name=thomas&getOA=Search

and downloaded the file.

 

At the beginning Cooper said that he was making the same arguments in front of a different court, hoping for a different result. Where do appeals panels fall in the spectrum of hearing the case anew, even to the point of disagreeing with established decisions, to following precedent from the other courts?

 

the answer to your question is to listen to first part of fhfa's cayne argument, citing the three circuit court cases he has won, and then male judge cutting him off and saying yes but now mr cayne you must confront our 8th cic case in CedarMinn

[DRValue]

My computer screen and headphones shed tears listening to the argument and reading the draft of the arguments.

 

Judge comments that the Third amendment effectively nationalized the companies. He also questions "So what value is left for shareholders after the Third amendment?". Defense argues that the companies were already worthless at the time of the third amendment...Judge comments "its worth nothing then, and its worth nothing now - zero then, zero now...zero in the future"..."they are investors and they are crazy enough to keep doing that..."

 

Judge "Could you give me a scenario where there could be value (for the shareholders) under the third amendment?"...@31 minutes...listen to the response for what it's worth

 

The defence really infuriates me at times and the judges even more so. Normally goes something like this:

 

"Whats left for shareholders?"

"your honor, you have to remember the tax payers put up x billion dollars"

 

And?? How does that impact whats left for shareholders?

[Sunrider]

My computer screen and headphones shed tears listening to the argument and reading the draft of the arguments.

 

Judge comments that the Third amendment effectively nationalized the companies. He also questions "So what value is left for shareholders after the Third amendment?". Defense argues that the companies were already worthless at the time of the third amendment...Judge comments "its worth nothing then, and its worth nothing now - zero then, zero now...zero in the future"..."they are investors and they are crazy enough to keep doing that..."

 

Judge "Could you give me a scenario where there could be value (for the shareholders) under the third amendment?"...@31 minutes...listen to the response for what it's worth

 

The defence really infuriates me at times and the judges even more so. Normally goes something like this:

 

"Whats left for shareholders?"

"your honor, you have to remember the tax payers put up x billion dollars"

 

And?? How does that impact whats left for shareholders?

 

What do you mean? That’s standard practice in Donald times - his classic response to something he doesn’t like ... “yeah but what about Hilary/bad person x doing x?”(even if completely unrelated :)

[rros]

Treasury's argument that a recovery for shareholders is possible (unknown and un-timed) is a straight arrow to the heart of the nationalization argument by plaintiff, so it is worrisome. Not to mention an acceptable delay strategy, as a recovery might be possible... within the next 1000 years.

[Guest cherzeca]

Treasury's argument that a recovery for shareholders is possible (unknown and un-timed) is a straight arrow to the heart of the nationalization argument by plaintiff, so it is worrisome. Not to mention an acceptable delay strategy, as a recovery might be possible... within the next 1000 years.

 

except i didnt see the judge concerned with nationalization buying it

[HalfMeasure]

Treasury's argument that a recovery for shareholders is possible (unknown and un-timed) is a straight arrow to the heart of the nationalization argument by plaintiff, so it is worrisome. Not to mention an acceptable delay strategy, as a recovery might be possible... within the next 1000 years.

 

except i didnt see the judge concerned with nationalization buying it

 

And wouldn't that argument be analogous to something like: "I didn't steal your property, I just took it but I could return it under some nebulous circumstances thus absolving me of theft".