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

[Guest cherzeca]

Re Bhatti

 

Is there anything to Cayce's argument in the letter sent to the clerk regarding deficient pleadings?  I briefly looked at the amended complaint filed.  I didn't see anything about the appointment's clause.  I am not sure if the constitutional argument plead is sufficiently broad.

 

count III of bhatti amended complaint contains the appointments clause claim.  starts on p.34

paragraphs 89-96

 

EDIT:  just looked at bhatti docket report, there is no fhfa response to bhatti's notice of supplemental authority.  I think fhfa filed a response on collins

[beaufort]

Thanks for the close reading.

 

rros:  see above.

[FreeOption]

Apologies if this has been covered, but is there a timeline for a decision in the Bhatti case? Or at least a range? Thanks.

[Guest cherzeca]

Re Bhatti

 

Is there anything to Cayce's argument in the letter sent to the clerk regarding deficient pleadings?  I briefly looked at the amended complaint filed.  I didn't see anything about the appointment's clause.  I am not sure if the constitutional argument plead is sufficiently broad.

 

fhfa's counsel cayne wrote letter to collins 5th cir to say that Cooper and kirk's reference to lucia is misplaced because collins only argued unconstitutionalyl structured claim, not appointments clause claim (which they probably didn't think of).  Cooper and kirk's point is that the remedy for appointments clause violation should be same as unconstitutionally structured claim

[rros]

Thanks for the close reading.

 

rros:  see above.

Yes, thank you. I removed my post.

[cameronfen]

I'm not invested in Fannie and Freddie for a variety of reasons, so I don't know the intracacies, but they would have gone bankrupt if the government didn't bail them out.  In what world *should* (not saying what will happen as the government can do stupid things to attract political support) government make whole people who purchased pre-bankruptcy equity.  If the government was any other market participant the preferred and the common would already be worth nothing. 

[allnatural]

There are indeed MANY intracacies to this story. Disregarging the fact that the GSEs infact did NOT need capital during the financial crisis if it wasnt for a few accounting tricks, the government did not take 100% stake in these entities as some might have you believe. They simpled infused them with capital in exchange for senior preferred shares with generous terms + recieved 80% of the equity. Private shareholders continued to exist. This also turned out to be one of the most successful investment in US history, invested $187.5b, earned $300b to date with another $100b to come if the government were to monetize its equity. Taxpayers are very fortunate for this deal.

 

Shareholders are not disputing the original agreement, they are disputing when the government changed the terms of the agreement as the GSEs were about to hit a period a probability. They changed the fixed dividend term to instead capture all profits indefinitely, leaving nothing for private shareholders, contrary to the original statements that private shareholders will retain value. If this transaction were done between two private parties to side step shareholders, those private parties would be behind bars today. Combined with the fact that there is close to no alternative to what the GSEs provide the housing market today. Hopefully rule of law and common sense prevails.

 

This should have played out no different than how AIG did with the government exiting their stake.

 

I'm not invested in Fannie and Freddie for a variety of reasons, so I don't know the intracacies, but they would have gone bankrupt if the government didn't bail them out.  In what world *should* (not saying what will happen as the government can do stupid things to attract political support) government make whole people who purchased pre-bankruptcy equity.  If the government was any other market participant the preferred and the common would already be worth nothing.

[cameronfen]

There are indeed MANY intracacies to this story. Disregarging the fact that the GSEs infact did NOT need capital during the financial crisis if it wasnt for a few accounting tricks, the government did not take 100% stake in these entities as some might have you believe. They simpled infused them with capital in exchange for senior preferred shares with generous terms + recieved 80% of the equity. Private shareholders continued to exist. This also turned out to be one of the most successful investment in US history, invested $187.5b, earned $300b to date with another $100b to come if the government were to monetize its equity. Taxpayers are very fortunate for this deal.

 

Shareholders are not disputing the original agreement, they are disputing when the government changed the terms of the agreement as the GSEs were about to hit a period a probability. They changed the fixed dividend term to instead capture all profits indefinitely, leaving nothing for private shareholders, contrary to the original statements that private shareholders will retain value. If this transaction were done between two private parties to side step shareholders, those private parties would be behind bars today. Combined with the fact that there is close to no alternative to what the GSEs provide the housing market today. Hopefully rule of law and common sense prevails.

 

This should have played out no different than how AIG did with the government exiting their stake.

 

I'm not invested in Fannie and Freddie for a variety of reasons, so I don't know the intracacies, but they would have gone bankrupt if the government didn't bail them out.  In what world *should* (not saying what will happen as the government can do stupid things to attract political support) government make whole people who purchased pre-bankruptcy equity.  If the government was any other market participant the preferred and the common would already be worth nothing.

 

I don't buy it.  Both companies went into conservatership and the government spent 238 billion dollars backstopping both businesses.  This doesn't include the more than 100 billion dollars that were spent buying debt and their mortgages.  At the peak their combimed market cap came out to somewhere around 170 to 200 billion dollars and combined they were no where near that value during the recession.  At the time, the New York Times said this bailout "could turn out to be the biggest and costiest bailout of private companies ever."  Sure the government made out like bandits after the fact but thats like punishing WEB for quadrupling his money bailing out BAC. 

 

The reason the government didn't take a 100% share is not because they couldn't people would have sold their shares for pennies on the dollar, but because it reeks of socialism when government nationalizes a business and thats not politically feasible.  Thus I think it was well understood that the government owned the thing.  Maybe they shouldn't have rewritten the contract, I dont know about the thesis on the thing, but I think everyone was aware that this was basically a nationalization in everything but name. 

[rros]

There are indeed MANY intracacies to this story. Disregarging the fact that the GSEs infact did NOT need capital during the financial crisis if it wasnt for a few accounting tricks, the government did not take 100% stake in these entities as some might have you believe. They simpled infused them with capital in exchange for senior preferred shares with generous terms + recieved 80% of the equity. Private shareholders continued to exist. This also turned out to be one of the most successful investment in US history, invested $187.5b, earned $300b to date with another $100b to come if the government were to monetize its equity. Taxpayers are very fortunate for this deal.

 

Shareholders are not disputing the original agreement, they are disputing when the government changed the terms of the agreement as the GSEs were about to hit a period a probability. They changed the fixed dividend term to instead capture all profits indefinitely, leaving nothing for private shareholders, contrary to the original statements that private shareholders will retain value. If this transaction were done between two private parties to side step shareholders, those private parties would be behind bars today. Combined with the fact that there is close to no alternative to what the GSEs provide the housing market today. Hopefully rule of law and common sense prevails.

 

This should have played out no different than how AIG did with the government exiting their stake.

 

I'm not invested in Fannie and Freddie for a variety of reasons, so I don't know the intracacies, but they would have gone bankrupt if the government didn't bail them out.  In what world *should* (not saying what will happen as the government can do stupid things to attract political support) government make whole people who purchased pre-bankruptcy equity.  If the government was any other market participant the preferred and the common would already be worth nothing.

 

I don't buy it.  Both companies went into conservatership and the government spent 238 billion dollars backstopping both businesses.  This doesn't include the more than 100 billion dollars that were spent buying debt and their mortgages.  At the peak their combimed market cap came out to somewhere around 170 to 200 billion dollars and combined they were no where near that value during the recession.  At the time, the New York Times said this bailout "could turn out to be the biggest and costiest bailout of private companies ever."  Sure the government made out like bandits after the fact but thats like punishing WEB for quadrupling his money bailing out BAC. 

 

The reason the government didn't take a 100% share is not because they couldn't people would have sold their shares for pennies on the dollar, but because it reeks of socialism when government nationalizes a business and thats not politically feasible.  Thus I think it was well understood that the government owned the thing.  Maybe they shouldn't have rewritten the contract, I dont know about the thesis on the thing, but I think everyone was aware that this was basically a nationalization in everything but name.

Your opinion or Allnatural's about the merit of the bailout -whether justified or not- are really irrelevant including anyone's opinion on whether shareholders should have been part of the recovery or not, never deserving a penny back.

 

I think the central issue Allnatural is trying to raise is that the success of the bailout was based upon agreements. Since you like to base your arguments on law, rules and regulations or basic agreements (bankruptcy code), his/her central point -and the shareholders' fight in courts- is that those original agreements that were conducive to a successful outcome were not followed 100%.

 

There is this one little wrinkle, the nws, that was not part of the original agreements that led a multitude of investors/shareholders buy equity in the companies. This minuscule change came about 4 years after the bailout when both companies were already posting profits making everyone who invested between 2008 and 2012 based upon the original agreements that sustained the companies as privately owned with residual equity to be had, a bagholder. It is really too bad that people like you are not happy that the original agreements and their authors could not foresee a happy outcome for shareholders (but many here did see it). We were on the road to become whole, all based upon government agreements when this little tweak attempted -successfully to this date- to rob the upside from us.

[cameronfen]

There are indeed MANY intracacies to this story. Disregarging the fact that the GSEs infact did NOT need capital during the financial crisis if it wasnt for a few accounting tricks, the government did not take 100% stake in these entities as some might have you believe. They simpled infused them with capital in exchange for senior preferred shares with generous terms + recieved 80% of the equity. Private shareholders continued to exist. This also turned out to be one of the most successful investment in US history, invested $187.5b, earned $300b to date with another $100b to come if the government were to monetize its equity. Taxpayers are very fortunate for this deal.

 

Shareholders are not disputing the original agreement, they are disputing when the government changed the terms of the agreement as the GSEs were about to hit a period a probability. They changed the fixed dividend term to instead capture all profits indefinitely, leaving nothing for private shareholders, contrary to the original statements that private shareholders will retain value. If this transaction were done between two private parties to side step shareholders, those private parties would be behind bars today. Combined with the fact that there is close to no alternative to what the GSEs provide the housing market today. Hopefully rule of law and common sense prevails.

 

This should have played out no different than how AIG did with the government exiting their stake.

 

I'm not invested in Fannie and Freddie for a variety of reasons, so I don't know the intracacies, but they would have gone bankrupt if the government didn't bail them out.  In what world *should* (not saying what will happen as the government can do stupid things to attract political support) government make whole people who purchased pre-bankruptcy equity.  If the government was any other market participant the preferred and the common would already be worth nothing.

 

I don't buy it.  Both companies went into conservatership and the government spent 238 billion dollars backstopping both businesses.  This doesn't include the more than 100 billion dollars that were spent buying debt and their mortgages.  At the peak their combimed market cap came out to somewhere around 170 to 200 billion dollars and combined they were no where near that value during the recession.  At the time, the New York Times said this bailout "could turn out to be the biggest and costiest bailout of private companies ever."  Sure the government made out like bandits after the fact but thats like punishing WEB for quadrupling his money bailing out BAC. 

 

The reason the government didn't take a 100% share is not because they couldn't people would have sold their shares for pennies on the dollar, but because it reeks of socialism when government nationalizes a business and thats not politically feasible.  Thus I think it was well understood that the government owned the thing.  Maybe they shouldn't have rewritten the contract, I dont know about the thesis on the thing, but I think everyone was aware that this was basically a nationalization in everything but name.

Your opinion or Allnatural's about the merit of the bailout -whether justified or not- are really irrelevant including anyone's opinion on whether shareholders should have been part of the recovery or not, never deserving a penny back.

 

I think the central issue Allnatural is trying to raise is that the success of the bailout was based upon agreements. Since you like to base your arguments on law, rules and regulations or basic agreements (bankruptcy code), his/her central point -and the shareholders' fight in courts- is that those original agreements that were conducive to a successful outcome were not followed 100%.

 

There is this one little wrinkle, the nws, that was not part of the original agreements that led a multitude of investors/shareholders buy equity in the companies. This minuscule change came about 4 years after the bailout when both companies were already posting profits making everyone who invested between 2008 and 2012 based upon the original agreements that sustained the companies as privately owned with residual equity to be had, a bagholder. It is really too bad that people like you are not happy that the original agreements and their authors could not foresee a happy outcome for shareholders (but many here did see it). We were on the road to become whole, all based upon government agreements when this little tweak attempted -successfully to this date- to rob the upside from us.

 

1.)  The D.C. circut of Appeals basically rejected this argument 2-1 regarding the illegality of the third amendment, so i dont think you or allnatural are really telling the whole story

 

2.) From what I have read, the origional agreement said that the government had a right to change how they were paid "to fully conpensate the Purchaser...".  Perhaps you can argue that government is compensated well enough, but I don't think making whole the government side is fully compensating given the massive risks the government had to take and the time value of money.  Again just something I'm researching and maybe at some point people who bought this will get paid I don't know. 

[rros]

Courts never rejected the argument. They stopped right before saying the action cannot be reviewed. If it is ever reviewed, it does not stand a chance.

 

I am sorry, I was never aware government could change the agreement. Please post the entire clause that specifically says so because in 10 years I could not find it. In fact, they used a subterfuge to specifically avoid changing the agreement because they knew they wouldn't be able to defend that action. That subterfuge was making a fixed dividend into a flexible one, wiping out equity. So far, the government has succeeded in having that change stick.

 

[cameronfen]

Courts never rejected the argument. They stopped right before saying the action cannot be reviewed. If it is ever reviewed, it does not stand a chance.

 

I am sorry, I was never aware government could change the agreement. Please post the entire clause that specifically says so because in 10 years I could not find it.

 

I don't mean to sound snarky, but it took me 2 minutes to find this.  The investment thesis might be sound but perhaps the confirmation bias has lead you to believe the right thing to do is what makes you money? 

 

https://www.frbatlanta.org/cenfis/publications/notesfromthevault/1405

[cameronfen]

Courts never rejected the argument. They stopped right before saying the action cannot be reviewed. If it is ever reviewed, it does not stand a chance.

 

I am sorry, I was never aware government could change the agreement. Please post the entire clause that specifically says so because in 10 years I could not find it.

 

Also says right here "Court reject hedge fund claim...in profit sweep."  I could not be reading carefully or could be a bad title but sounds like the court had an opinion on sweep. 

 

https://www.housingwire.com/articles/39277-court-rejects-hedge-funds-claims-in-fannie-freddie-profit-sweep

 

 

[rros]

Courts never rejected the argument. They stopped right before saying the action cannot be reviewed. If it is ever reviewed, it does not stand a chance.

 

I am sorry, I was never aware government could change the agreement. Please post the entire clause that specifically says so because in 10 years I could not find it.

 

I don't mean to sound snarky, but it took me 2 minutes to find this.  The investment thesis might be sound but perhaps the confirmation bias has lead you to believe the right thing to do is what makes you money? 

 

https://www.frbatlanta.org/cenfis/publications/notesfromthevault/1405

I don't think you sound snarky, more like a troll. Nothing in that article supports your contentions. And yes, you are going to need more than 2 minutes of research. And most likely, develop your own analysis while stop reading other people's opinions. May lead to better judgment.

[cameronfen]

Courts never rejected the argument. They stopped right before saying the action cannot be reviewed. If it is ever reviewed, it does not stand a chance.

 

I am sorry, I was never aware government could change the agreement. Please post the entire clause that specifically says so because in 10 years I could not find it.

 

I don't mean to sound snarky, but it took me 2 minutes to find this.  The investment thesis might be sound but perhaps the confirmation bias has lead you to believe the right thing to do is what makes you money? 

 

https://www.frbatlanta.org/cenfis/publications/notesfromthevault/1405

I don't think you sound snarky, more like a troll. Nothing in that article supports your contentions. And yes, you are going to need more than 2 minutes of research. And most likely, develop your own analysis while stop reading other people's opinions. May lead to better judgment.

 

Again I'm not trying to start something, but I find it funny that you think I'm a troll when a.) I post with my real name, b.) I have lots of posts both positive and negative about other stocks but c.) I disagree with you.  IMO, I would look in the mirror and ask if you are guilty of confirmation bias (and writing off variant views as trolls). 

 

Personally, I don't invest in the stock because while I feel like preferred are likely to make money (again based on little research), but it leaves a bad taste in my month profiting off taxpayers knowing that public servants can be manipulated because they want to win votes and support. 

 

On to my arguments.  Here is the paragraph in the article that I think supports my contentions:

 

Another important change is that the periodic commitment fee was suspended so long as the third amendment's dividend payment requirements remained in effect. The original agreement had included provisions for a periodic committee fee "to fully compensate Purchaser for the support provided by the ongoing Commitment following December 31, 2009." The initial agreement also provided that the commitment fee would be "mutually agreed by Purchaser and Seller, subject to their reasonable discretion." However, the purchaser (Treasury) "may waive the Periodic Commitment Fee for up to one year at a time, in its sole discretion, based on adverse conditions in the United States mortgage market." The Federal Housing Finance Agency (FHFA) Office of Inspector General says that the fee had never been set and the Treasury consistently waived this fee prior to the third amendment.

 

What this is saying is that before the third amendment, FHFA is arguing that the dividend was actually the result of waving the fee that FHFA is due (as they weren't profitable until 2012) and that the real agreement required full compensation from Fannie and Freddie.  He then defends this entire position through the rest of the article.  While I also linked the court case, you claim that the court did not rule on this profit sweep.  From the title of the article on the court case, it sounds like the judges had an opinion on the profit sweep and it influenced their 2-1 ruling for the government.  Even if what is true, clearly the judges could have ruled on the profit sweep, and if the ruling is a slam dunk in favor of investors, the judges probably would have ruled in favor on that point 3-0.  At best, according to you, they deferred from ruling, suggesting that they think the argument "does not stand a chance" is likely flawed. 

 

I think your criticism is a little silly that I should do more research as I'm never going to own the stock, but I concede that maybe I shouldn't post on this thread if I didn't do research.  Even so, I post here because I find the people saying that the government owes them the dividends a little self-righteous.  Shareholders did nothing to keep Fannie and Freddie afloat.  The government did all the work (also a point made in the piece I linked). The main stockholder base brought in after the fact because they thought they could use a legal loophole to force the government to give up control.  It doesn't seem to me like current stockholders have any high ground to claim.  Although I'm not disagreeing that you can't make money.  Just because you can make money doesn't mean it should happen (that's all I'm saying). 

[locutusoftexas]

 

I think your criticism is a little silly that I should do more research as I'm never going to own the stock, but I concede that maybe I shouldn't post on this thread if I didn't do research.  Even so, I post here because I find the people saying that the government owes them the dividends a little self-righteous.  Shareholders did nothing to keep Fannie and Freddie afloat.  The government did all the work (also a point made in the piece I linked). The main stockholder base brought in after the fact because they thought they could use a legal loophole to force the government to give up control.  It doesn't seem to me like current stockholders have any high ground to claim.  Although I'm not disagreeing that you can't make money.  Just because you can make money doesn't mean it should happen (that's all I'm saying).

 

Normally I would not say anything, especially since you seem to have no interest in the stock. However, this is a much deeper legal and accounting issue than two minutes of research would cover. Either way (i.e., NWS aside), a winning argument for plaintiffs is that the GSEs have been de facto nationalized without compensation of the owners (shareholders) in violation of the fifth amendment and centuries of international legal precedent. This complaint has been filed in the US Court of Claims and will be heard toward the end of this year.

 

Let me summarize my opinion: you are wrong, wrong, wrong. The people who post to this board have invested considerable time and talent on the legal and financial analysis. I do not place myself in that class, but I have spent a fair amount of time on trying to understand the nuances of this investment.

 

Finally, if one invests one's money in an asset, one deserves to profit fairly from taking the risk of the investment. That is the way that markets work. If the taxpayers don't take the risk of owning a security, then they do not deserve to profit from the ownership. The recent consensus (including even a recent Washington Post editorial) is that the Treasury Department has been paid back in full and even profited from its actions regarding the GSEs. By many assessments, the actual profit has been very large (100% or more) of the actual funds expended by Treasury.  Even then, one could argue that the actual risk taken on by Treasury was nil. Not so with private shareholders, who invested their personal, finite assets and who cannot simply print more money.

[cameronfen]

 

I think your criticism is a little silly that I should do more research as I'm never going to own the stock, but I concede that maybe I shouldn't post on this thread if I didn't do research.  Even so, I post here because I find the people saying that the government owes them the dividends a little self-righteous.  Shareholders did nothing to keep Fannie and Freddie afloat.  The government did all the work (also a point made in the piece I linked). The main stockholder base brought in after the fact because they thought they could use a legal loophole to force the government to give up control.  It doesn't seem to me like current stockholders have any high ground to claim.  Although I'm not disagreeing that you can't make money.  Just because you can make money doesn't mean it should happen (that's all I'm saying).

 

Normally I would not say anything, especially since you seem to have no interest in the stock. However, this is a much deeper legal and accounting issue than two minutes of research would cover. Either way (i.e., NWS aside), a winning argument for plaintiffs is that the GSEs have been de facto nationalized without compensation of the owners (shareholders) in violation of the fifth amendment and centuries of international legal precedent. This complaint has been filed in the US Court of Claims and will be heard toward the end of this year.

 

Let me summarize my opinion: you are wrong, wrong, wrong. The people who post to this board have invested considerable time and talent on the legal and financial analysis. I do not place myself in that class, but I have spent a fair amount of time on trying to understand the nuances of this investment.

 

Finally, if one invests one's money in an asset, one deserves to profit fairly from taking the risk of the investment. That is the way that markets work. If the taxpayers don't take the risk of owning a security, then they do not deserve to profit from the ownership. The recent consensus (including even a recent Washington Post editorial) is that the Treasury Department has been paid back in full and even profited from its actions regarding the GSEs. By many assessments, the actual profit has been very large (100% or more) of the actual funds expended by Treasury.  Even then, one could argue that the actual risk taken on by Treasury was nil. Not so with private shareholders, who invested their personal, finite assets and who cannot simply print more money.

 

@rros for your latest comments.  Maybe I'm trolling now too idk.  But look I'm not even arguing the merits of the case.  The loophole that Perry capital and others found may be rock solid legally, but here is what I see:

 

Government saves fannie and freddie at an enormous expense and places the instituions into conservership (which credit default swaps consider to be a default).  Stockholders play no role in the rescue as they wouldnt be able to issue enough shares (not even close) on the public market to stay afloat.  The shareholder base turns over as hedge funds and eventually individual investors realize they can use a loophole to wrest monetary control away from the government.  People on CoBF are indigant that the government doesn't give them the dividends they think they should be owed by Fannie amd Freddie. 

 

Look I'm not saying I'm not willing to go into ethical grey areas for a good investments as if I were alive and knew how well philip morris has done over the past 30 years I wouldn't have hesitated to pull the trigger.  In fact I may have owned PM at one time.  But let's call a spade a spade and not delude ourselves into think we are crusading for the little guy and fighting for justice and maybe the spirit of the law (although we can disagree on that third point).   

[cameronfen]

Look there is what is permitted by law and then there is what is ethical.  Controversial statements: I think the legal points don't matter ethically and here is why.  If the government was any other market participant, they could have gotten away with owning basically all the stock and all the bonds for much less than the 200+ billion dollar injection they put in.  The reason the terms were so favorable to the equity holders is because Obama would have been called a socialist if he actually nationalized "the mortgage industry".  So here you have the government granting more concessions than any other rational self interested market particpant would ever dream of giving, and then you have hedge funds who want to extract even more money from the government by expiditing the process in favor of stockholders and prevent the government from recouping a proper return on investment. 

 

This is why people hate the financial industry.  The government saved your ass.  Gave you more concessions than they had to and then when you recover you turn around and use those concessions to force the government to hand you a quick buck.  Why do people hate Hank Greenberg for being an ass?  Why do people complain about big bank bonuses?  Why am I completely baffled by the self righteousness of this thread?  Its because you may have all the legal justification in the world, but that doesn't mean it is the right thing to do and that is what infuriates people.  You play "fair" but you don't play fair.  I'm not arguing that markets worked this way and you weren't playing by the laws and regulations, but we also have a higher obligation to doing the right thing.  You can't codify what is right up to every detail in a set of laws, so we have to rely on people doing what's right.  I'm not going to complain if you think that Fannie Mae is a ethical enough to invest in, but when you start to act self righteous about basically extorting a government whose hands were tied politically, a government whose actions basically prevented a new great depression, that they owe you money after they saved the company that you or your predecessors were invested in, that kind of pisses me off. 

 

ok seriously flame war has to stop.  I'll give you one more response but I won't reply. 

[allnatural]

Ty Cameronfen. There is nothing wrong with healthy debate we are all friends here.

 

Just one quick counter point bc its clear we won't see eye to eye on this topic. The Government didnt nationalize the GSEs for one reason and one reason only, if they took 0.01% more in equity (79.99%) than they did, they would have been required to consolidate the GSEs $5tn in liabilities to the governments balance sheet which was a big no no. Also if you read Hank Paulsons book, he orchestrated the GSE "conservatorship" bc he wanted to assure international investors (China) that the paper was money good. In fact the NWS is what truly nationalized the GSEs, and the judges in the Saxton case agree as they essentially force the government to admit this fact just last month. Recall that HERA authorized the government to act as a conservator (rehabilate the entities) or receiver (liquidate and unwind the affairs), no where was nationalization granted by congress. Shareholders hopes are looking up in various courts today with more and more judges beginning to ask the right questions.

 

If you arent a troll which I dont think you are, and want a true understanding of what really happened, and I say this sincerely because I believe all Americans should be educated on this issue, read the latest amended brief by Fairholme in the Sweeney case and the Judge Brown dissent in the Perry case.

 

A couple powerful passages from Judge Brown:

 

"Plaintiffs—not all innocent and ill-informed investors, to be sure—are

betting the rule of law will prevail. In this country, everyone

is entitled to win that bet."

 

"When assessing responsibility for the mortgage mess

there is, as economist Tom Sowell notes, plenty of blame to

be shared. Who was at fault? “The borrowers? The lenders?

The government? The financial markets? The answer is yes.

All were responsible and many were irresponsible.” THOMAS

SOWELL, THE HOUSING BOOM AND BUST 28 (2009). But that

does not mean more irresponsibility is the solution.

Conservation is not a synonym for nationalization.

Confiscation may be. But HERA did not authorize either, and

FHFA may not do covertly what Congress did not authorize

explicitly. What might serve in a banana republic will not do

in a constitutional one."

 

Best wishes!

[cameronfen]

Ty Cameronfen. There is nothing wrong with healthy debate we are all friends here.

 

Just one quick counter point bc its clear we won't see eye to eye on this topic. The Government didnt nationalize the GSEs for one reason and one reason only, if they took 0.01% more in equity (79.99%) than they did, they would have been required to consolidate the GSEs $5tn in liabilities to the governments balance sheet which was a big no no. Also if you read Hank Paulsons book, he orchestrated the GSE "conservatorship" bc he wanted to assure international investors (China) that the paper was money good. In fact the NWS is what truly nationalized the GSEs, and the judges in the Saxton case agree as they essentially force the government to admit this fact just last month. Recall that HERA authorized the government to act as a conservator (rehabilate the entities) or receiver (liquidate and unwind the affairs), no where was nationalization granted by congress. Shareholders hopes are looking up in various courts today with more and more judges beginning to ask the right questions.

 

If you arent a troll which I dont think you are, and want a true understanding of what really happened, and I say this sincerely because I believe all Americans should be educated on this issue, read the latest amended brief by Fairholme in the Sweeney case and the Judge Brown dissent in the Perry case.

 

A couple powerful passages from Judge Brown:

 

"Plaintiffs—not all innocent and ill-informed investors, to be sure—are

betting the rule of law will prevail. In this country, everyone

is entitled to win that bet."

 

"When assessing responsibility for the mortgage mess

there is, as economist Tom Sowell notes, plenty of blame to

be shared. Who was at fault? “The borrowers? The lenders?

The government? The financial markets? The answer is yes.

All were responsible and many were irresponsible.” THOMAS

SOWELL, THE HOUSING BOOM AND BUST 28 (2009). But that

does not mean more irresponsibility is the solution.

Conservation is not a synonym for nationalization.

Confiscation may be. But HERA did not authorize either, and

FHFA may not do covertly what Congress did not authorize

explicitly. What might serve in a banana republic will not do

in a constitutional one."

 

Best wishes!

 

Thanks.  Good luck with this investment! 

[cameronfen]

Almost everyone in America invests in stocks, bonds through 401K, retirement plans, pension plan, education savings and other vehicles for education and retirement (except the ones who love not to work even when unemployment is low 3% and take free food stamps, free housing, free healthcare, free school, free college, lobby to get rid of student loans and even lobbied with previous administration for free child care). I do 3 jobs to end meet and still put money in the market and skipping on my favorite lattes at Starbucks.  You come in here telling us that we are evil and feeding off taxpayers? The taxpayers have not only gotten 100 billion extra in addition to 10% dividend and principal but another 150 billion in fines and penalties that never made it to people for whom they were intended to but were routed to support free healthcare and many other pet programs.  You do not even count economic benefit of close to 500 billion that were recouped by using GSE’s as a tool to create growth.  I think we need reporters report this true story that close to a trillion dollar have been recouped already, directly and indirectly from GSE’s by looting the private shareholders. I am sure that will hit some nerves. The previous administration never punished banks that caused the crisis but filled their pocket for campaign finance. Come on don’t come here and give us this bullshit with your 2 minutes of research and call yourself as a data scientist. May be the fellow travelers are getting desperate if you are friends with one or yourself.

 

Are these not your thinking? Hypocrisy at best.

“it is very easy to screw shareholders not named putin/executives.”  So does that ring a bell what is going on with GSE shareholders and what the previous administration did?

“…but the executives can get away with a lot at the expense of shareholders which is probably a bigger minus.”

 

 

 

It doesn't seem to me like current stockholders have any high ground to claim.  Just because you can make money doesn't mean it should happen (that's all I'm saying).

 

The shareholder base turns over as hedge funds and eventually individual investors realize they can use a loophole to wrest monetary control away from the government. 

But let's call a spade a spade and not delude ourselves into think we are crusading for the little guy and fighting for justice and maybe the spirit of the law (although we can disagree on that third point). 

 

I want to respond but already said I was done.  gl! 

[cameronfen]

I just saw that you also support open borders. Would that be with Ecuador?

 

Almost everyone in America invests in stocks, bonds through 401K, retirement plans, pension plan, education savings and other vehicles for education and retirement (except the ones who love not to work even when unemployment is low 3% and take free food stamps, free housing, free healthcare, free school, free college, lobby to get rid of student loans and even lobbied with previous administration for free child care). I do 3 jobs to end meet and still put money in the market and skipping on my favorite lattes at Starbucks.  You come in here telling us that we are evil and feeding off taxpayers? The taxpayers have not only gotten 100 billion extra in addition to 10% dividend and principal but another 150 billion in fines and penalties that never made it to people for whom they were intended to but were routed to support free healthcare and many other pet programs.  You do not even count economic benefit of close to 500 billion that were recouped by using GSE’s as a tool to create growth.  I think we need reporters report this true story that close to a trillion dollar have been recouped already, directly and indirectly from GSE’s by looting the private shareholders. I am sure that will hit some nerves. The previous administration never punished banks that caused the crisis but filled their pocket for campaign finance. Come on don’t come here and give us this bullshit with your 2 minutes of research and call yourself as a data scientist. May be the fellow travelers are getting desperate if you are friends with one or yourself.

 

Are these not your thinking? Hypocrisy at best.

“it is very easy to screw shareholders not named putin/executives.”  So does that ring a bell what is going on with GSE shareholders and what the previous administration did?

“…but the executives can get away with a lot at the expense of shareholders which is probably a bigger minus.”

 

 

 

It doesn't seem to me like current stockholders have any high ground to claim.  Just because you can make money doesn't mean it should happen (that's all I'm saying).

 

The shareholder base turns over as hedge funds and eventually individual investors realize they can use a loophole to wrest monetary control away from the government. 

But let's call a spade a spade and not delude ourselves into think we are crusading for the little guy and fighting for justice and maybe the spirit of the law (although we can disagree on that third point). 

 

I want to respond but already said I was done.  gl!

 

If you want to dm me we can talk about this in private (or we can start another thread on the politics board), but I don't really understand why you are bringing up my comments on other threads on this topic. 

[Jurgis]

Echo chamber thread for 7 years and 1000 pages.

 

 

 

Or at least since merkhet left.

[SnarkyPuppy]

Probably because of some of the opinions expressed above are consistent with the consensus view.  Money is made in investing when you have a variant perspective.  Similar to locutusoftexas, it took me a long time to fully appreciate the various constraints involved before it became obvious that there is a (structural) margin of safety much stronger than a few hours of reading would suggest.  Almost everything about this situation is nuanced and different than it appears on the surface. 

 

In addition to the fact that anyone looking at this starts with a negative opinion, there is timing risk, career risk, volatility risk, and liquidity risk.  There have also been multiple dips where interested buyers have already doubled/tripled/quadrupled down. 

 

There's certainly risk of permanent loss of capital involved - I'm worried about a few low probability events.  Or we can just be completely wrong - our view of the probabilities, incentives, and potential outcomes could simply be blatantly wrong.  But the fact that there are 1000 pages on cobf and the fact that there are uninformed investors on the right side of this trade are absolutely independent from the final outcome.  Considering either is bias.   

[SnarkyPuppy]

One additional point - I think most look at this situation and ask "how do these go to par?" and there is no clear answer (there's a wide range of potential successful or partially successful outcomes).

 

Those who have invested in this situation have inverted the above question and have asked "how do these go to 0?"