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

[Luke 532]

Filing (attached) in which Judge Reade (Saxton case) denies amicus brief citing she doesn't need to see it to make a decision on the motion to dismiss.  Perhaps she has already made up her mind on whether or not she will dismiss the case.  The footnote is interesting: "Although the court finds that amicus participation is currently improper, it is not foreclosing the possibility of amicus participation at a later stage in the proceedings."

FNMAS_Reade_Denies_Amicus_12-3-2015.pdf

[doughishere]

No party has requested oral argument, and the court finds that oral argument is unnecessary. The matter is fully submitted and ready for decision.

 

 

Therefore, “Fairholme’s attempt to submit evidence purportedly supporting Plaintiffs’ allegations is . . . misplaced at this stage of the litigation.”

 

The court must limit its review to the face of the pleadings alone,

 

Both the Fairholme Reply and the Plaintiffs Reply demonstrate that the purpose of the amicus brief is to inject new facts into the pleadings. However, because the court will not consider facts and evidence outside of the pleadings in determining facial challenges to subject matter jurisdiction under Rule 12(b)(1), it will not admit or consider Fairholme’s evidence in support of Plaintiffs’ opposition to the Motions to Dismiss.1

 

 

When they talk about "facial challenges to subject matter jurisdiction" they mean that In U.S. constitutional law, a facial challenge is a challenge to a statute in which the plaintiff alleges that the legislation is always unconstitutional, and therefore void. If a facial challenge is successful, a court will declare the statute in question facially invalid, which has the effect of striking it down entirely. This contrasts with a successful as-applied challenge, which will result in a court narrowing the circumstances in which the statute may constitutionally be applied without striking it down.

 

 

 

So I believe what this says is that Fairholme amicus brief is being denied at this time because its really too early in the game(remeber that SAXTON is side show game, not the other cases) to decide if whats contained in the brief(remember whats probably in it is some redacted "bad stuff") is necessary in "determining facial challenges to" whats at stake here.

 

The foot note from the doc....that Luke highlighted.

Although the court finds that amicus participation is currently improper, it is not foreclosing the possibility of amicus participation at a later stage in the proceedings.

 

Edit:

The court has decided to deny it because of a number of reasons

 

1. Because it can.

"judicial grace."

No statute, rule, or controlling case defines a federal district court’s power to grant or deny leave to file an amicus brief

 

2. is the brief "useful"?

“the information offered [by the amicus] is ‘timely and useful’” to the pending action.

 

3. Will it help enlighten the judge?

“the brief will assist the judge[] by presenting ideas, arguments, theories, insights, facts, or data that are not to be found in the parties’ briefs.”

 

 

 

So basically I think what She is saying is that the Amicus brief will in no way help her determine if the facial challenges that are what this case is about are with merit?

 

Merk or cherzeca im i right?

 

[Luke 532]

Filing (attached) in which Judge Reade (Saxton case) denies amicus brief citing she doesn't need to see it to make a decision on the motion to dismiss.  Perhaps she has already made up her mind on whether or not she will dismiss the case.  The footnote is interesting: "Although the court finds that amicus participation is currently improper, it is not foreclosing the possibility of amicus participation at a later stage in the proceedings."

 

More filings attached. Saxton plaintiffs have asked to amend their complaint based on information obtained from Fairholme's discovery.

Saxton_12-3-2015.pdf

Saxton_12-3-2015_another.pdf

[doughishere]

So they got to file the information with out the Fairholme's Amicus?

[Guest cherzeca]

@doug

 

to dismiss for lack of subject matter jurisdiction, judge has to take all of the allegations contained in complaint and treat them as true.  i think judge had decided that, assuming all of these allegations are true, there either is, or is not, power (jurisdiction) for the court to hear case.

 

if she follows lamberth, she will dismiss.  if she doesn't, she wont. 

 

i must say one of the problems with lamberth's opinion was that even though he said he was giving credence to all of the plaintiffs' allegations, it is clear from his opinion that he did not.  so judge reade may be more "judicious" than lamberth and not dismiss.  or she may simply think that if dismissal is good enough for a DC judge, it is good enough for an iowan judge.  hard to handicap.

 

i see luke has a post saying that plaintiffs' have sought leave to amend complaint.  i suppose their view is that judge reade will dismiss with complaint in present form and they need to get judge reade to permit amended complaint, which will add to the facts she must presume to be true in order to decide motion

[merkhet]

Ms. Morgenson has a new article out on Fannie & Freddie

 

http://www.nytimes.com/2015/12/07/business/a-revolving-door-helps-big-banks-quiet-campaign-to-muscle-out-fannie-and-freddie.html?_r=1

[Luke 532]

I really wish FMCCL wasn't so illiquid (only 5,000,000 shares outstanding).  Trading at a measly 10% of par ($5 on $50 par).

[Luke 532]

Interesting screenshots of court documents filed today (attached)...

FNMAS_Swanson_12-7-2015_Tweets.docx

[TonyG]

Anyone have the actual filing?

[Luke 532]

Interesting screenshots of court documents filed today (attached)...

 

Bethany McLean tweet...

 

Bethany McLean ‏@bethanymac12

#FannieGate  New doc in the Fairholme case seems to say the gov't was expecting what the lawyers call "windfall profits" w/ 3rd amendment.

 

[merkhet]

I think the more important tweets are the ones that follow the two from Luke's post.

 

It looks like there may be some (un-curable?) defects in the government's assertion of privilege. I have said this privately to people before, but, back in law school, the DOJ was known as a pretty high status place to work (maybe it was just the DOJ Honors program). This case is making it look like the Justice Department is full of people who are blatantly incompetent...

 

The guy's twitter URL is as follows:

[Luke 532]

I think the more important tweets are the ones that follow the two from Luke's post.

 

Merkhet, thank you for adding those!

[merkhet]

I think the more important tweets are the ones that follow the two from Luke's post.

 

Merkhet, thank you for adding those!

 

No problem. Looks like things are beginning to get interesting again for FNMAS holders. :)

[merkhet]

Anyone have the actual filing?

 

Yes. Here's a link to the filing in my dropbox. GSE Links will also have it soon.

 

https://www.dropbox.com/s/qjg2ign307chipm/2015-12-07%20Fairholme%27s%20Public%20Redacted%20Motion%20to%20Compel%20Production%20of%20Certain%20Documents%20Withheld%20for%20Privilege.pdf?dl=0

[Mephistopheles]

I'm getting antsy! Things seem to be looking good but it's taking forever!

[TonyG]

Thanks merkhet.

[Luke 532]

USA Today is picking up the story...

http://www.usatoday.com/story/money/columnist/2015/12/08/delamaide-fannie-freddie/76989140/

 

WASHINGTON — Congressional gridlock has its uses and one of them is that the government-backed mortgage providers Fannie Mae and Freddie Mac have been able to keep providing mortgages.

 

The hybrid public-private institutions, which function as mortgage insurers, were taken into government conservatorship in the midst of the financial crisis as losses on mortgages quickly overwhelmed their inadequate capital base.

 

They have since languished comfortably in government care, given that a polarized Congress cannot agree on anything, let alone an issue as vexed as the government role in housing finance.

 

While the U.S. housing finance system is routinely described as "broken," it is really anything but that, as people continue to buy and sell homes briskly with most mortgages taken up by Fannie and Freddie.

 

The system may be limping a little, but that is due more to banks being more risk averse as they work off all the bad loans from the housing bubble and enjoy the benefit of the Federal Reserve's easy money policy, which makes even low-risk loans profitable.

 

In the meantime, Fannie and Freddie have fully repaid the nearly $200 billion in federal aid they received during the crisis, and have transferred another $50 billion-plus in profit to the Treasury Department.

 

However, the future of Fannie and Freddie is a piece of unfinished business for the Obama administration. The issue came under the spotlight this week as a New York Times investigative piece focused on the banking industry's efforts to snatch the lucrative lending for themselves so that they, instead of the government, reap the handsome profits from government-insured mortgages.

 

The long piece by Pulitzer Prize-winning reporter Gretchen Morgenson describes a revolving door between industry and government that has enabled a number of individuals to influence policy in Congress and the White House in favor of handing this prize to the banks.

 

The irony of plans to wind down Fannie and Freddie and replace them with a government-backed insurance scheme that would make the banks the main provider of mortgages is that it would reward the very culprits whose reckless behavior in housing finance brought on the crisis in the first place.

 

There is no question that Fannie and Freddie had spun out of control prior to the crisis, with bloated executive salaries, lax regulation, a lobbying budget that functioned as a slush fund, and empire-building that took them well beyond their mission of guaranteeing affordable housing finance.

 

But the flaws in these two institutions pale when compared with the speculative frenzy that drove banks to expand the subprime loan market, including the infamous liar loans, and then package them into deceptive mortgage-backed securities they unloaded on unsuspecting investors around the world.

 

The simplest solution to the problem would seem to be reining in Fannie and Freddie with tougher oversight and stricter rules to keep them to their original purpose.

 

This essentially is what has happened in the intervening years. The debate now is whether to get them out of government conservatorship by recapitalizing them and letting them go about their business, or wind them down and funnel the government-insured mortgages through the banks.

 

The argument against just leaving them as they are — essentially nationalized mortgage insurance providers — is that taxpayers would be "on the hook" once again if there were a new housing bust.

 

The reality is that taxpayers will always be on the hook when the prospect of millions of foreclosures forces the government to intervene, no matter how the market is structured.

 

The difference is that under the plan favored by the industry and by the influence-peddlers in Washington it is the banks, not the Treasury Department, would reap the profits in good times, and taxpayers would pick up the tab when things go south.

 

This is exactly the type of scenario all the financial reforms in the wake of the crisis are seeking to avoid. Perversely, it would seem to reinforce the very "too-big-to-fail" phenomenon the Dodd-Frank Act was designed to eliminate.

 

The banks' main motive for making a grab for this business is greed, but there is an ideological twist to it as well.

 

Fannie Mae and Freddie Mac are government-sponsored enterprises, an oxymoron for right-wing ideologues. Their official names are the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation — a sure sign of government overreach in their point of view.

 

The original 2013 bill to wind down Fannie and Freddie and transfer the business to the banks was "bipartisan" in the sense that it was co-sponsored by a Republican, Sen. Bob Corker of Tennessee, and a "moderate" Democrat, Sen. Mark Warner of Virginia, a former businessman who would have been a Rockefeller Republican in another era. It died in committee.

 

Fannie Mae was created in 1938 in response to the Great Depression, brought on in great part by widespread abuses at the banks of that era. Freddie Mac was added in 1970 to expand the secondary market for mortgage-backed securities, further improving liquidity in housing finance.

 

Ideology aside, they served American homeowners well for decades until new abuses in the financial industry brought another financial crisis.

 

There would seem to be little incentive — except for the incessant lobbying by the banking industry — for throwing out this system in favor of an untried, jury-rigged system that favors the very institutions that have twice plunged the country into severe economic downturns.

 

So maybe Congressional gridlock leaving Fannie and Freddie in a legislative limbo is not such a bad thing.

[Luke 532]

Fortune magazine a week ago, NY Times yesterday, USA Today this afternoon,...

[phil_Buffett]

since months only good News, and the fu... stock goes down and down  >:(

[Luke 532]

Fairholme e-mail earlier this evening...

Dear Shareholder,

 

An article by Gretchen Morgenson published on the front page of the New York Times on Monday, December 7, 2015, sheds light on a surreptitious campaign spearheaded by the “Too Big To Fail” banks to assume control over the mortgage market and usurp the assets of Fannie Mae and Freddie Mac.

 

During the 2008 financial crisis, Fannie and Freddie helped save America’s home mortgage system and resuscitated our national economy by continuing to provide liquidity when credit markets froze. In the process, the big banks, lobbying groups, and individuals exposed in Ms. Morgenson’s article seized the opportunity to falsely blame Fannie and Freddie for the misdeeds of others. Record legal settlements – exceeding $18 billion to date – paid to Fannie and Freddie validate the wrongdoing by those big banks.

 

For years, competitors and adversaries of Fannie and Freddie have conducted an unprecedented disinformation campaign, largely carried out through the mainstream media, in which they disseminated deliberately inaccurate information mischaracterizing Fannie and Freddie’s insurance businesses, exaggerating their risks, and understating their benefits. These pervasive false narratives have been particularly effective given that Fannie and Freddie were forced into conservatorship in 2008 and forbidden to speak for themselves.

 

We wrote in an earlier letter to shareholders that, “…some in government apparently want their friends in the mortgage-industrial complex to take for free what you, the shareholders of these companies, paid for with cash.” Based on the investigation by the New York Times additional evidence has emerged about the small cabal of government officials who have deliberately debilitated Fannie and Freddie in order to benefit the Too Big To Fail banks.

 

We encourage you to read more at: http://www.nytimes.com/2015/12/07/business/a-revolving-door-helps-big-banks-quiet-campaign-to-muscle-out-fannie-and-freddie.html 

 

Kind regards,

 

 

Fairholme

             

Fairholme Funds, Inc.

4400 Biscayne Blvd.

9th Floor

Miami, FL 33137

 

[Luke 532]

Watt Tells Congress Conservatorship “Not Sustainable”

http://investorsunite.org/watt-says-tells-congress-conservatorship-not-sustainable/

[Luke 532]

Catches my attention when someone like Christian Herzeca says the following (attached)...

Herzeca_Tweet_12-7-2015.docx

[doughishere]

He has some good stuff over on the google boards.

[orthopa]

Seems like there have been some pretty good developments for shareholders but the market has paid little attention. Hard to believe all of this is flying below the radar. Market must sick of trading on hopes and wishes, traders at least that is...

[Luke 532]

I'm getting antsy! Things seem to be looking good but it's taking forever!

 

since months only good News, and the fu... stock goes down and down  >:(

 

Seems like there have been some pretty good developments for shareholders but the market has paid little attention. Hard to believe all of this is flying below the radar. Market must sick of trading on hopes and wishes, traders at least that is...

 

Patience, gentlemen.  No more than Mr. Market being Mr. Market.