Fannie Mae-No Politics (FNMA)

[Donotunderstand]

it says not convertible ?

there have been 1,000 posts on if and when and how the GOV will convert the SPS to common

you say the agreement says they are not convertible

help from some one who knows a lot more

[Rodney5]

Millett and Ginsburg summarized the case and their 70-page opinion as follows:

Quote: “ We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f). ” End of Quote

STRICT LIMITATION ON JUDICIAL REVIEW

The SCOTUS is barred from ruling on the case. It was dismissed.

Link: https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/02/21/d-c-circuit-concludes-recovery-act-bars-judicial-review-of-suits-against-fhfa-over-treatment-of-fannie-and-freddie-shareholders/

The problem is not with the rulings of the courts. The problem is and always has been that the plaintiffs attorneys have only challenged the “Actions of the Conservator” such as the NWS or other provisions of SPSPA which is a contract. 4617f bars courts from questioning the actions of a conservator. As it should. None of the 15 + years worth of court cases have challenged the action of the FHFA as regulator or Treasury with respect to the statutes that actually matter. The charter act, safety and soundness act, chief financial officer act, etc. To get a takings or an illegal exaction verdict, you have to show that the gov broke the laws. The actions of the conservator cant break a law. But if you go before a judge and say the SPSPA is bad and the gov stole our companies and limiting the argument to the specifics of the SPSPA agreement and the amendments you get 15 years of no results.“

[stockanalyze]

several posts within a minute, i could not even type with spelling mistakes suggests well cordinated effort here. look them up. beware.

[jog49]

Guido,

If you wake up one morning to find your feet encased in concrete, and before your journey ends, know that we appreciate your efforts

[RickNagra]

Quite a few big buys so far in the day. We should be turning green momentarily. Please be prepared and look your best. Whales like well dressed and well mannered astute brilliant smart intelligent investors.

[clarencebeaks21]

The assertion that the NWS was not validated as legal or illegal is false or misleading or both.

If by “illegal” you mean ultra vires or arbitrary or capricious, you are incorrect. In Collins, SCOTUS quite plainly reviewed the plaintiffs’ APA 702 claims and held —unanimously —that the Agency acted within its powers and functions.

If by “illegal” you mean something else, you are guilty of the fallacy of non-sequitur because SCOTUS cannot fail to decide on something it is not considering.

Skeptic, to me, is suggesting that Collins stands for a proposition: if FHFA survived one challenge under the APA, then it could use the same legal standard to survive another similar challenge. And that is correct.

To understand why, reread pages 14-15 of Collins. To survive an APA 706(2)(A) challenge, the standard is that an agency only needs to provide a reasonable basis in the record for their decision. In Collins, Alito failed to expressly list this standard, but he did explain its application to the facts and how FHFA *met the standard*:

“Whether or not this new arrangement was in the best interests of the companies or their shareholders, the FHFA could have ***reasonably concluded*** that it was in the best interests of …the public…” (emphasis added)

So altogether, in Collins, SCOTUS *does* decide the legality under the APA of FHFA’s decision, and Collins stands for the proposition that Conservator decisions that elevate the interest of the public over that of the companies or shareholders, only need a reasonable basis for doing so. A reasonable basis may arguably be a low bar, but it is not no bar at all.

[imbellish]

Based - this is exactly correct.

Rhetorically using expressions "dollar for dollar" does not explain the accounting. It's just rule by Rhetoric which they expect to get away with. Pungent den of parasites.

[trunkmonk]

the anti GSE common share crew is maybe a couple people, 🤡KTNoNameCarneyClown🤡 and many others that complement each other, are one in the same person. He is an angry little reporter, who was paid by Preferreds or Gov, maybe Corker, to bring down the commons because they were shorting or they were pushing the receivership BS for years in order to get lots of common shares at 10c. U know the voice, the former shell man who was lost and now is coming back to center, he was the front runner for the big conversion while they were laser focused on losing in courts. most of the real pro reporters are gone, filled in by 3rd rate guys like KTNoNameCarney, with all kinds of agendas that include impersonating legal counsel on social media. what a freak. But he still draws in feeble minded kids and new investors, which is why how he survives and thrives his tainted agenda.

[RickNagra]

Oh wow. Did you open another bank account this morning ? There is no need. My bank account is completely empty. Just use mine.

[Guido2]

I'm not suicidal either. If anything happens to me, it will be because I continue to expose our government's swindle of Fannie Mae and Freddie Mac equity while they remain in a fraudulent "temporary" conservatorship since 2008.

FREE FANNIE!
FREE FREDDIE! https://t.co/PMNPzEAUP3

— Guido da Costa Pereira (@GuidoPerei) May 2, 2024

[Guido2]

Just wish to add to your excellent post. Mnuchin sent SCOTUS a letter stating that he and Calabria had ended the NWS. One of the justices even referenced that letter.

[skeptic7]

they upheld the validity of the NWS and said it was not illegal and could be enacted at the discretion of the conservator. You are correct, they did not say that the NWS or the c-ship was here in perpetuity, and my meaning was that by upholding the validity of the NWS, it will be used in a manner to reduce capital retention as needed, so they've simply assured that c-ship isn't going away.

My opinion, so you can talk about all of the acronyms and nuances you like, but easier to just look at the blue print they've laid out and realize the possibility. You know a lot of companies with trillions on the books, most profitable earnings per employee, billions every quarter in profits, that trade on the OTC and whose PPS goes down after better than expected earnings...every time? Me neither.

[DaJester]

"no write off is written in a footnote"

I'm not sure what this refers to. There is no law or regulation that I'm aware of that prevents Treasury from writing off some or all of the LP. If anyone has evidence to the contrary, I'd want to read it. The SPSA says the seniors are not convertible, but that doesn't mean much either.

[Rodney5]

Skeptic Quote “ Because of the scotus ruling the NWS is here in perpetuity,” End of Quote

I’m not sure if you’re understanding what the SCOTUS actually said,

All the lawsuits challenged the actions of the Conservator within the terms of the SPSPA... AND The Supreme Court basically said we will not rule or give Judgment are act as an arbitrator on the contract the SPSPA. So, the NWS was not validated as legal or illegal by the Court: The Court dismissed the lawsuit. The SCOTUS did not rule the NWS is here in perpetuity.

Now if the lawyers would apply the Law.

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174342904

[Sammy boy]

New journey to two, da moon by noon !

[skeptic7]

They'll never get to that threshold. Because of the scotus ruling the NWS is here in perpetuity, and when the threshold gets close (I believe slightly different figures for Faniie and Freddie) they will create a scenario for a net sweep and thereby reduce the amount of retained capital.

[skeptic7]

You'd think so, wouldn't you...

[Donotunderstand]

KT hits and misses - IMO

I do think the no write off is written in a footnote in one of the reports by FHFA/F/F ?

but - IMO that is 100% a THEN opinion

[nagoya1]

What happened to the GSE related libor case, that poster has suspiciously kept quiet. Where are the facts…hmm.
It’s probably taking as much time as sleet footed judge Lamebert halloween coinciding yearly judgements. Must have been labor..
Fnma

[Wise Man]

A Common Stock represents a legal claim on all the future EPS

Which is either distrbuted as dividend to common shares or kept by the company as Accumulated Retained Earnings account.
This is why this account is included as an item to calculate the Common Equity.

And this is why the stock valuation is calculated at X times the EPS, without analyzing what portion will be paid out or kept by the company.
What's 14 times $0.00 EPS?

[detearing]

Hearing of the few paid bashers that put clown symbols on posts I respect, though I put the ihub-clowns on ignore long ago, on FNMA FMCC...truth keeps giving me confidence we getting released soon.

[JOoa0ky]

Incorrect.

The pattern is: We are certain to go green for 2-3 days whenever Along4Zride initiates his short.

[LuLeVan]

Curious - Do you have a re-entry point in mind if the JPS come back down?

Hard to say. If Biden wins (unlikely), the JPS could drop below $2 again. If Trump wins, nobody knows when and if he will act, we could see the shares trade sidewards around current levels. The courts are of no help either. I might reenter if the JPS are in the 3$ area, starting with a small position.

[Wise Man]

The fraudsters want to become more Communist than China.

Existing common shareholders do not own the companies at all. They have no economic rights and no voting rights. Nothing.

Economic rights don't exist because there is no "right" to anything, but a legal claim.
For instance, the JPS have a legal claim on a dividend payment as per contract with FnF, but there is no Right, as those can be suspended at the discretion of the Board of Directors (for recapitalization, not for fun) and also, restricted by law when FnF remain undercapitalized (Restriction on Capital Distributions. IN GENERAL).
A Common Stock represents a legal claim on all the future EPS ( Net Income Attributable to common shareholders, after the payment of compensation to the Preferred Stocks, and shares on a fully diluted basis -Warrant-. Hence today's market price discounting a Machiavellian Conservatorship).

You mean Property Rights like the Legal Ownership, which is inherent to a common stock and they've remained deposited in our broker accounts all along, acting as custodians.
You are talking about a Receivership instead.

Other rights, like Voting Rights were transferred to the conservator in order to allow it to fulfill its statutory mission.
Once FnF have met some minimum thresholds (MANDATORY release Undercapitalized in the FHEFSSA , struck by HERA. Image below), FnF are released from the TEMPORARY Conservatorship, and those rights are returned, unless the conservator uses its Incidental Power "in the best interests of the Agency" ("authorized by this section" means Capital Adequacy-wise), to extend it more years, seeking a "membership cleansing" (FHLB-style in a 2016 Final Rule) with the redemption of the JPS (Core Capital and AT1 Capital), which is what is happening (Conservator Risk).

[Rodney5]

Donotunderstand, the LP is not and never was repayable is a lie. The persons pumping that are spreading a lie. The problem is the Law has never been applied.

READ IT AS PLAIN AS DAY

It’s bad faith and unfair dealing when the Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval to pay down the Senior Preferred Stock the Director has the authority from Congress written in HERA:

HOUSING AND ECONOMIC RECOVERY ACT OF 2008

RESTRICTION ON CAPITAL DISTRIBUTIONS.— page 2731
‘‘(1) IN GENERAL.—A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized. The exception.

Quote: “Page 2732

EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.

NOTE: REPURCHASE, REDEEM, RETIRE...

WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.

Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf

In essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full. The Treasury did not take a Perpetual Equity Investment in the enterprises, the Treasury stated a temporary investment period!

The liquidation preference has be paid and the Senior Preferred Stock should be canceled.

The law actually exists! FHFA and its Director are executive branch entities. They can not make changes to federal laws. Only Congress can change the law.

Therefore, the U.S. Congress did not give DeMarco the power to take all the future profits of their wards in conservatorship into perpetuity, thus Nationalizing the GSES, based on an Incidental Power in HERA: The Net Worth Sweep.

The U.S. Congress would have given the FHFA more explicit instructions to do so than merely drafting in the HERA to do whatever it feels is in its best interests. DeMarco, this non-elected bureaucrat, has been allowed to steal the companies for the Treasury.

The SCOTUS upholding the NWS does not change the fact the liquidation preference can be paid down and the Senior Preferred Stock redeemed under the terms of the law of HERA. The money kept by the Treasury by the NWS should be applied to principle and 10% interest and over payment should be returned to the companies. $301 billion is more than enough to pay the liquidation preference and redeem the Senior Preferred Stock.

[Wise Man]

Kphut19, a financial illiterate repeating the same lies over and over again.
The SPS LP increased for free is

off balance sheet

Primarily, it's false because they must be posted on the balance sheet.
Secondly, even if that were the case, FnF publish their financial statements on a consolidated basis. For instance, this is why their $7 Trillion worth of UMBSs held in MBS Trusts (Special Purpose Entities, SPEs), is shown on the Balance Sheets.

He wants to conceal that they carry an offset, with the reduction of Core Capital (Retained Earnings account in this case), like occurred with the initial $1B SPS LP issued for free.


A Financial Statement fraud.
And thus, FnF aren't building regulatory capital (Retained Earnings account, Core Capital) but SPS (Capital Stock) in their Net Worth.

[FNM500K]

Karney19 on a posting frenzy? We are looking at green tomorrow!

[Wingsjr]

You’ve pumped this bull 💩 for years. I can tell you with 100% certainty, common shareholders will get very rich off FnF. We will see 80/share minimum. If they try to screw us shareholders, there will be no second offering or reoffering because we will sue and nothing will happen for another 15 years. The SCOTUS already hinted that a takings case would be won by us if brought to the SCOTUS.

[TightCoil]

11 hours until opening bell...Are You Ready?
i might have to open another bank account
to hold it all

[DaJester]

"Existing common shareholders do not own the companies at all. They have no economic rights and no voting rights. Nothing."

If you want to make an extreme click-bait statement, sure.

But as usual, you state facts yet drill down to a single conclusion that only time will tell if it's true. We are still shareholders. Shareholders have the rights associated with the Shareholder agreement. These rights do not dissolve suddenly in 2012 because of a contract between two government entities that violates the fair dealing with Shareholders. These rights travel with the shares. This is backed by the Berkley verdict.

The economic and voting rights are temporarily suspended during conservatorship. That is why it is a Conservatorship and not Receivership. Dilution of those rights is possible as part of the emergence from Conservatorship. In fact, Treasury could wipe all of the Common and JPS value based on their LP amounts. It's also possible they don't wipe 100% of the value of the companies. And no - the amount of equity Treasury took from AIG has zero bearing on what they may take from the GSEs.

Furthermore, FHFA (control) and Treasury (ownership) fall under the Executive Branch. As such, the control and ownership can be altered based on political winds of who is in charge of the Executive branch at any time. It is possible the leader of the free world will abscond with the value of 2 publicly traded private entities worth billions of dollars. It's also possible the leader of the free world will believe in the 5th Amendment. We may see a concept similar to Tyler v. Hennepin County, where the GSEs would be seen as obligated to render unto Caesar what is Caesar's, but no more. The resolution of Conservatorship may include NOT further violating the covenant of good faith and fair dealing with Shareholders. IMO, this would be the smarter resolution.

It is completely unnecessary for Treasury to liquidate the GSEs in order for them to function again or to be rehabilitated. There is no need for a government windfall to make Caesar whole. So while I agree with you that it is possible Treasury conversion wipes common shareholders out completely, I also see other possibilities. If you don't see those possibilities, that's on you and I'm sure you will invest accordingly.

[EternalPatience]

if Fart noise says it, it must be true

[Fannie Heyyyyy]

KThomp, you appear to have a solid, in depth understanding of FnF history as it pertains to FHFA and Treasury.

I enjoy reading your posts, but I have no idea on how you see the conservatorship ending. How do you see the preferreds and commons doing? I realize there are numerous possible outcomes, but I'm curious what you think.

[basesloaded]

Agreed!

[JosephS]

They are not here to make money

They’re just here to argue

[TightCoil]

The Conservatorship and it's administration REEK with CORRUPTION

[Donotunderstand]

Page 47 of Fannie Mae's 2024 Q1 10-Q form shows that they have a shortfall of $156B to the Adjusted Total Capital requirement of $106B. 25% of the $82B buffer adds another $21B to give the total shortfall to being able to pay dividends: $177B.

$121B of that could be made up in an instant if Treasury decides to cancel the seniors

and it could happen - the GOV could cancel the LP value of the SP equity

if done - then the shortfall is 177 minus 121 or 56Billion

Worth hoping and waiting for

[Guido2]

Good governments don’t put their most profitable corporations in fraudulent “temporary” conservatorships and then swindle their equity for pet projects not funded by Congress.

FREE FANNIE!
FREE FREDDIE! https://t.co/k0pI6bY97h

— Guido da Costa Pereira (@GuidoPerei) May 1, 2024

[Donotunderstand]

but is it on the TREASURY balance sheet ? and if yes - how does it show --- as the SP value or ?

[Donotunderstand]

the LP is not and never was repayable.

F and F will likely not have the money - but why is the LP (a # defined to rep the SP equity value) not callable ?

[DaJester]

Glad you were able to make a profit. :)

Curious - Do you have a re-entry point in mind if the JPS come back down?

[Donotunderstand]

I do hope so !!!!!!

yet - the LP sits out there --- ?

[Donotunderstand]

I saved this to read slowly

Thank you - solid explanation

[The Man With No Name]

Is there any other channels on AM?

[NoahG15]

Lulevan, I've enjoyed your perspective on this morass over the years.

Good luck to you sir; I hope you'll continue to linger around.

[jog49]

Yep, that's why there were recent jokes about 5%. As soon as 4% is achieved (which is way out there) the government will then move the goalposts to 5% . . . so on and so forth........

[DaJester]

One man's noise is another man's music. Don't like it, change the station.

[DaJester]

Calabria's position is clear, and he is the author of the book. But last I checked, he speaks from FHFA position not any official Treasury position. You repeating "Treasury thinks it's illegal" is a highly inaccurate and liberal use of a book quote. There may be a PERSON or PEOPLE at Treasury who thought that and may have stated such to Calabria. However, someone thinking it does NOT make it true that it is in fact illegal. You keep acting as if it is because it's in a book.

I know you can follow this train of thought, you simply refuse to.

[DaJester]

"Calabria repeated his preference for a senior-to-common cramdown in this article, so if you're referring specifically to that then the evidence is still on my side."

And how exactly does that relate to what "Treasury thinks?"
-------------------------
Treasury Thinks ™
- Copyright KThomp 2023

[DaJester]

"Are you really basing part of your common investment thesis on the idea that someone, someday, might bring a lawsuit and that said lawsuit would succeed in such a way as to make the common shares worth appreciably more?"

No, I'm just conversating and speculating what could happen.

"The 2012 NWS already removed all shareholder economic rights in the future by making it impossible for FnF to ever build capital"
And there will soon be a ratified 2023 decision that says Shareholders do have a right to reap in the benefits of the company profits as per the shareholder agreement. What's your point?

[DaJester]

"Does that mean if a senior-to-common exchange happens you think it will be too late for anything to be done about it? The same logic would apply to warrant exercise."

Yes, although this doesn't mean lawsuit/s won't be filed after the fact. They just have a near-zero chance of success. What are they waiting for? I don't know, I don't speak for "they".

"they would have to take a $200B writedown of asset value, thereby increasing the national debt by that amount"
Yes, but how did the rogue assets get on the books to begin with? It's kind of like the DTAs, it's all just bookkeeping entries and where they are entered. This is different than actual or future cash flows. There is no tangible taxpayer money lost by halting the future pillage of privately owned companies. It's not their (future) money to lose. It sits there as an accounting entry based on the ongoing conservatorship and resulting dividends.

The money recovered from the initial draws/debits has already been entered on Treasury's books and already exceeded the draws. Unfortunately, it was not used to write down the assets because they built the contract in a way that prevented that logical return of capital. But it was actual cash received by Treasury. A write-down could rectify the accounting to prevent a government windfall - 300bn already received, plus another 300bn to retire the SPS? Just as easily as the conservatorship started with government policy, it can just as easily end. This is mentioned in the footnotes of the report: "Estimated senior preferred values and future draw amounts will depend on numerous factors that are difficult to predict including, but not limited to, changes in government policy with respect to the GSEs". The amounts CAN be altered with a pen swipe.

While it's possible the 300+bn worth of SPS gets converted, it's also possible it's less than that. Just my opinion and speculation, so no - I will not share a calculation nor will I file a prospective lawsuit on behalf of "they" in case you were going to ask.