Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
So you are saying that Fairholme is meddling in another case, attempting to stall any decision in the Roberts litigation until the Perry Appeal gets handed down? Wouldn't that tend to validate Mr. Sammons claim that things are getting dragged out? Couldn't this lead to an intercession being filed in the Perry Appeal by a shareholder who is tired of and scared by the endless legal jostling over documents and discovery? Wouldn't a dismissal by Judge Chang be reviewable under appeal if later information surfaced that contra-indicated such a decision, making any delaying action unnecessary? Wouldn't a favorable ruling to hear Roberts by Judge Chang be favorable to plaintiffs in many pending actions? Why delay?
Something smells bad here.
Please clarify what you meant by "getting roberts by the perry capital appeal".
JMHO.
Desperation has entered the Berkowitz compound in Miami? "Hold everything for documents (never seen 'em, but could be juicy)?"
Looks like a Chang Bang could be in the offing, about any day now.
Domino time?
JMHO.
No need to speak to him. He also filed a report with the court asserting his status as a private, non-aligned party in the matter. He is a citizen concerned with losing $1 M in Fannie Mae stock and who feels his interests are not being properly protected under the present proceeding underway in the Sweeney court.
http://gselinks.com/Court_Filings/misc/17-102-002.pdf
It strikes me that the little guys are now fighting for themselves because the big boys are turning this litigation circus into a quagmire with no exit in sight. I see some of the same potential rationale in Collins suit.
JMHO.
In very simple terms, a writ of mandamus stops a case in progress before a verdict is rendered so a point of law can be considered. In this case, that point concerns which court should be hearing the Fairholme case. The petitioner, Mr. Sammons, claims that the law requires a lower court with elected judges, not judges appointed by the government, to hear the Fairholme case.
The writ stops the original court process before any decision can be reached until the point of law raised in the mandamus is ruled on by an appeals court. This can be a matter of a few weeks or many months depending on how things play out in court.
Now the outspoken Fannie Mae M/B Law Review Panel can tell you all the reasons why I am wrong for my explanation.
JMHO.
You got a writ of mandamus, right on schedule.
http://gselinks.com/Court_Filings/misc/17-102-001.pdf
Exactly as I correctly predicted.
Next up? A Cubs curse-ending Series victory.
Today's real news: writ of mandamus filed and docketed by Mr. Sammons.
Au contraire, mon ami. The trend is NOT your friend. Nor does it support with any certainty, claims of "All is well" in at least the Freddie realm of release and recapitalization probability. If the sweep stopped, come Monday morning, Freddie could not just resume op's in accordance with regulated parameters by which they must abide because they don't make enough profit to rebuild, even if they continue to stiff the preferred shareholders. Fannie is in much better shape. Freddie is "Dead Man Walking" which is why I don't own it. If the hiatus on JPD gets lifted, there is almost NO $$$ left to rebuild anything. And if they don't restore dividends, they lose one of their primary sources of capital as banks look at an anemic income statement and say "risk, risk,risk... tsk, tsk,tsk..." and UP go the rates. You don't think the Fed is going to go low, lower, lowest on rates to FMCC when they are no longer paying the bills with UST payments, do you?
You see, all the pieces fit together.
Freddie Mac's profit in the glory hole year of 2013 (the reversal Nirvana) was a huge (maybe better described as STUPID) $48,668 M. Then it sank like a rock to $7,690 M in 2014. Then in 2015, it sank again to $6,376 M. Then the easy part of recovery slid into the rearview mirror as reality set in. The last 4 quarters look more like a red blanket in comparison to the prior better days of a "go go" economy:
Q3/2015 = ($475 M). Q4/2015 = $2198 M. Q1/2016 = ($354 M). Q2/2016 = $993 M. That is NOT sufficient to revert back to the pre-sweep 10% dividend, nor would that profit rate serve to recap Freddie Mac in any sustainable way because virtually all the "profit" is derived by continuing to STIFF the junior preferred shareholders that have gone UNPAID FOR EIGHT YEARS while touts like you hollered "look at how profitable we are." Of course you were profitable. You hid behind the government charter to pay no state or local income tax, stiffed the FnF junior preferred stockholders that put up like $60 B in capital prior to September, 2008 that got nothing... and then want to puff your chests out and claim "How Great Thou Art."
What a farce.
JMHO.
When it comes to owning Fannie Mae preferred stock, why... yes... I already have gotten a nice treat with the share price run up over the last two weeks. I could sell for a profit, even now, but I'll wait for a more opportune time to make an even larger gain later. I think its is going to be HUGE.
You see, Guido, I have a thorough and well thought-through and well-researched investment thesis on how this whole FnF thing plays out. I have modified it, several times, over the last 3 years, and I have a lot of confidence that it is dead on the money. It's now almost like being able to peek into the future and know what's coming next. Look at all my many predictions both here and on YMB (where I know you best from) that have actually come true. There are many of them. And there will be more.
But, going back to your Halloween question, no I won't be dressing up for that special night. I will leave the Creepy Clown and Troll costumes to those that deserve them more.
Actually, Freddie made NO payment to UST during those two quarters and could not have made the original 10% SPD dividend prior to Amendment 3 being put in place. We can all argue over whether the combined FnF bailout total of $187 B was paid back or not, but that is a whole different discussion. Freddie paid Treasury nada during the two loss quarters and, obviously, could hardly have supported the costs of the Affordable Care Act during that time frame, either.
I will keep trying to have a conversation here, not an argument simply for argument's sake..
JMHO.
Freddie's profits couldn't have paid for very much of the ACA. They lost money in 2 of the last 4 quarters and could be fixin' to lose even more in about 2 weeks. I personally think that is why Edwards/PWC is moving towards a settlement. Bad numbers will only tend to corroborate that their audit role reflected the realities of tenuous FMCC results. Maybe that's why Deloitte lingers on? I can only guess on this.
What do you think of the mandamus stuff? I still thought a stay during Sammons appeal, for however long it survives, would come first.
JMHO.
Looks like the mandamus appeal is now game on.
JMHO.
Sweeney's caught in "Fifty Shades of Gray" restraints.
Sammons docketed appeal is the handcuffs.
A government mandamus appeal on documents is the leg irons.
The election is the blindfold.
And Q3 earnings are the source for the upcoming whipping.
"Go ahead. Hurt my Fannie. I can take it."
Now that's better than "spanking the ask" isn't it?
LOL.
What time, today, is Sweeney planning to announce her sanctions?
Hey, there's the first confirmation of a mandamus filing, a concept that I introduced to this board, weeks ago.
Basic math? That would include factoring in the 8 years of junior preferred dividends that were cancelled, went unpaid and which you now claim are profits from ongoing op's. LOL. That's a riot.
In 2018, Fannie and Freddie are broke. Refute that with real numbers if you want to be proactive. Forensic analysis of that scenario cann only be performed via autopsy on a cadaver.
JMHO.
1.The stress test substantiates the concern for inadequate reserves. It is a "Houston, we have a problem" moment of concern for the regulator/conservator and for Congress considering reform measures.
2. My predictions were over another housing crisis which may or may not signal a decline in housing prices. Many experts share this same concern.
3. There is zero consideration of or sympathy for big banks that would ever lead to another bank bailout. Have you listened to Capuano or Warren?
4. Loss provisions carry no absolute certainty. They are estimates. Just like earnings predictions are simply estimates.
5. The stress test numbers have nothing to do with McFarland, nor did I ever say or imply this. The actual reported income numbers, however, DO MATTER, and further weak numbers would refute the GSEs ability to exit conservatorship and recapitalize. The recap $$$ COMES from income. Two bad quarters at Freddie DO discredit McFarland's projections.
6. If all the GSEs losses are from derivative hedging and simply recycle,over time, then why would not the identical presumption apply to any income, going forward? Are you saying all McFarland's income projections are bogus, too?
Your argument is like watching the computer's refresh arrow as it just endlessly spins, round and round, while the computer is rendered useless until you give up and end the seesion.
JMHO.
The recent Fannie Mae stress test says you are patently over-optimistic.
"Oh, well, you see we just toss that inconvenient fact aside because it doesn't suit our agenda. We want to limit discussion to Forensic Accounting studies done in 2009, not anything done in 2016 that serves to rebuke the "All is Well" proclamation from the Town Crier/ Village Idiot (choose one)."
JMHO.
I continue to hold FNMA Series S preferred shares because after 12 months of stock ownership, I pay a 20%[ cap gains tax rate instead of normal taxes that are almost double that rate.
It's all just mathematics. You never really grasped that about my strategies @ XIDE or DNDN/VRX, either. But that's why I made money there, and will here, too.
JMHO.
For shareholders who were not appellants, this translates as: "No tickee, no washee." It means you get NOTHING.
Great news, huh?
JMHO.
Thanks for a thoughtful post. Sadly, I think most of the affordable housing discussion and the political consequences get lost in the rancor over who gets the $$$ in all this. I agree that a dangerous downside exists that is not helpful to the greatness of America, over the course of future history. I recently posted a lengthy message on the FNMAS board on this if you get bored, later in the evening, and want some mental stimulation.
I don't fear any tax loss selling, this year. A lot of the residual "holds" are remnants of the "Ninety Eight Cent Beauty Contest" dip from earlier, so they won't sell, and the balance are long-term "Under a buck'ers" that have been here since time immemorial... so I think they will just ride out the delays like me.
I fully expect the Perry Appeal will confirm the Lamberth dismissal. The contract basis is a big load of crap. The Fairholme suit under Sweeney has better "legs" if the basic premise could ever breath clean air without Docugate fumes numbing the court's sensibilities and understanding of the law. The pith of the matter has been lost in the pits of winning in the wrong game by plaintiff attorney groups. Stupid, if you ask me.
Too bad MorRon Steal blew the Delaware opportunity. A simple maneuver into a claim for "all preferred shares required to equal, pro-rated dividends under state corporate law" could have ended this, once and for all. Instead, MoeRon went for enrichment which is just another ludicrous rabbit hole that will deliver no end benefit.
I, too, will buy more preferred shares if the prices compress due to impatience with lack if progress. I also believe the impetus to resuscitate some eventual settlement will ratchet up in 2017 as the window to receivership starts to crack open. Never forget that the 79.9% of commons that the government holds in warrants become valueless in any liquidation, just like all other common equity. Sadly, resistance to "giving an inch" has annealed as a legal contest of wills for all or nothing outcomes that pit the immovable object against the irresistable force. Call it mano-a-mano, pighead vs pighead... it really doesn't matter.
The net result is no movement, no progress and no reward for shareholders.
Go Cubs.
JMHO.
Okay. please name one FNMA accounting person that was instructed to cook the books or alter numbers by FHFA. Or one FHFA plant that was imposed into the GSE accounting function to effectuate cooking the books.
I think you may have just entered "The Twilight Zone."
Prove it.
JMHO.
So you are accusing Layton and Mayopoulos of accounting fraud?
Wow. Doesn't sound to me like a team that anyone should consider releasing to run a less regulated entity by retiring the conservatorships.
Is that really what you mean?
JMHO.
"Its (sic) not about profit... its (sic) about net worth and reserve (sic)."
Where do you think the net worth and reserves come from, playing Pokemon Go?
That is total, unmitigated bullshit. Any pre-conservatorship manipulation was done by Fannie Mae and Freddie Mac personnel, not by government. "The GSEs giveth, the GSEs taketh away."
Sorry for such extreme financial pressure on an "all in" investment in FnF. Because of preferred share liquidation preference, I think all pfd shares will finish in the money, to whatever extent we are able to remain in the game. I plan to be there until the end. I could use a win, here, just like everyone else.
Good luck. By the way, I feel the same way about YOUR Seeking Alpha reports. Just like diarrhea. All runs, no substance.
JMHO.
This article only serves to reinforce a point made yesterday on the earnings expected in week #1, November being so important. If weak numbers are out, there goes the argument that no death spiral was appropriate and the McFarland numbers should have been given more gravitas vs. the decision to impose Amendment 3. The 10 year profitability put forth by Susan McFarland was then spurious, at best.
The recent Fed housing assessment linked on this board in the last 24 hours shows housing market weakness tied to reduced "for sale" inventory and rising prices. A weak market unable to generate real estate growth despite record low rates and plenty of bank liquidity (the GSEs are doing their job) seems to make recapitalization under any release scenario seem highly unlikely. That would also seem to make any further bailout requests to be ill-advised by FHFA Director Watt who alone has the authority to consider the GSEs ability to repay further UST draws and choose the receivership option.
That is why I believe we may be barely over a year away from a liquidation. This also is why I own preferred shares. Other options would be worth far more to me as an investor, but receivership is at least a safety net that would likely extend some kind of payoff, even if well below par value. If the Q3 numbers are strong, all the better. If not, I am at least basically hedged against a dire alternative outcome.
The Appeal panel judges are well aware of Freddie's shaky profitability in two of the last three fiscal quarters. I find it highly unlikely that they will remand under an order to rescind the 3rd Amendment. They could remand under a recommended limitation on either % or duration. That would be far more likely.
I keep saying that the delays and gambits are not favorable to shareholders who seem to greet each new court challenge with enthusiastic support and celebration. Time is running out.
JMHO.
"The Perry appellate decision could invalidate HERA if won" as a statement is a far cry from saying a remand would contain reasons for the remand. Of course any appeal ruling other than to affirm the Lamberth dismissal ruling would have a rationale for remand. That is judicial SOP.
My statement was, and remains that no action undertaken in the Perry Appeal will EVER invalidate HERA. That statement is 100% certain because no complaint within the corpus of the appellants case cites HERA as invalid, only actions by government as being inconsistent with the provisions of the statute.
If you wish to argue the point further, please offer one example where any legal statute that was not claimed as unconstitutional in any appeal led to the Appeals court ruling the law, though unchallenged in the appeal, was invalidated (clearly means overturned). Or, alternatively, please cite one claim in the Perry Appeal that states that HERA as a law is unconstitutional and should be repealed.
JMHO.
Yes, I agree totally with your read. It's kind of like the "nuclear option" frequently mentioned in congressional discussions of the debt ceiling.
Were this divorce to take place, would this leave the GSEs as unregulated fully-private businesses? Would the former regulator be reinstated?
The one facilitator in this would be satisfying the camp within government that cites reform as necessary to prevent another bailout. That part goes away with dissolution. What remains, unresolved, is the surviving questions on the fate and future of affordable housing.
Never devoted enough time to diving into this agreement. I'll have to work on that.
JMHO.
Horseshit. The appellate court cannot invalidate a Federal law in HERA. The law is not under challenge.
LOL. This is like bonehead level law stuff.
JMHO.
I understand that Bill Clinton is an avid follower of the Fannie Mae and Freddie Mac court cases and, recently, said regarding Fairholme and the Sweeney Court: "I can't wait for orals to begin."
I'm pretty sure that's what he meant.
FNMAS preferred shares have another surge, today, up to $4.24. Just like I predicted. Common shares remain exiled in the basket of deplorables.
JMHO.
No. The Perry Appeal is on a motion to dismiss. All it can accomplish is to send the discussion back the lower court for reconsideration and possible reinstatement of the case, which still would have to be heard before any change to HERA could take place. Very low probability that any such action would be a repeal order without a constitutional challenge being filed.
JMHO.
The post said something good was on its way for Fannie Mae shareholders and public details would soon be out. What's the big deal?
Thanks to Il Padrino for posting what he was comfortable divulging. I will look forward to the details and how they affect Fannie Mae on the litigation front when they become available.
JMHO.
It's really, REALLY simple. The CFPB ruling is no huge win for Fanniegaters, despite claims otherwise. Introducing this precedent into pending Fannie cases will only deter any decisional timeline on everything for an extended period of time.
My word choices were confusing. Sorry for that.
JMHO.
I have more respect for what YOU reported that George W. Bush said about the GSEs... that the GSEs are private enterprises under conservatorship.
The fake Tim Howard has little to no legal rationale tosupport so outlandish a prediction. FHFA is not an independant governmental agency, it is a private enterprise under conservatorship. Plaintiff's attorneys would be nothing short of NUTS to introduce this CFPB decision into any pending action. Any delays you have seen up to this point pale by comparison to what any such action would precipitate. Add maybe 5 years before any endgame ruling if they are foolish enough to attempt any such gambit.
JMHO.
No pending suit seeks to invalidate HERA. Introduction of this latest ruling's precedent, with eventual repeal of the law as a goal, would require a new suit be filed challenging the constitutionality of HERA. This is a point I have been trying to make for nearly two years on this board. Lamberth underscored this in his decision, just in slightly different words.
All the PHH suit accomplished was pushback from a Director's decision on fines. Interesting to note that the victory in court came, not from disputing the claims of wrongdoing that prompted the fine, but rather from disputing the right of the other party to impose a claim. This is actually very similar to government's strategy by claiming plaintiff's have no right to assert a claim against them.
JMHO.
CFPB acts as an autonomous entity with no balancing supervision from the POTUS or other highly-placed Executive Branch supervisors. The court ruling says that the Director has too much power and, thus, functions as an unregulated regulator with too much power to act unilaterally. Some believe that the precedent in this case can be applied to FHFA, as well, leading to an end to conservatorship or a discrediting of HERA which seems to empower the FHFA Director in similar fashion.
That would be the upside to such a ruling for Fannie shareholders. But wait. There's more. It's not all sunshine and roses in this ruling.
Part of the discovery/document brouhaha focuses on seeking support for claims that UST or the POTUS may have violated HERA which states that FHFA must act in a fully autonomous way but they interfered with the process, making such actions illegal. So applying this new precedent, you could impose new rules on FHFA or have it or HERA ruled unconstitutional, have limitations imposed upon them by the court, etc. But in doing this, plaintiff's would also let Treasury and the Government off the hook for any settlement or damages because their actions actually keptFHFA within constitutionalboundaries. So, in short, there goes all the money for huge S/P wins in Fanniegate since the U.S. has it and FHFA or FNMA or FMCC do not. So... it is very unlikely that this ruling will ever be introduced to any pending Fanniegate case. Put your pom-poms down, yet?
But wait. There's more.
The ruling actually was the near equivalent of absolving a big bank, PHH, who is a major real estate mortgage originator. Sort of like a TBTF bank. The suit was brought by an attorney active in Fanniegate proceedings, as well, and challenged the CFPB's Director's decision to increase a fine for illegal bribes/kickbacks @ PHH from around $6 M to around $109 M. So the ruling just let a bank off the hook for any fine for wrongdoing, which would be the OPPOSITE effect of the Wells Fargo stuff that has been used to discredit big banking's possible privatization of FnF's insurance business and the backing of MBS. So the Fanniegate lawyer got the TBTF bank off the hook. Stillexcited about this?
So this ruling is not all good news, except for PHH that gets off for bribery? Things just seem to get presented that way like every other hunt for something, anything positive to offset the gloom of ZERO PROGRESS for what seems like an investor eternity.
Spin on,though. LOL. Talk about lemmings...
JMHO.
Don't misquote me and don't distort what I stated.
1. I never said a stay was favorable to shareholders. A stay is favorable to further delays that could benefit government. Further delays might also lead to a settlement which would benefit all parties.
2. You presume to know what Mr. Sammons motive is. I believe Mr. Sammons only wants his interests protected by a change in venue.
3. Mr. Sammons could be a mole for either side, I suppose. If plaintiffs have concern that Sweeney may be teetering towards dismissal, or thePerry Appeal may be unraveling with the Wikileak/Podesta stuff that shows no improper motivation for HERA or conservatorship, they could benefit from a new court, too. I think neither possibility is likely.
4. "letting Sammons take the lead" implies no cooperation, conspiracy or linked action. If the goal was to delay things, it would only be logical to wait for a secondary action until after the first one played out.
5. "The U.S. could not file such an appeal" because they never raised a jurisdictional complaint in any of their previous filings. Neither did the plaintiff's legal teams. Sweeney mentions this, specifically, in her rejection order of Sammons letter to the court.
My comments on interlocutory appeal were intended to contribute to a discussion initiated by other posters. To imply some sinister ulterior motive to them falls more into the personal attack category than any constructive dialog to Fannie Mae and potential outcomes to the matters pending in court.
JMHO.
I believe that Sammons would be the party to file an interlocutory appeal because his complaint is jurisdictional in nature. Jurisdiction is often the rationale for many such predecisional appeals because any concluded end-ruling could prejudice an appeal's outcome. This effectively would serve to stall all other actions until the jurisdiction question is resolved. The U.S. could not file such an appeal because it never raised jurisdiction, but would fare better by letting Sammons take the lead on this. I say that because should Sammons prevail, it would be like hitting the reset button all over again and place a new court and judge in the discovery debate and possibly more favorable ruling than a rubber stamp of the plaintiff's original motion.
Besides jurisdictional basis, interlocutory appeals also can be favored when a defendant is citing immunity claims which certainly could be applied to disallowance of judicial review under the law as specified under HERA. I think this government option would be held in reserve for round #2, though only a portion of the motion to dismiss seems to hinge on any immunity claim under HERA. Much tougher sell to the court.
I still believe a stay motion will be the next development, unless a reply on the order regarding plaintiff legal costs on the Motion to Compel comes out first. Very interesting to watch this play out. This playbook is not out of freshman year law study.
JMHO.
Because I cited Sweeney's stated rationale does not mean I endorse it. All I did was explain it, as I interpreted her ruling text.
And I NEVER said "all this discovery is a stupid detour and Fairholme lawyers should not have gone down this path." Discovery is a normal part of most any plaintiff action.
What I have said is that the discovery process in Fairholme has been dragged out when the complaints in their case require simple rulings of law on procedure and areas that require no deep discovery diving into areas that seem irrelevant to the fulcrums in their litigation. Hence, much or even most of the requested discovery materials they demand seem to matter little-to-nothing in their suit, and only seem to benefit other parties in other suits.
Happy to clarify that for you.
JMHO.
It all depends, first on the assertions for rationale on which any appeal is filed, second on the way it is filed and third on the reaction of the court to which it is appealed.
I take a different view than one expressed earlier that a discovery appeal can only be initiated once a trial is concluded with a verdict. A writ of mandamus appeal can be filed after any judge's order that requires action. Any such action is no more expensive than any other appeal. Judge Sweeney's order to compel release of documents is precisely such a qualifying order/event and, thus, can be appealed BEFORE any compliance is required that would release documents or complete any other stipulated action then under review.
All court actions are reviewable under appeal, and no court order is automatically enforced when a litigant cries "foul" and objects to a remedy stipulated by the court that is claimed to violate any litigant's legal rights. The court cannot say to the government: "Your objections to release of privileged documents" can only be weighed for merit after they have already been released by the court and made public without your consent after the case is over." Sorry, but I have to disagree on that conclusion, if that's what it meant, as I at least interpreted it.
So, IF the government files an appeal, it MUST be re-affirmed, re-heard or rejected either by an en banc hearing in the same court in which the order was initially issued, or considered by a higher court of appeals. How that concludes depends on the filing mechanism that might be initiated by the party objecting. Most typically, however, this would be an action in the one-tier-up court of superiority. Exactly as with the Sammons appeal that was recently docketed in such manner with the Court of Appeals, one tier elevated from the Court of Claims.
The consequences are severalfold, if such an appeal is formalized by government, and, no, I have no way to predict what any such ruling might entail. The list of possibilities could eventually include: affirming the order to compel, forcing the documents to be released or risk contempt. Re-appeal to the next higher up jurisdiction, including the Supreme Court, in such case. A mediated settlement on document redaction or protection that is satisfactory to both parties. A rebuke of the initial judge's order to compel, whose conditions then become vacated. Or other eventualities or more unusual rulings that the appeals court might designate.
I believe the government will simply file a motion to stay the Sweeney/Fairholme case while Sammons wends its way through the maze. Thereafter, we'll just have to see if any next steps take hold. Said another way, more delays on the horizon when two immovable objects meet in confrontation over one immutable impasse involving 11,000 in-play documents.
We will all know something concrete very quickly on all of this which is to everyone's benefit. Including me, since I just want this stuff to conclude.
JMHO.