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Lamberth didnt get replaced.
Shareholders filed for a partial motion for summary judgement on a narrow issue re: the commitment fee.
This case cannot be dismissed in the summary judgment motion
It would/should be right after trial is over within weeks. More of a question how long trial will ultimately last if we get there.
Ruling on the law in motion for Summary Judgement comes before trial. Because if shareholders lose on the law, facts are irrelevant in trial so no need to call in a jury trial.
BREAKING NEWS: Odeon Capital Group LLC analyst Richard Bove cut the recommendation on Federal National Mortgage Association (FNMA) to hold from buy. PT set to 75 cents.
It's a hailmary statistically speaking not accounting for how strong the merits of the appeal is. Only ~1% of SCOTUS petitions get picked up.
Lamberth dismissed the takings claim in his court a long time ago, all thats left is the implied covenant claim. Court of federal claims just dismissed it as well. There is no more takings cases left outside of a hailmary appeal to SCOTUS.
I think ultimately what gets decided in the collins case at the district level will be irrelevant as the other side will immediately look to appeal it back to the 5th circuit en banc judges who will have final say on this issue. And i feel best about those judges given their past rulings in our favor.
I don't think its relevant as I think the remedy question present there is not the same as what's in front of Collins/Bhatti/Rop. The question specific to our case is, are shareholders entitled to retrospective relief for the period when Mel Watt was a confirmed director for an unconstitional agency directing the NWS payments to go through at a time when President Trump would have fired him if possible (2017 -> 2019) and stopped the payments like Calabria did his first few months in power. I haven't studied the All American case too closely so I could be wrong but I don't think the remedy questions are similar.
There are currently three constitutional cases pending, Collins, Bhatti, and Rop.
Collins involves potential remedy due to the unconstitutional structure of the FHFA. This case has been remanded from SCOTUS to the district court which should have a decision by year-end.
Bhatti and Rop both involve the Collins remedy question above, as well as an appointments clause challenge. Bhatti has already been remanded to the district court and just wrapped up briefing so we should have a decision by year-end as well. The ROP case hasn't been fully remanded to the district court yet. Oral arguments are scheduled for June 9th at the appellate level, but I expect a similar decision to Collins/Bhatti which will remand it to the district court later this year.
As a practical matter, wouldn't it be better to have a buffer above the LC, RBC, PLBA, and PCCBA to assure investors that any return of capital via dividends is sustainable long term?
(1) This is a leftover idea from Mark Calabria and reflects the previous administrations thinking, especially as it relates to the urgency of release from the CONservatorship.
Now that the ERCF has been finalized by the FHFA, both Fannie and Freddie reported in their Q1 10-Q’s their capital metrics under the ERCF for the first time as of March 31, 2022. Below is my attempt to summarize the findings.
First, there are two capital requirements, leverage capital (LC) and risk-based capital (RBC). Additionally, there are two applicable buffers, PLBA for the LC requirement and PCCBA for the RBC requirement. As I understand it, to exit conservatorship, the GSEs would need to hit both their respective capital requirements (LC + RBC), while the buffers are in place to restrict payouts to shareholders (dividends or buybacks) and executives (compensation) on a floating schedule dependent on how much of the buffer is filled that I detail below.
LC: As of Q1, Fannie has an LC requirement of 2.5% with a PLBA buffer of 0.5% (2.5% to exit conservatorship, 3% to be fully capitalized without any restrictions on payouts). Freddie has an LC requirement of 2.5% with a PCCBA buffer of 0.3 (2.5% to exit conservatorship, 2.8% to be fully capitalized without any restrictions on payouts). Assuming the senior pfds are either cancelled or converted to common shares, Fannie has a $61b LC shortfall while Freddie has a $58b LC shortfall to exit conservatorship.
RBC: As of Q1, Fannie has an RBC requirement of 2.5% with a PCCBA buffer of 1.7% (2.5% to exit conservatorship, 4.2% to be fully capitalized without any restrictions on payouts). Freddie has an RBC requirement of 2.0% with a PCCBA buffer of 1.4% (2% to exit conservatorship, 3.4% to be fully capitalized without any restrictions on payouts). Assuming the senior pfds are either cancelled or converted to common shares, Fannie has a $59b RBC shortfall while Freddie has a $41b RBC shortfall to exit conservatorship.
Calculation of maximum payout ratio as finalized in the ERCF:
- At < 25% of the buffer filled, the maximum payout ratio is 0%
- At > 25% but < 50% of the buffer filled, the maximum payout ratio is 20%
- At > 50% but < 75% of the buffer filled, the maximum payout ratio is 40%
- At > 75% but < 100% of the buffer filled, the maximum payout ratio is 60%
- At > 100% of the buffer filled, the maximum payout ratio is 100%
Based off these findings, I was able to calculate the GSEs after-tax ROE using both the LC and RBC requirements at various stages of the buffers being achieved. As an example, for Fannie, a 50% buffer allows it to pay out 40% of its earnings to shareholders, the LC requirement would be 2.75% which would achieve an after-tax ROE of 12.1% (assuming $15b normalized annual earnings going forward). Similarly using the same assumptions, the RBC requirement would be 3.3% which would achieve an after-tax ROE of 10%. For Freddie, a 50% buffer allows it to pay out 40% of its earnings to shareholders, the LC requirement would be 2.65% which would achieve an after-tax ROE of 10.5% (assuming $10b normalized annual earnings going forward). Similarly using the same assumptions, the RBC requirement would be 2.7% which would achieve an after-tax ROE of 10.3%.
Thanks for the clarification Tim P. Great to see you increase your conviction in the Jr Pfd shares over the last year!
Ok that is a future prediction, I was just correcting what you said:
A few months ago I told you guys that Market will implode and crash. It is doing that as I predicted.
Expect to see FNMA/FMCC trade south of $.50.
“Where is the buying frenzy?”
What do you mean jr pfd shares are up 50% since beginning of march.
Since the only surviving claim left is a direct contractual claim (vs a derivative claim on behalf of the GSEs), it turned into a class action.
All that's left in the Rop case which is currently in the court of appeals for the 6th circuit is to issue its decision (which will most likely look exactly like Collins/Bhatti did, which is to remand it to the district court for further proceedings).
Is the only remaining issue is whether there can be damages for the separation of powers constitutional violation as was decided in Collins by SCOTUS?
Has the case been remanded back to the District Court for the District of Minnesota?
Is Judge Patrick Schiltz and an appointed Magistrate presiding over this case?
Do you have a timeline for the next court action in this case?
Do you think this case can be decided before the Remand of Collins in the 5th Circuit to the Southern District of Texas?
You are sadly misinformed. Please direct us where in the SCOTUS opinion said this was a takings? (Spoiler: they didnt). The only takings case was just dismissed in the court of appeals for the federal circuit.
The class action lawsuit you are talking about was decided to be a direct claim by Judge Lamberth who is overseeing the case. There isnt any discussion whether this case is direct or derivative as the judge already ruled it to be direct and we are now pending trial.
Its already been decided this is a direct case a long time ago.
The class action is the consolidated implied covenant case yes.
They can ask for en banc review or petition straight to SCOTUS. Deadline is May 23.
Youre over thinking it. Just look up the closing price of fmckj on 2/28 and closing price on 3/31 and calculate the % move. This isnt rocket science no offense
I am looking at fmckj and fnmas which are the most liquid jr pfds. For example fmckj started march 2.28 and closed 3.1. Thats +36%
Final count for the month of March:
Common performance -2%
Junior Pfds performance +35%
What is mr market trying to tell us?
Lets see what April brings.
I don't think anything was "right" about that opinion, but what I think is irrelevant as they have already decided the issue for us (unless SCOTUS decides to take it up for themselves which is unlikely).
Ackman comments on GSEs in annual letter today. O look, he confirmed what I have been telling this board for weeks now but my comments keep getting removed because apparently "you cant handle the truth". Sweeney/takings case is dead unless SCOTUS decides to take it. All that's left for her to do is rubberstamp the court of appeals ruling dismissing the case in totality.
"Fannie Mae (“FNMA” or “Fannie”) and Freddie Mac (“FMCC or “Freddie”) (together “the GSEs”)
Fannie and Freddie suffered large stock price declines of 66% and 64%, respectively, in 2021, primarily driven by a Supreme Court ruling in June that was adverse to shareholders, as we previously discussed in detail in our Semi-Annual report. Shareholders suffered another legal blow in February 2022, when the Court of Appeals for the Federal Circuit ruled decisively against the plaintiffs in the takings cases filed in the Court of Federal Claims, which will end this litigation unless the Supreme Court decides to review the decision.
Despite these disappointing outcomes in the courts, we believe that the GSEs’ exit from conservatorship remains a question of when and not if, as their role as the irreplaceable core of the U.S. housing finance system is now broadly acknowledged across the political spectrum. Privatization of Fannie and Freddie will ensure that private capital bears the first loss in any future real estate dislocation, rather than having Treasury or U.S. taxpayers bear the risk. As common shareholders, we own valuable perpetual options on both entities that we believe will be worth many multiples of today’s prices once re-privatization occurs. The perpetual nature of these options protects our investment even if Fannie and Freddie do not exit conservatorship for years. In the meantime, both entities continue to build capital through retained earnings and now have combined capital of $75 billion.
Wrong. Jr pfds are up 25-30% this month. Common is different story (negative for the month).
It's not hard to say with a straight answer at all. Sweeney literally just confirmed she is waiting for the case to be FINAL and NON-APPEALABLE before she rubberstamps the appellate court ruling.
The case will become final and non-appealable when either 1) Plaintiffs don't petition to SCOTUS by 5/23 deadline, 2) Plaintiffs petition to SCOTUS but they decline to take the case, or 3) Plaintiffs petition to SCOTUS and they accept the case and re-rule on takings. Other than that, its out of Sweeney's hands, she has to rule that the takings case is dismissed as she is now binded by the court of appeals precedent.
In your defense, the pfd shares are up 25-30% this month. It's just the common that is slightly down. So you get partial credit.
Discovery ended last week on 3/15. Motion for SJ due today. We may see new discovery documents and expert witness testimony come to light soon.
Its irrelevant as discovery is already finished in Lamberth
Judge Brown is the judge who called the NWS the action of a banana republic, and claimed shareholders were betting on the rule of law, and in this country everyone is entitles to that bet. She ruled the NWS violated HERA but was overrulled by her 2 colleagues. Ring a bell?
Not true, Judge Brown in DC circuit and the en banc 5th circuit (9 out of 16 judges) all ruled in favor of shareholders to deny the governments motion to dismiss (later over turned by SCOTUS). Judge Lamberth also denied the governments motion to dismiss (as well as the appealscourt before him), and discovery just wrapped up.
Sweeney ruled in our favor as well but was overturned by the federal appeals court so unless SCOTUS agrees to take the takings case its a dead case and out of her hands.
Look at my past post history and youll see my answer to that. But the gist of it is that Lamberth already ruled in his 2018 ruling even if we lost the SCOTUS APA ruling and the Takings ruling, it wouldn't dismiss our contracts claims.