Why did MC require International Commercial Bank Capital Ratios WHEN THE GSES ARE SIMPLY MONOLINE INSURANCE COMPANIES (I know Navy ESPECIALLY IS GOING TO MISS HIM POST COLLINS!)?:

"What to Do with Fannie and Freddie?

Because I am largely advocating a return to the originate-and-hold model, what should we do with the secondary market’s biggest players? There may well be value in a smaller secondary market and in the current GSEs. To retain whatever value there is, the current GSE charters should be converted to national bank charters and the GSEs reorganized as bank holding companies (BHCs). Not only could the GSEs continue to pool and securitize mortgages as BHCs, but they could also originate, collect deposits, and engage in other bank activities.

Given the high concentration among the largest banks, adding two large BHCs would immediately bring increased competition to that market. It would level the playing field between the GSEs and the largest banks, in both directions. This would require that the GSEs operate under the same rules as other BHCs. Securities law exemptions and favorable tax treatment would disappear. But the goodwill and human capital within the GSEs would remain. Shareholders would also benefit to the extent that the companies had value. This would require the GSEs to meet bank capital levels. Selling off the government’s preferred shares would assist in this regard.

It is worth noting that converting Fannie and Freddie to BHCs solves one problem while exacerbating another: the too-big-to-fail status of our largest banks. Ultimately all BHCs, including the newly created Fannie and Freddie BHCs, should hold substantially more capital. That capital should also largely be in the form of common equity and calculated on a non-risk-adjusted basis.

Conclusions

Securitization is a false god that failed us. While not without some value, its virtues have been exaggerated, if not illusionary, while its costs have been hidden or ignored. The same holds for government guarantees of credit risk. Hiding costs rarely reduces them. Painful experience has continued to show the opposite. A more stable and affordable housing market would be best served by returning to an originate-and-hold model of mortgage finance. The past failures of that model—its fragmented nature and its extensive government guarantees—can be more easily addressed without a continued resort to massive leverage. We need not prohibit securitization or even mandate originate and hold; we simply need to remove the various subsidies and distortions that tilt the field toward securitization. While modest tweaks of the current system might be more politically palatable, such small tweaks will only push off the issue until the next downturn in the housing market (and yes, there will be another housing downturn). The only responsible path is to fix the fundamental flaws in our current system."

https://www.urban.org/policy-centers/housing-finance-policy-center/projects/housing-finance-reform-incubator/mark-calabria-coming-full-circle-mortgage-finance

https://www.houstonchronicle.com/business/texas-inc/article/Supercharged-housing-market-likely-to-persist-16222765.php

https://www.axios.com/housing-boom-zillow-jeremy-wacksman-0c50f991-72fb-4a8d-9951-e51603b8c9d8.html

https://www.wktv.com/templates/AMP?contentID=574565811

https://www.foxbusiness.com/money/prepare-for-mortgage-forbearance-end.amp

Patswill: The problem for Tim Rood is that he can't ask Edward Pinto the tough probing questions associated with his tactics during the strong arm takeover of the board of the twins in 08 as well as his participation in the preferred course of action of his "fellow travelers". On the other hand, you gotta tip your hat to Tim Rood for gathering these big players in this never ending drama to attempt to shed some light on where we've been, how we got here, and where do we go from here!

The ACA is the BIGGEST case of this October 2020 term! And why is that relevant for us? Because it involves Severability Analysis and so too does Collins. These two cases will have to be harmonious and work together in their Severability Analysis because the law (believe it or not) is webbed together in a cohesive manner. So I am guessing maybe later in the month or one of the final of the 22 left. Who knows? Maybe they are putting the finishing touches on the ACA Case and have already written Collins and it will be ready for prime time on Monday or Thursday. Good times Good times!

Another big publicity case is this one, https://www.nbcnews.com/news/amp/ncna1269623 which intersects with religious freedom and gay rights.

There is the issue of can a school suspend a student for expressing her negativity at not making the cheerleading squad by displaying a certain digit on her hand on social media and disparaging the school?

Then there is still a couple of big Corporations cases and criminal issues to resolve.

Can't we all just get along and peacefully coexist with each other in America? I guess not! HeeHee! (More Bob Ross's in the world might lower litigation costs!)

I wonder if the SCOTUS ever says, "Can't these clowns work out their problems on their own!" Let's see if the SCOTUS gives the Collins Plaintiffs a bigger stick to use in bringing Uncle Sug back to reality!

The SCOTUS is definitely aware that other cases are coming up the Federal Courts ladder and will be knocking on their door at some point in the future, so they may rule in a way that encourages Uncle Sug to consider possibly resolving the aggrieved shareholders claims. After over 12.5 years of a temporary conservatorship that has turned into a blatant Nationalization of two private corporations coupled with all the smoking guns Plaintiffs have gathered over the years, Uncle Sug may finally begin to come to terms with just how badly they have acted and begin to finally take some responsibility for their misdeeds.

Nationalization, while a short term shot in the arm for dictators and banana republics, long term, results in shortages of goods and services for its Citizens (e.g., housing) and is just a horrible choice for America, but we'll see what happens!

The Acting Director being fireable at will may not be enough to overcome the pernicious problem of the POTUS having enough control over one of his federal agencies.

Under HERA, if the POTUS fires the Acting Director he cannot choose a replacement that is aligned with his beliefs and desires for the future of the Agency, he must pick from 1 of 3 deputy directors chosen by the current FHFA Director. There are also imposed on him under the Federal Vacancies Reform Act further restrictions on just how long his Acting Director can serve before getting a Senate confirmed Director in there. In this particular fact pattern, OBama said he was unable to remove Lockhart.

But if the SCOTUS wants to do a remedial dodge on the Severability Analysis relief section of the Collins case, I think they could maybe find a way. As this case was making its way up to the SCOTUS, many Judges expressed skepticism about giving retrospective relief. I thought David Thompson had a good answer to Justice Sotomayors question, "Why should YOU be entitled to anything?". Answer: Because Seila Law last term said that the Plaintiffs are entitled to retrospective relief and it was granted in some other cases in the past. Also, footnote 11 in the Free Enterprise case said that the Plaintiffs need not create a but for world.

Of course, I am pretty sure that Justice Thomas and Gorsuch are itching to OVERRULE HUMPHREYS EXECUTOR, if you read their reasoning in Seila Law, but can they get ACB, Kavanaugh, Alito, or Roberts to join them? Good times, Good times!

Seems like you are making it more complicated than it really is. Let's say the SCOTUS rules that the anti-injunction and Succession clauses applies always and the FHFA may do WHATEVER is in the FHFAs best interests.

Does that mean that the gses are nationalized forever? I don't think so. Why were they set up over 50 years ago as private corporations? Because private capital in a 1st loss position is a good idea for the government and a win win scenario.

https://www.businessinsider.com/bill-ackman-pershing-square-spac-psth-universal-music-future-deals-2021-6?amp

https://amp.dispatch.com/amp/7476076002 "Landlord" or "Housing Provider", which one sounds less evil?

"If you ask the people who provide these small portfolios of housing why low-cost housing options are disappearing, they will cite the swarm of rules and regulations combined with COVID-19 eviction bans encouraging residents to withhold rent."

"Changing the term “landlord” would mean the laws in Ohio would reflect this reality; people who work hard every day to serve their customers are housing providers, not impersonal, wealthy interests bent on eviction."

https://mynorthwest.com/2945519/cancel-the-rent-extend-moratoriums-seattle/amp/

https://www.marcusmillichap.com/research/research-brief/2021/06/research-brief-june-housing

Lajrchamp:

I think the cleanest and easiest path to "victory" (i.e., ending the sweep, returning $29.5B and LP to 0) is by the court ruling the sweep an ultra vires act in violation of the APA and the anti-injunction and Succession Clauses do not apply in this fact pattern and remand to the 5th.

The Severability Analysis is a little more messy. Remember Sotomayor asking David Thompson, "Why should YOU be entitled to anything just because the Director was unconstitionally insulated?". Same kind of resistance we saw in the 5th EnBanc. Of course Bulldozing HERA would be fun (that would unscramble the egg) but we'll see what happens on that one, I think Kagan, Sotomayor and Breyer will dissent on some aspect of the Severability Analysis.

Well said, "Congress doesn't hide elephants in mouse holes" or "Congress doesn't hang engines on tailpipes" both were mentioned in the 16 Judge 5th Circuit EnBanc Panel ruling and I believe are quotations from past USSCT precedence.

The whole idea of a Conservator being able to drain the profits from its wards into the coffers of the UST because HERA says "may be in the best interests of the FHFA" in an incidental powers section just seems bizarre to me!

I look forward to their decision. It will come out eventually.

See it helps when you expand your conversation from just a few lines!

Here's the language from J. Thomas's dissent: "The Act defines “exceeds authorized access” as “to access
a computer with authorization and to use such access to ob-
tain or alter information in the computer that the accesser
is not entitled so to obtain or alter.” §1030(e)(6).

SO SAY I'M RIGHT AND THAT YOU ARE THE DEGENERATE! And say it like this, "Sir, you are correct and I am a degenerate!" HeeHee!



That's right and the General powers of a Conservator to preserve and conserve their wards assets overrules these incidental powers.



This may be where there is "a failure to communicate". The majority opinion is simply stating that the Criminal statute MUST BE CONSTRUED AS WRITTEN. Here, Officer Van Buren was convicted of a felony and sent to the jail for 18 months for "unauthorized access" of the computer in his squad car. Since he had authorized access to use his squad car computer, it was NOT UNAUTHORIZED ACCESS and since criminal statutes are construed strictly Van Buren wins. J. Thomas in the dissent said that there is a definition in the statute of what UNAUTHORIZED access means and it is consistent with property law and officer Van Buren violated it. I explained this to you already though!

Maybe I am confused as to what you mean by "Textualist". How is J. Thomas, Roberts and Alito NOT Textualists but ACB, Kavanaugh, Gorsuch, Kagan, Sotomayor, and Breyer ARE Textualists? Isn't the job of ALL Judges to read and interpret the Laws? Can a "textualist" Judge rule differently in one type of case versus another and when?

I just told you in my previous response: A definition of what the incidental Conservator power is!

You are simply stating that other courts have read that the incidental power provision (that the nws may be in the best interests of the FHFA) allows for the nws. Judge Thomas in his dissent yesterday, said that the definitions section of the statute describes EXACTLY what "unauthorized access" means.

So, where in the definitions section of HERA does it list EXACTLY WHAT THE INCIDENTAL POWERS OF A CONSERVATOR ARE?

That's why I'm still confused about your 1 or 2 liner from the other day.

How specifically does the 1st couple of paragraphs from yesterdays Thomas dissent not bode well for the Collins Plaintiffs?

Let me guess (that's really all one can do with your 1 to 4 liner posts) is it this line from the dissent: "Foremost, that interpretation is contrary to the plain
meaning of the text. "?

And because the incidental powers in HERA (that are NOT defined in the definitions section of HERA) says "may do what is in the best interests of the FHFA" that the nws is valid and therefore that does not bode well for the Collins Plaintiffs?

Is that what you are trying to say?

Expanding on your 1 or 2 liners from stated conclusion to the reasons that support your conclusion allows the viewer to understand why you support a particular conclusion! Thanks for clarifying the REASONS BEHIND YOUR CONCLUSION:

I disagree with that legal analysis. Why? In Justice Thomas's 10 page dissent he said that "unauthorized access" is clearly defined in the definitions section of the Statute, describing EXACTLY what that means, and the officers conduct was therefore unauthorized access pursuant to the definitions section of the Statute and the historical usage of unauthorized access to property. Here, HERA has no definitions section specifically answering what the FHFA Director can do under the "may be in the best interests of FHFA" SO HOW DOES THAT BODE NOT WELL FOR THE COLLINS PLAINTIFFS?

https://amp.cnn.com/cnn/2021/06/04/politics/supreme-court-june-term/index.html

https://www.scotusblog.com/2021/06/real-estate-agents-ask-court-to-block-eviction-moratorium/

Thanks for the 4 liner and the link to the 7+ year old Perry Capital decision. You are still a very cryptic poster and I typically ignore your one or two liners with their general broad sweeping statements backed up by zero substance!

So what SPECIFICALLY are you referring to here:

A. To what SPECIFIC IN DETAIL "SUBJECT" are you cryptically referring to?

B. I have been responding to your post from yesterday morning that Van Buren was decided via textualism by ACB and since HERA says the FHFA Director can do whatever he wants, that this somehow bodes badly for the Collins Plaintiffs.

C. Do we both agree that textualism is irrelevant in the USSCT'S legal analysis, BECAUSE INCIDENTAL POWERS DO NOT SUPERCEDE GENERAL POWERS?

D. Yes, I read the 10 page Justice Thomas dissent where he was joined by Roberts and Alito, they stressed that "unauthorized access", is clearly defined in the Statute and therefore the officer conviction should be upheld. WHAT DOES THAT HAVE TO DO WITH THE COLLINS CASE?

Give me some more SPECIFIC clarity, otherwise I'm just going to continue ignoring your 4, 3, 2, 1 liners!

Your original post was a statement that ACB was a textualist and HERA says the FHFA Director can do whatever it wants. All the courts said that ultra vires acts are not covered by the HERA anti-injunction clause. Thus, ultra vires acts are challengeable by the Plaintiffs and the courts can issue a ruling reversing such acts.

We went over this incidental power provision yesterday on the board and how the US Congress doesn't put the engine on the tailpipe or hide elephants in mouse holes and that the general power to preserve and conserve overrules the incidental powers.

Did you not understand that discussion yesterday or was the drive thru getting too backed up when you are reading and concentrating on our "degenerate" posts? (Relax, I'm kidding!)

BTW, your posts would be more meaningful if you would give us MORE THAN 1 or 2 liner often vague and meaningless posts, after all, us "degenerates" can't read your mind!

Remember, giving your time generously to the "degenerates" is a worthy cause!

What specifically did you find convincing in the Lamberth case?

Well said! I'm not by any means trying to defend the Judges that have denied us meaningful relief after all these years but to understand why they have. It is a "big ask" psychologically for 1 Federal Judge to issue a ruling forcing the UST to repay the wronged Plaintiffs $308B ESPECIALLY WHEN THE EXECUTIVE AND LEGISLATIVE BRANCHES CONTINUE TO BOTH THINK AND ACT AS IF NOTHING IS WRONG!

Another reason might be a misguided perception that the Plaintiffs are "Evil hedge fund guys/Evil banksters" who already brought the world economy to its knees during the GFC and now here they are in front of me asking for a $308B check.

Lastly, Judges aren't really business specialists and throughout their tenured careers on the bench, have put citizens in jail, sometimes for life and/or sentenced them to death based solely on the evidence and sometimes sole testimony of government officials, so their is a kind of "the King or Sovereign can do no harm" philosophy permeating subconsciously throughout the sometimes opulent federal government courthouses.

That said, the SCOTUS rarely lets this kind of renegade governmental actions continue unabated and I don't see them stretching HERA interpretations to include Nationalizing two private corporations.

We'll see what happens!

https://eyeonhousing.org/2021/06/the-aging-housing-stock-4/

https://amp.cnn.com/cnn/2021/06/03/politics/supreme-court-realtors-eviction-moratorium/index.html

On 02-21-17, the USCT of Appeals said: "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). We also reject most of the stockholders’
common-law claims. Insofar as we have subject matter
jurisdiction over the stockholders’ common-law claims against
Treasury, and Congress has waived the agency’s immunity
from suit, those claims, too, are barred by the Recovery Act’s
limitation on judicial review. Id. As for the claims against
FHFA and the Companies, some are barred because FHFA
succeeded to all rights, powers, and privileges of the
stockholders under the Recovery Act, id. § 4617(b)(2)(A);
others fail to state a claim upon which relief can be granted.
The remaining claims, which are contract-based claims
regarding liquidation preferences and dividend rights, are
remanded to the district court for further proceedings."

Over 2.5 years later the 16 judge majority opinion in the 5th Circuit EnBanc Ruling ruled differently.

WHAT SPECIFICALLY DID YOU FIND MORE CONVINCING IN LAMBERTH'S COURT THAN THE 5TH CIRCUIT AND WHY? I'M LOOKING FOR SOME SUBSTANCE IN YOUR LEGAL ANALYSIS, SPARE ME THE ONE OR TWO LINERS! For instance, you could reply, I found the legal reasoning in the US Court of Appeals more convincing than the 5ths because 1, 2, 3...

I know, BUT ALL THE COURTS AGREE THAT WHEN A GOVERNMENTAL OFFICIAL ACTS OUTSIDE HIS POWER OR THE ACTION IS ULTRA VIRES, THE ANTI-INJUNCTION CLAUSE DOES NOT APPLY. That's why it looks like the days of the nws are numbered.

The "may do whatever is in the best interests of the FHFA" section of HERA is an INCIDENTAL POWER and does not override the GENERAL POWER OR MANDATE of the Conservator to preserve and conserve their wards assets.

Criminal statutes are construed narrowly as the power of the State to imprison people is the greatest infringement on their Liberties.

How does the fact that a particular Judge is a "textualist" have negative implications for the posture of the Collins Plaintiffs legal case?

Could the SCOTUS utilize the bulldozer on HERA to put the parties back into the positions they were in prior to HERA? I think that would solve the recovery of the tbtf bank bad loan deliveries and subsequent legal settlements that went straight into the UST coffers. But most if not all legal commentators think a scalpel approach will be used.

I agree, who ever heard of a temporary conservatorship lasting into perpetuity where the Conservator strips its wards of all their earnings?

Check out Ackman: https://www.cnbc.com/2021/06/03/bill-ackmans-pershing-square-nears-biggest-ever-spac-deal-with-universal-music-source-says.html

I think we all agree that it's crystal clear to us, especially based on the smoking guns in 6 years of painstaking discovery with Uncle Sug. Like you I am trying to figure out HOW the SCOTUS would deny the Collins Plaintiffs the relief they seek, so I welcome ideas!

You should really read the 5th Circuit EnBanc Ruling, it goes into great detail as to why their sister circuits and Lamberth differed. I think Judge Lamberth was the victim of perjury from a high ranking FHFA official as well. As I recall years ago, he said basically I can't help the Collins Plaintiffs, go write a letter to your Congresspeople! Today, I think there is still a contract claim pending for trial.

https://casetext.com/case/collins-v-mnuchin-4. The 5th Circuit on the anti-injunction clause:

"In Ward , relying on Onion , we held that the anti-injunction provision stopped a federal court from rescinding a receiver’s sale. We elaborated that there is a "difference between the exercise of a function or power that is clearly outside the statutory authority of the RTC on the one hand, and improperly or even unlawfully exercising a function or power that is clearly authorized by statute on the other."

"In Ward , selling low instead of high was an improper use of the receiver’s power to liquidate assets. But here, FHFA as conservator essentially liquidated assets without ever being appointed receiver. Improperly exercising a power is not restrainable, but exercising one beyond statutory authority is."

Other circuits follow the same interpretation. Even our sister courts that rejected claims like Counts I–III acknowledge the same rule: " Section 4617(f) will not protect the Agency if it acts either ultra vires or in some third capacity" besides conservator or receiver. So have circuits deciding unrelated cases against FHFA. To quote the Ninth Circuit, "the anti-judicial review provision is inapplicable when FHFA acts beyond the scope of its conservator power." And the Eleventh Circuit holds that "[t]he FHFA cannot evade judicial scrutiny by merely labeling its actions with a conservator stamp."

The provision’s plain meaning, FIRREA precedent, and HERA precedent show that we may grant relief if FHFA exceeded its statutory powers. The Agencies primarily contend that the Third Amendment falls within the conservatorship powers, 12 U.S.C. § 4617(b)(2). As we explain below, that is incorrect, at least at the pleading stage. But first, we address the Agencies’ arguments from disconnected provisions.

The 5th Circuit on the Succession Clause:

"To decide whether Counts I–III are direct or derivative, we begin with the cause of action. Counts I–III assert rights under the APA. Under 5 U.S.C. § 702, "[a] person suffering legal wrong ... or adversely affected or aggrieved by agency action within the meaning of a relevant statute is entitled to judicial review." And under 5 U.S.C. § 706, "[t]he reviewing court shall ... hold unlawful and set aside agency action" that is arbitrary and capricious, exceeds statutory authority, or is otherwise unlawful.

You are going to have to read the rest yourself, did you read it already? 16 or 9 people rarely are in total agreement on anything. What is it SPEFICALLY that you find convincing about the judges opinions that are in the minority OR that have ruled against the Collins Plaintiffs?

True, and if the SCOTUS truly wants to dodge remedial relief for the Collins Plaintiffs, I am sure they can find a way.

But, I don't think it will be by them saying, that HERA says the FHFA "may act in it's own benefit, whenever exercising its Conservator powers". Why? Think about what David Thompson said during oral arguments, if that is the case and the US Congress thought that it was okay for the Conservator to act in any way that MAY benefit the FHFA, then they would have endorsed an unconstitutional taking and would have made the US Government liable for a Takings Claim.

It would be in the FHFA'S best interests to acquire all the assets of the gses for $1. Does that mean that HERA authorizes that?

You should read my earlier in the day response to FFFacts when he brought this up. Also read the 5th Circuit EnBanc Panel majority ruling on this particular topic.

Remember, the "may be in the FHFAs interests" power in HERA is an INCIDENTAL POWER AND DOES NOT OVERRIDE THE GENERAL POWER OF THE CONSERVATOR TO PRESERVE AND CONSERVE THE ASSETS AND PROFITS OF THE GSES.

"Congress doesn't hide elephants in mouse holes", is a famous quote from a USSCT case. "You don't hang the motor on the tailpipe" is what the 5th Circuit said.

GIVE ME SOME OTHER REASON THE SCOTUS WILL DENY THE COLLINS PLAINTIFFS RELIEF AND WHY YOU THINK IT WILL HAPPEN, IF YOU CAN THINK OF ONE.

In many ways, all this multi-year Litigation is simply a chess match and the Collins Plaintiffs are getting very close to CHECKMATE!

I've never seen an investment involving so many moving parts and I kind of enjoy the intellectual exercise, but sadly it would never have been necessary had the Government intended to follow HERA.

I think you are missing the point. The Prosecutor (i.e., Da gubmint) convicted a man who was sentenced to serve a prison term of 18 months. How did the government do it? BY OVERREACHING ON THEIR INTERPRETATION OF A STATUTE. Officer Van Buren HAD AUTHORIZED ACCESS TO THE COMPUTER SYSTEM, so how can the government convict a cop of a felony if he ALWAYS HAS AUTHORIZED ACCESS TO THE COMPUTER SYSTEM?

In Collins, Hashim Moopan, FOR YEARS, has tricked lower court Judges by saying, "Well, Uncle Suggy can do the Net Worth Swipe BECAUSE IT "MAY" do anything that benefits the FHFA. See it's in the incidental powers section of HERA!". This is an example of Governmental overreach. Why? Because, as explained by the 5th Circuit EnBanc Panel majority ruling, that power is incidental and cannot override the general duty of a Conservator to preserve and conserve their wards profits and assets.

Does that help any or are you more confused?

Here is Amy Howe's explanation: "The question in Van Buren was whether users violate that statute by accessing information for improper purposes or instead whether users violate the statute only if they access information they were not entitled to obtain. In this case, for example, a Georgia police officer named Nathan Van Buren took a bribe to run a license-plate check. He was entitled to run license-plate checks, but not for illicit purposes. The lower courts upheld a conviction under the CFAA (because he was not entitled to check license-plate records for private purposes). The Supreme Court disagreed, adopting the narrower reading of the CFAA, under which it is a crime only if users access information they were not entitled to obtain."

https://www.scotusblog.com/2021/06/diverse-six-justice-majority-rejects-broad-reading-of-computer-fraud-law/

When it comes to the power of the state to take away your Liberty, don't you want them to do so ONLY IF YOU ACTUALLY VIOLATED THE STATUTE?

I couldn't help but to kind of give them a hard time, GIVEN ALL THE SH*T WE'VE TAKEN FROM THEIR SUPERIORITY COMPLEX OVER THE LAST YEAR! Truth is we are all in the same boat until Uncle Suggy gets his boot off our necks!

So today, the court decided 6-3 the Van Buren case, a case heard before December 9th.

It looks like the SCOTUS is trying to somewhat go chronologically, WITH THE EXCEPTION of the low hanging fruit cases where they are in near unanimity. It may be before the last batch of cases, we'll find out in a little while...

JPS_Cancelled, are my eyes deceiving me, or are jps down 30% YOY versus Common up 5%? What's up with that?

I thought that surely a fulcrum security would always outperform the low life "common" people.

Can you describe the phenomenon, but this time in words and logic and not pictures?

Latest from TH: "Thanks. Hopefully we’ll get the SCOTUS ruling before the Fourth of July, then we all can begin speculating on what’s likely to happen in the next phase of the Fannie/Freddie saga.

Since no one has asked about the recent paper by Don Layton titled “The FHFA’s Report on Credit Risk Transfer,” with the subtitle “Another Controversial Document Further Erodes Confidence in the Agency,” I thought I’d take this opportunity to volunteer a few brief comments about it.

I had been wondering how Layton might respond to the FHFA piece on CRTs, since he has been such a strong advocate of them. As the subtitle of his paper indicates, he has decided to lump the CRT report in with three other recent regulatory actions–the capital rule, the “living will” regulation, and the January letter agreement requiring Fannie and Freddie to limit the amount of some of the business they do–and make the case that FHFA is biased and a bad regulator, and that as a consequence its CRT report shouldn’t be taken seriously.

I think the capital rule is a disaster, and am no fan of either the restrictions Calabria has put on Fannie and Freddie’s business or its (unnecessary and intensely bureaucratic) living will requirement. But I also think one needs to address the CRT paper on its merits. Layton pointedly does not do this, saying he will “not do a soup-to-nuts analysis of the CRT report.” Instead, he focuses on “four important benefits of CRT either not mentioned or just slightly referenced in passing,” which is the bias he claims the paper exhibits. In his view, these four ignored or downplayed benefits are: (a) systemic risk reduction, (b) taxpayer risk reduction, (c) capital reduction, and (d) market discipline.

Where Layton’s paper falls short, however, is that he doesn’t make the case for how CRTs could have these “four important [theoretical] benefits” if even in a repeat of the loss performance of Fannie and Freddie’s 2007 books of business (their worst by far) they still cost them $20 billion MORE than they return in loss transfers. That neither reduces systemic risk nor protects taxpayers; by weakening the companies (through having them pay out $30 billion and only getting back $10 billion), it does the opposite. And while the CRTs DO reduce the companies’ capital, it’s not in the way Layton intends.

The problem with Fannie and Freddie’s CRTs is that they kick in at too high a level of cumulative loss, they insure against risks that are far too remote, and they can prepay rapidly and thus disappear before they can be called upon–as the ever-to-date experience (admittedly in a highly favorable economic and financial environment) and the performance simulations show. While they may be great in theory, in practice Fannie and Freddie’s CRTs are extremely costly giveaways to Wall Street and the investor community, that increase the companies’ vulnerability to the credit risk they end up retaining."

Latest from TH: "Thanks. Hopefully we’ll get the SCOTUS ruling before the Fourth of July, then we all can begin speculating on what’s likely to happen in the next phase of the Fannie/Freddie saga.

Since no one has asked about the recent paper by Don Layton titled “The FHFA’s Report on Credit Risk Transfer,” with the subtitle “Another Controversial Document Further Erodes Confidence in the Agency,” I thought I’d take this opportunity to volunteer a few brief comments about it.

I had been wondering how Layton might respond to the FHFA piece on CRTs, since he has been such a strong advocate of them. As the subtitle of his paper indicates, he has decided to lump the CRT report in with three other recent regulatory actions–the capital rule, the “living will” regulation, and the January letter agreement requiring Fannie and Freddie to limit the amount of some of the business they do–and make the case that FHFA is biased and a bad regulator, and that as a consequence its CRT report shouldn’t be taken seriously.

I think the capital rule is a disaster, and am no fan of either the restrictions Calabria has put on Fannie and Freddie’s business or its (unnecessary and intensely bureaucratic) living will requirement. But I also think one needs to address the CRT paper on its merits. Layton pointedly does not do this, saying he will “not do a soup-to-nuts analysis of the CRT report.” Instead, he focuses on “four important benefits of CRT either not mentioned or just slightly referenced in passing,” which is the bias he claims the paper exhibits. In his view, these four ignored or downplayed benefits are: (a) systemic risk reduction, (b) taxpayer risk reduction, (c) capital reduction, and (d) market discipline.

Where Layton’s paper falls short, however, is that he doesn’t make the case for how CRTs could have these “four important [theoretical] benefits” if even in a repeat of the loss performance of Fannie and Freddie’s 2007 books of business (their worst by far) they still cost them $20 billion MORE than they return in loss transfers. That neither reduces systemic risk nor protects taxpayers; by weakening the companies (through having them pay out $30 billion and only getting back $10 billion), it does the opposite. And while the CRTs DO reduce the companies’ capital, it’s not in the way Layton intends.

The problem with Fannie and Freddie’s CRTs is that they kick in at too high a level of cumulative loss, they insure against risks that are far too remote, and they can prepay rapidly and thus disappear before they can be called upon–as the ever-to-date experience (admittedly in a highly favorable economic and financial environment) and the performance simulations show. While they may be great in theory, in practice Fannie and Freddie’s CRTs are extremely costly giveaways to Wall Street and the investor community, that increase the companies’ vulnerability to the credit risk they end up retaining."

Isn't it better to be an owner of a company instead of a glorified zero coupon bond holder of a company? I'm asking for a friend.

Monday is next release. https://www.supremecourt.gov/

The SCOTUS today AGAIN slapped down a Governmental overreach! This time for a cop who ran a licence plate tag number for a friend and received 18 months in prison. "It was an important one because the government in recent years has been applying the law quite broadly, arguing that users “exceed unauthorized access” (and thus face federal criminal liability) whenever they use information from a computer for an impermissible reason. In this case, for example, the police officer, Nathan Van Buren, lawfully accessed computerized license-plate records, but his use of the information for a private purpose led to the federal criminal prosecution that the court has now rejected."

https://www.scotusblog.com/2021/06/justices-narrow-federal-computer-fraud-statute/

The SCOTUS is there to protect our rights against Governmental overreach, JUST LIKE WE'VE EXPERIENCED HERE!

If the SCOTUS says that the incidental powers in HERA allow the FHFA to sell all of the equity interests and all future profits in the gses to itself for $1 dollar because it "may" be in the FHFA'S INTEREST, then not only would they be ignoring HERAS general mandate to preserve and conserve their wards assets, THEY WOULD BE OVERTURNING 100'S OF YEARS OF CONSERVATORSHIP LAW!

Can you think of a temporary conservatorship that has lasted over 12.5 years, where the Conservator has taken all of the profits of its Conservatee?

The whole thing is bizarre and as Judge Steele pointed out, this "May" versus "Shall" issue that has tripped up the lower courts is 1st year law student stuff.

But if the SCOTUS really wants to do a remedial dodge in Collins they could probably figure one out, but I can't think of one can you?

They could say, "Ha Ha, the anti-injunction clause prevents us from issuing the Plaintiffs relief, or ONLY THE FHFA CAN SUE ITSELF", but that seems unlikely to me.

We'll have to, and I'm quoting your FAVORITE POTUS, "See what happens!".

6/3/2021
FHFA Extends COVID-19 Multifamily Forbearance through September 30, 2021
Washington, D.C. — Today, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) will continue to offer COVID-19 forbearance to qualifying multifamily property owners through September 30, 2021, subject to the continued tenant protections FHFA has imposed during the pandemic. This is the third extension of the programs, which were set to expire June 30, 2021.

“While COVID-19 cases are declining and many homeowners continue to emerge from forbearance, many renters, who are unable benefit from rising home prices, have not financially recovered from the pandemic. To help those families still struggling to pay their rent and to help multifamily property owners maintain their properties, FHFA is extending the multifamily COVID-19 forbearance and tenant protections through the end of September 2021,” said Director Mark Calabria.

Property owners with Enterprise-backed multifamily mortgages can enter a new or, if qualified, modified forbearance if they experience a financial hardship due to the COVID-19 emergency. Property owners who enter into a new or modified forbearance agreement must:

Inform tenants in writing about tenant protections available during the property owner's forbearance and repayment periods; and
Agree not to evict tenants solely for the nonpayment of rent while the property is in forbearance.
Additional tenant protections apply during the repayment periods. These protections include:

Giving tenants at least a 30-day notice to vacate;

Not charging tenants late fees or penalties for nonpayment of rent; and

Allowing tenant flexibility in the repayment of back-rent over time, and not necessarily in a lump sum.

In addition to requiring written tenant notification, the Enterprises have posted the tenant protections to their respective online multifamily property lookup tool websites. The property lookup tools make it easier for tenants to find out if the multifamily property in which they reside has an Enterprise-backed mortgage.

These actions are just the latest steps FHFA has taken to benefit renters, property owners and the mortgage market during the pandemic. FHFA will continue to monitor the data and the coronavirus' impact on tenants, borrowers, and the mortgage market and update policies as needed. FHFA may extend or sunset its policies based on updated data and health risks. Homeowners and renters can visit consumerfinance.gov/housing for up-to-date information on their relief options, protections, and key deadlines.

https://www.fanniemae.com/newsroom/fannie-mae-news/fannie-mae-extends-protections-renters-affected-covid-19

Press Release
Fannie Mae Extends Protections for Renters Affected by COVID-19
June 3, 2021
Multifamily Borrowers Now Eligible for Forbearance through September 30, 2021
WASHINGTON, DC – To continue to support renters in multifamily units and Fannie Mae-financed multifamily property owners experiencing financial difficulties as COVID-19 persists, Fannie Mae (FNMA/OTCQB) today announced the extension of its multifamily COVID-19 forbearance program through September 30, 2021. The program, which requires landlords to suspend all evictions for renters unable to pay rent during the forbearance period, was formerly set to expire on June 30, 2021.

For any Fannie Mae-financed multifamily properties with a new or modified forbearance plan as the result of a financial hardship due to COVID-19, the property owner must inform tenants in writing about tenant protections available during the property owner’s forbearance and repayment periods. In addition, the borrower is required to provide tenant protections, which include:

Allow the tenant flexibility to repay back rent over time and not in a lump sum;
Not charge the tenant late fees or penalties for non-payment of rent; and
Give the tenant at least a 30-day notice to vacate.
“Fannie Mae remains committed to supporting renters and multifamily property owners as COVID-19 continues to financially impact many people in the United States,” said Michele Evans, Executive Vice President and Head of Multifamily. “By extending the forbearance program for Fannie Mae multifamily borrowers, we are also extending essential protections and flexibilities for renters, which will help keep people in their apartments as the economy continues to improve.”

Here to Help
Since March 2020, Fannie Mae has taken a number of actions to help renters facing financial hardship due to COVID-19, including extending eviction protections to multifamily renters when the property owner received a forbearance and announcing a new Renters Resource Finder tool.

These and the many other resources, including KnowYourOptions.com, that we make available are part of our ongoing Here to Help education effort, aimed at helping homeowners and renters impacted by COVID-19 understand the options available to them. For renters, KnowYourOptions.com provides straightforward information to understand rent relief and assistance options and to understand the available tenant protections.

Renters in a multifamily property financed by Fannie Mae also have access to the Disaster Response Network, which offers free assistance from U.S. Department of Housing and Urban Development-certified housing counselors who can help navigate financial challenges caused by COVID-19, such as information and guidance on accessing federal and state housing assistance, unemployment benefits, nutritional assistance, and other available programs. The Disaster Response Network can be accessed from the Renters Resource Finder on KnowYourOptions.com, or by calling 877-833-1746.

About Fannie Mae
Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of people in America. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit:
fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

Media Contact
Rachel O’Grady
202-752-0462

Fannie Mae Newsroom
https://www.fanniemae.com/news

Textualists understand that the incidental powers granted to FHFA in HERA, do not mean that an accountable to no one in Government FHFA Director can do whatever he wants. As David Thompson stated at the SCOTUS orals, "The US Congress doesn't hide elephants in mouse holes."

The 16 judge EnBanc Panel ruling in their majority opinion said, "We doubt that Congress "in fashioning this intricate ... machinery, would thus hang one of the main gears on the tail pipe."

Such a ruling upending 100's of years of Conservatorship Law by the SCOTUS seems unlikely, but keep holding your jps while the conversion ratio slips from 5 to 3. Where is that downward spiral going to end? Oh yeah, fulcrum security, how could I forget!

Fortis Fortuna Adiuvat; Fortunes Favors the Bold.
One of the most known of its earlier use is when Terence, a Roman playwright used it in his comedy play called Phormio. Later on, the quote itself made famous by the United States as the motto of notable US Navy ships and Trumbull College of Yale U.

https://medium.com/@ammarsharewindra/fortis-fortuna-adiuvat-does-fortune-really-favors-the-bold-1297a3a92472

https://www.foxbusiness.com/markets/housing-shortage-rising-prices-push-mortgage-applications-february-low.amp

https://www.yahoo.com/news/u-appeals-court-leaves-cdc-203018946.html

Quote: "The warrants are legal no matter what happens in Collins." Does that include if the SCOTUS is unable to determine exactly how the US Congress would have wanted the Judicial Branch to rewrite HERA and uses the Bulldozer approach?

Don't really agree with your logic on jps being the fulcrum security and the immediate need for a capital raise. As far as the 3 cases you cited that decided that the government may impose the nws because it's NOT ultra vires and therefore the FHFA may do the nws because it benefits the FHFA was largely discredited by the 5th Circuits 16 judge panel. One thing we know for sure is that Conservators and receivers don't give away all of their wards profits to itself.

What about hedging for the possibility that the junior dividend doesn't kick in for years, is found by the courts to be retroactively non recoverable and that the common shareholders price for whatever reasons exceeds or greatly exceeds the junior shareholders price?

Do you have any links for the 9th and 11th Circuit cases that found for the government on the ultra vires and/or anti-injunction and/or Succession Clause issues?