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What Congress approved with the passing of HERA.
The Treasury was authorized by Congress a limit of $2.25 billion FOR PURCHASE OF OBLIGATIONS. This amount was increased by Congress in the Charter Act that was amended by HERA. The amount today $200 billion as of December 24, 2009, expired on December 31, 2009: AND NO MORE.
Sandra Thompson CANNOT release pursuant a consent decree without congressional approval. LAW: Congress will have to approve a consent decree. Administrative means to provide financial support by ongoing fee is not authorized by Congress. A consent decree is a line of credit, NOT PURCHASE OF OBLIGATIONS, two different products.
With the passage of HERA Legislation: (purchase obligations increased with an expiration date of December 31, 2009).
SEC. 1117. TEMPORARY AUTHORITY FOR PURCHASE OF OBLIGATIONS OF REGULATED ENTITIES BY SECRETARY OF TREASURY.
The HERA legislation granted temporary authority to the Treasury to purchase obligations of the Enterprise, above the limits written in the Charter, (Charter limitation of 2.25 billion) up to the point in time of ‘‘(4) TERMINATION OF AUTHORITY.—The authority under this subsection (g), with the exception of paragraphs (2) and (3) of this subsection, shall expire December 31, 2009.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
Sandra Thompson CANNOT release pursuant a consent decree without congressional approval. LAW: Congress will have to approve a consent decree. Administrative means to provide financial support by ongoing fee is not authorized by Congress.
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 304. SECONDARY MARKET OPERATION
Fee Limitation
Quote: “(f) PROHIBITION ON ASSESSMENT OR COLLECTION OF FEE OR CHARGE BY UNITED STATES.—Except for fees paid pursuant to section 309(g) of this Act and assessments pursuant to section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, no fee or charge may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any mortgage, asset, obligation, trust certificate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury pursuant to subsection (c) of this section.” End of Quote. Page 16
Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 309. GENERAL POWERS OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION
Federal Reserve Banks to Act as Fiscal Agents (Fannie Mae and GNMA)
Quote: “(g) DEPOSITARIES, CUSTODIANS, AND FISCAL AGENTS.—The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a)(2), for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.” End of Quote. Page 29
Links:
FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT
As amended through July 25, 2019
link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
Director Lockhart Regulator cannot just decide to change the LAW.
The Senior Preferred Stock was a new product, a new product OBLIGATION, that had never ever been sold ever in the past by the enterprises. The FHFA violated the safety and soundness act of 1992 and the administrative procedures act. This new product is not what Congress intended written in the Charter Act Treasury purchase of obligations under the subsection.
The Director of FHFA as regulator violated the safety and soundness act and the administrative procedures act by not following the statutory duty to approve new products issued by the GSEs to Treasury for the purpose of stabilizing the secondary mortgage market. The law required the publication in the federal register of the SPS with their variable rate liquidation preference tied to the commitment. It requires a public comment period, and a rule making process to make the SPS legal. It is the same law that required the capital rule. And the same law that required FHFA a year ago issue the new products law for MBS products. They have ignored this requirement for 15 years.
Donotunderstand, The Senior Preferred Stock was a new product, a new product that had never ever been sold ever before by the enterprises. The FHFA violated the safety and soundness act of 1992 and the administrative procedures act. This new product is not what Congress intended written in the Charter Act Treasury purchase of obligations under the subsection.
The Senior Preferred Stock, with a variable liquidation preference outlined in the SPSPA and its amendments and share certificates is a new product for the purposes of the Safety and Soundness Act of 1992 as amended by HERA.
Congress directed the Director of FHFA to apply the Administrative Procedures Act to the new products sold to Treasury. The FHFA did not follow the administrative procedures congress required in the plain language of the safety and soundness act.
The Director of FHFA as regulator violated the safety and soundness act and the administrative procedures act by not following the statutory duty to approve new products issued by the GSEs to Treasury for the purpose of stabilizing the secondary mortgage market.
The law required the publication in the federal register of the SPS with their variable rate liquidation preference tied to the commitment. It requires a public comment period, and a rule making process to make the SPS legal. It is the same law that required the capital rule. And the same law that required FHFA a year ago issue the new products law for MBS products. They have ignored this requirement for 15 years.
Director Lockhart Regulator, and Director Lockhart Conservator. Holding both positions as Regulator and Conservator; Conservator Lockhart is required by law to file notice to himself as Regulator.
The Safety and Soundness Act required Director Lockhart as regulator not conservator to approve a new product issued by Director Lockhart acting as conservator FHFA-C (SPS with variable liquidation Preference) to Treasury under the terms of the SPSPA for the purpose of carrying out the secondary mortgage market. He was required as regulator to file notice in the federal register, seek public comment and issue federal regulations for the new product we call the Senior Preferred shares sold to Treasury.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Page 2689
SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
Layton, government appointed CEO Quote: “The Treasury was legally obligated to inject equity funds into the two companies so each would never have a negative net worth.” End of Quote.
No were in the Charter Act did Congress give the Treasury permission to provide a LINE OF CREDIT. Congress granted ONLY PURCHASE OF OBLIGATIONS (MBS).
What did the Treasury's funding commitment of $200 billion buy? NOTHING
Quote: “(3) FUNDING.—For the purpose of the authorities granted in this
subsection, the Secretary of the Treasury may use the proceeds of the sale of
any securities issued under chapter 31 of Title 31, and the purposes for
which securities may be issued under chapter 31 of Title 31 are extended to
include such purchases and the exercise of any rights in connection with
such purchases. Any funds expended for the purchase of, or modifications
to, obligations and securities, or the exercise of any rights received in
connection with such purchases under this subsection shall be deemed
appropriated at the time of such purchase, modification, or exercise.” End of Quote
THE ABOVE TAKE NOTE:
PURCHASES,
WITH SUCH PURCHASES,
EXPENDED FOR THE PURCHASE OF,
CONNECTION WITH SUCH PURCHASES,
AT THE TIME OF SUCH PURCHASE.
SEC. 304 Purchase Obligations
Subsection (c)
$200,000,000,000 (two hundred billion dollars): This amount of money is construed as a commitment from the Treasury, a line of credit, backstop, this money was not used to purchase anything. What did the $200 billion buy? NOTHING
This money was not used to purchase obligations of Fannie Mae as permitted in the HERA legislation under terms as defined by the changes of the company's Charter Act by HERA.
The HERA legislation granted temporary authority to the Treasury to purchase obligations of the Enterprise, above the limits written in the Charter, (Charter limitation of 2.25 billion).
Therefore, the FHFA was not given authority by Congress to enter into contract with the United States Treasury in the amount of $200,000,000,000 (two hundred billion dollars): This amount of money is construed as a commitment from the Treasury, a line of credit, backstop.
Layton, government appointed CEO Quote: “It is the general expectation that, upon exit from conservatorship by administrative means, the PSPAs would continue to provide financial support to the companies and there would then be an ongoing fee to compensate taxpayers for this risk. This fee remains unknown, as it has yet to be developed or specified by Treasury.” End of Quote
Administrative means to provide financial support by ongoing fee is not authorized by Congress.
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 304. SECONDARY MARKET OPERATION
Fee Limitation
Quote: “(f) PROHIBITION ON ASSESSMENT OR COLLECTION OF FEE OR CHARGE BY UNITED STATES.—Except for fees paid pursuant to section 309(g) of this Act and assessments pursuant to section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, no fee or charge may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any mortgage, asset, obligation, trust certificate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury pursuant to subsection (c) of this section.” End of Quote. Page 16
Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 309. GENERAL POWERS OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION
Federal Reserve Banks to Act as Fiscal Agents (Fannie Mae and GNMA)
Quote: “(g) DEPOSITARIES, CUSTODIANS, AND FISCAL AGENTS.—The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a)(2), for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.” End of Quote. Page 29
Links:
FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT
As amended through July 25, 2019
link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
The government appointed CEO of Freddie Mac repeats numerous times IMPLICIT in the article.
Explicit and Implicit
The Treasury was authorized by Congress a limit of $2.25 billion. This amount was increased by Congress in the Charter Act that was amended by HERA. The amount today $200 billion as of December 24, 2009, expired on December 31, 2009: and no more.
FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT
PURCHASE OF OBLIGATIONS BY TREASURY; CONDITIONS AND RESTRICTIONS
The Secretary of the Treasury shall not at any time purchase any obligations under this subsection if such purchase would increase the aggregate principal amount of the Secretary’s, then outstanding holdings of such obligations under this subsection to an amount greater than $2,250,000,000.
Link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
"The U.S. Government does not guarantee, directly or indirectly, our securities or other obligations." ... (Implicit is not worth the paper it WAS NOT WRITTEN ON).
The United States was not obligated after 1968 to back any debt of Fannie Mae. The United States Taxpayers became obligated when the government took over the two companies.
Originally, Fannie Mae had an explicit guarantee from the United States government; if the entity got into financial trouble the government promised to bail it out. This changed in 1968. Fannie Mae became a private stockholder owned company. Fannie Mae securities received no actual explicit or implicit government guarantee. This is clearly stated in the securities themselves, and in many public communications issued by Fannie Mae. (Other than a limit of $2.25 billion by the Charter Act).
Quote: “Although we are a corporation chartered by the U.S. Congress, the U.S. Government does not guarantee, directly or indirectly, our securities or other obligations. We are a stockholder-owned corporation, and our business is self-sustaining and funded exclusively with private capital. Our common stock is listed on the New York Stock Exchange and traded under the symbol “FNM.” Our debt securities are actively traded in the over-the-counter market.” End of Quote.
Information from: Fannie Mae form 10K Dec 31, 2007
part I, page 1, item 1.
https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/quarterly-annual-results/2007/form10k_022708.pdf
With the passage of HERA Legislation: (purchase obligations increased with an expiration date of December 31, 2009).
SEC. 1117. TEMPORARY AUTHORITY FOR PURCHASE OF OBLIGATIONS OF REGULATED ENTITIES BY SECRETARY OF TREASURY.
The HERA legislation granted temporary authority to the Treasury to purchase obligations of the Enterprise, above the limits written in the Charter, (Charter limitation of 2.25 billion) up to the point in time of ‘‘(4) TERMINATION OF AUTHORITY.—The authority under this subsection (g), with the exception of paragraphs (2) and (3) of this subsection, shall expire December 31, 2009.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
Your argument doesn’t work anymore, we see right through your smoke and mirrors. The mistake of the lawyers over and over has been the focus on the SPSPA.
THE LAW 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 problem with Professor Epstein his evaluation focused on the contract SPSPA between two government agencies. All he had to do was to apply the LAW WRITTEN IN HERA: with that being said doesn’t change the fact in what the Professor wrote is the ABSOLUTE TRUTH.
According to Professor Richard Epstein
The Senior Preferred Stock would have been redeemed.
Quote “The conflict of interest took a more ominous turn with the adoption of the Third Amendment between FHFA and Treasury nearly four years later. At that time, the market had quieted down, and the GSEs were making timely dividend payments on Treasury’s preferred stock. Nonetheless, FHFA and Treasury ripped up the old agreement, and substituted in its place a new deal that created a “net worth sweep” whereby all of the funds received by the GSEs were paid over to Treasury as a dividend, even in amounts far in excess of the original 10 percent dividend. The consequences have been huge. Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed. With the Third Amendment, about $128 billion that could have been used to redeem the preferred shares has been reclassified as a dividend payment, rather than a return of capital.” End of Quote
Please Note: “Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed.”
Link: https://ricochet.com/326448/fannie-freddie-fiasco/
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
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
AIG the difference in the case of FNMA
Barron Quote: In the case of FNMA, the charter act is everything. The Charter is FNMA. It takes precedence over all other laws and regulations enacted to regulate FNMA. This is why Congress amended the Charter act in HERA. In other words, no other legislation or regulation or contract can negate the requirements of FNMA charter. The arguments and claims just havent been brought before the judiciary yet.” End of Quote bottom of the page
Link: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=171741857
Guido, The expert lawyers never mention the Federal statutes which are the Charter Act, the Safety and Soundness Act of 1992, as amended by HERA, and the Administrative Procedures Act. Lawyers are stuck on the 3rd Amendment net worth sweep! THE CONTRACT IT’S NOT WORKING. TRY USING THE LAW!
HOW TO WIN !
Barron Quote: “I posit that the variable liquidation preference outlined in the SPSPA and all amendments are an illegal commitment fee/charge attached to the purchase of the senior preferred shares. Prohibited by the Charter Act. The warrants are also a fee in consideration for access to the commitment. Prohibited by the Charter Act.
I posit that the senior preferred shares with their variable liquidation preference as outlined in the SPSPA constitute a new product for the purpose of the secondary mortgage market outlined in the charter act at sec 1719.
I posit that under the safety and soundness act as modified by HERA, the sale of SPS with a variable liquidation preference to Treasury under authority of sec 1719(g) of the Charter Act required notice in the federal register, opportunity for public comment, and official rule making by the plain language of the safety and soundness act.
I posit that the above statutory violations necessarily violate the warranties on behalf of the FHFA-C contained in the SPSPA.
301 Billion to be returned to the corporation. LP and warrants canceled. Future of 191 billion of taxpayer debt illegally given to corps to be determined.” End of Quote
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172470841
Barron Quote: “Perry, Fairholm and all the other Plaintiffs made the fatal error to not challenge the SPSPA using what I believe are violations of the Charter Act and the Safety and Soundness Act that would nullify the SPSPA outright. Further arguments could be made that the 200 billion commitment where not authorized by The Appropriations act as they werent used to purchase obligations or securities but rather used as a tax payer debt obligation of the GSEs with a rate that also violates the Charter. Potential violations of the CFO act leading to 14th amendment violations could have been argued as well as MQD issues. But none of that was brought before a court.
The Plaintiffs attempted to get around the HERA sand trap by arguing the NWS was ultra vires by way of the APA’s arbitrary and capricious language, or Delaware corporate Law etc etc. All failed except the Common Law implied good faith and fair dealings implicit to contracts that Congress can’t legislate away. So here we are cheering on the last scraps of a failed legal strategy that will do nothing but take cash from the beleaguered GSEs and make some Attorneys more money.
I believe that the 2nd, 3rd, and 4th amendments to the SPSPA have created new distinct injuries to the GSEs and shareholders such that under the continuing claims doctrine, the Statute of limitations on the original Charter Act and Safety and Soundness act violations instituted by the SPSPA are still ripe. Would you be willing to help me with this?” End of Quote
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172532488
Barron has an excellent approach to this entire debacle. “ No fancy legal doctrines are needed for mental gymnastics. It is plain letter law that avoids all the traps”
Quote: “ If you were paying attention to my posts you would have realized that my proposed strategy that Rodney has been posting relies on filing little tucker act claims in the local federal district court. If you file a takings claim for greater than $10,000, it has to be heard in Sweeny’s court of federal claims. If you challenge any aspect of the SPSPA, such as the NWS the terms of the agreement requires all claims to be heard in the DC district Court aka Lamberth.
I propose neither. I propose claims alleging illegal exaction due to Treasury and FHFA violating Federal statutes that any district court has jurisdiction over. The Federal statutes are the Charter Act, the Safety and Soundness Act of 1992, as amended by HERA, Administrative Procedures Act, and potentially the Chief Financial Officers Act.
None of the current litigation makes any claims of violation of these acts. They all challenge the actions of the Conservator and attempted to squeeze the APA and the 5th amendment takings into the Actions of the FHFA-C within the terms of the SPSPA. all have failed to this point. It is called a categorical error. Kind of like the “war on terror” how do you fight a war against a weapon?
Rather, I propose a simple set of questions:
1) is a variable Liquidation preference pegged to the amount of commitment drawn by the GSEs (with a 10% rate later changed to NWS, later to LP increased for free) attached to the sale of 1000 Senior Preferred Shares considered a charge or fee for the purposes outlined in the Charter Act?
2) are the warrants in consideration of the Commitment a charge or fee?
3) If they are determined to be a charge or a fee attached to a GSE obligation or a security, are they prohibited by the plain language of the Charter Act?
4) what appropriations law did treasury use to make $200 billion of tax payer debt available for the GSEs to draw from?
5) are the SPS with a variable liquidation preference outlined in the SPSPA and its amendments and share certificates a new product for the purposes of the Safety and Soundness Act of 1992 as amended by HERA?
6) If they are a new Product, Congress directed the Director of FHFA to apply the Administrative Procedures Act to these new products sold to Treasury. Did FHFA follow the administrative procedures congress required in the plain language of the safety and soundness act?
7) The CFO act requires the Treasury department based on published accounting standards to determine if their actions of funding through appropriations, ownership of 100% of the GSEs net worth and non-regulatory control of the GSEs through the SPSPA require the consolidation of the GSEs liabilities onto the nations balance sheet. Do the actions of Treasury under the SPSPA require such consolidation under the plain language of the Chief Financial Officers Act?
The answers to these questions would hopefully result in the voiding of the SPSPA in its entirety and a cash sum of less than $10,000 to me. Each of these questions can be answered by just reading the plain language of the statute and the Agreements. No fancy legal doctrines are needed for mental gymnastics. It is plain letter law that avoids all the traps. The only doctrine involved is the doctrine of continuing claims. Otherwise we are limited to the SOL on the 4th amendment to the SPSPA.” End of Quote
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172580067
Wise Man said Quote: “The law isn't HERA but the FHEFSSA-Charter Act, as amended by HERA.” End of Quote
That statement is not completely correct. Yes, FHEFSSA, Charter Act the law and HERA amended both, READ PAGE 1
HERA PUBLIC LAW
PUBLIC LAW 110–289—JULY 30, 2008
HOUSING AND ECONOMIC RECOVERY ACT 2008
Wise Man Quote: “The 10% and NWS dividends existed and they are forbidden,“ End of Quote
You are exactly right. NO CAPITAL DISTRIBUTION IS ALLOWED WHILE THE ENTERPRISES ARE UNDER CAPITALIZED
The SCOTUS upholding the NWS does not change the fact the LP can be paid down and the SPS 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 LP and redeem the SPS. Secondary IPO replaces the commitment.
This is the argument of the Cram Down People, they reference the
The Senior Preferred Stock Purchase Agreement Optional Pay Down of Liquidation Preference Following termination of the Commitment.
Quote: “The companies can't terminate the commitment anyway no matter what without Treasury's approval. The funding commitment doesn't have anything to do with the NWS. The funding commitment came into existence when the original SPSPAs were signed in 2008.” End of Quote. WRONG!
The Senior Preferred Stock Purchase Agreement is an illegal contract.
The LAW
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
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 Senior Preferred Stock Purchase Agreement is an illegal contract.
Explained: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172666360
THE LAW
Code of Federal Regulation
1237.12 Capital distributions while in conservatorship.
(a) Except as provided in paragraph (b) of this section, a regulated entity shall make no capital distribution while in conservatorship.
(b) The Director may authorize, or may delegate the authority to authorize, a capital distribution that would otherwise be prohibited by paragraph (a) of this section if he or she determines that such capital distribution:
No 1: Will enhance the ability of the regulated entity to meet the risk-based capital level and the minimum capital level for the regulated entity;
No 2: Will contribute to the long-term financial safety and soundness of the regulated entity;
No 3: Is otherwise in the interest of the regulated entity; or
No 4: Is otherwise in the public interest.
Section c, this section is intended to supplement and shall not replace or affect any other restriction on capital distributions imposed by statute or regulation.
DID THE NET WORTH SWEEP
Enhance the ability to meet risk-based capital level? NO
Contribute to the long-term financial safety and soundness of the regulated entity? NO
In the interest of the regulated entity? NO
Is otherwise in the public interest? NO
(The taxpayers are responsible for the liabilities of the enterprises).
The Net Worth Sweep could not possibly have any rehabilitative effect and that one of the principal duties of the FHFA Director is to preserve and conserve assets.
Fannie is allowed to retain its earnings until it fully meets its applicable risk-based capital requirement (it’s currently short by $247.8 billion), but those increased retained earnings are matched by a dollar-for-dollar increase in Treasury’s liquidation preference.
https://gov.ecfr.gov/current/title-12/chapter-XII/subchapter-B/part-1237/subpart-D/section-1237.12
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.
Professor Epstein made the calculation in 2016 that’s 7 years ago. Since then the GSEs have sent more than enough to pay down the LP with money left over.
THE LAW HERA
The trustees of Fannie and Freddie can 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.
Cram Down People, they reference the
The Senior Preferred Stock Purchase Agreement Optional Pay Down of Liquidation Preference Following termination of the Commitment.
Quote: “The companies can't terminate the commitment anyway no matter what without Treasury's approval. The funding commitment doesn't have anything to do with the NWS. The funding commitment came into existence when the original SPSPAs were signed in 2008.” End of Quote. WRONG!
The Senior Preferred Stock Purchase Agreement is an illegal contract.
The LAW
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
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
The Senior Preferred Stock Purchase Agreement is an illegal contract.
Explained: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172666360
Hamish Hume
Counsel of Record
The lawyers brought the wrong lawsuit before the SCOTUS, using the contract SPSPA, the lawyers should have brought the LAW WRITTEN IN HERA. But it doesn’t change the fact lawyer Hume gave us the numbers.
In the Supreme Court of the United States
Quote: "In August 2012, FHFA and Treasury changed the PSPA dividend on Treasury’s senior preferred stock from 10% of the stock’s principal value to 100% of the net worth of Fannie Mae or Freddie Mac (minus a small reserve that would shrink to zero by 2018), in perpetuity. Under this arrangement, private shareholders in Fannie and Freddie could never receive any dividends no matter how much money they earned, as 100% of all dividends would have to be paid to Treasury. As a result, Treasury has taken roughly $150 billion more than it could have received under the original 10% dividend." End of Quote
https://www.supremecourt.gov/DocketPDF/22/22-98/230704/20220722162334690_Petition%20for%20Writ%20Of%20Certiorari.pdf
Your argument doesn’t work anymore, we see right through your smoke and mirrors.
The problem with Professor Epstein his evaluation focused on the contract SPSPA between two government agencies. All he had to do was to apply the LAW WRITTEN IN HERA: with that being said doesn’t change the fact in what the Professor wrote is the ABSOLUTE TRUTH.
According to Professor Richard Epstein
The Senior Preferred Stock would have been redeemed.
Quote “The conflict of interest took a more ominous turn with the adoption of the Third Amendment between FHFA and Treasury nearly four years later. At that time, the market had quieted down, and the GSEs were making timely dividend payments on Treasury’s preferred stock. Nonetheless, FHFA and Treasury ripped up the old agreement, and substituted in its place a new deal that created a “net worth sweep” whereby all of the funds received by the GSEs were paid over to Treasury as a dividend, even in amounts far in excess of the original 10 percent dividend. The consequences have been huge. Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed. With the Third Amendment, about $128 billion that could have been used to redeem the preferred shares has been reclassified as a dividend payment, rather than a return of capital.” End of Quote
Please Note: “Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed.”
Link: https://ricochet.com/326448/fannie-freddie-fiasco/
DaJester, Thank you Sir…
DaJester Quote: “ This isn't quite right either. The Supreme Court said there's nothing unconstitutional to implement the NWS. Just like the govt can take your house away legally, they can also take a business or the assets of the business. There' nothing to legally prevent the NWS even if it's never been done before. That doesn't mean there doesn't need to be compensation for takings.” End of Quote
The SCOTUS upholding the NWS does not change the fact the LP can be paid down and the SPS 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 LP and redeem the SPS. Secondary IPO replaces the commitment.
This is the argument of the Cram Down People, they reference the
The Senior Preferred Stock Purchase Agreement Optional Pay Down of Liquidation Preference Following termination of the Commitment.
Quote: “The companies can't terminate the commitment anyway no matter what without Treasury's approval. The funding commitment doesn't have anything to do with the NWS. The funding commitment came into existence when the original SPSPAs were signed in 2008.” End of Quote. WRONG!
The Senior Preferred Stock Purchase Agreement is an illegal contract.
The LAW
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
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 Senior Preferred Stock Purchase Agreement is an illegal contract.
Explained: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172666360
The cram down makes the counterfeit shares disappear. Makes me ask ‘Who do the cram down people work for?? And why are they pushing the cram down so hard??’
TRADING FLOOR OF THE MARKET-MAKER:
The primary market-makers in these GSE's are Goldman Sachs (Fannie Mae) and LaBranche & Co. (Freddie Mac). These are the specialists on the NYSE where the GSE's are listed, thus all trades executed on the NYSE in the GSE's must flow through these market-makers.
Quote: “Without the counterfeiting of the GSEs shares and the concerted effort to manipulate the stock prices, the GSEs potential to raise significant capital would have been much greater and it is unlikely that the U.S. Taxpayers would be the conservators of these companies at this time.
This report shows why this is true and that illegal sellers of the shares of the two GSEs made a vast sum of money taking down these companies to the detriment of the U.S. Citizens. This report names who the key market participants are in the trading of the GSEs.” End of Quote.
https://www.sec.gov/comments/s7-08-09/s70809-407a.pdf
kthomp, let’s look past the SPSPA ‘The Contract’ between two government agencies.
THE LAW OF THE LAND HERA
The FHFA Director can at any time, REPURCHASE, REDEEM, RETIRE... First the Senior Preferred Stock and second the Junior Preferred Stock.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
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.
kthomp, do you work for the Market Maker?
KT Quote: “ One single flaw: that the FHFA director could only be removed for cause. The Supreme Court fixed this by saying that the President can now remove the FHFA director at will. Now HERA is 100% constitutional.” End of Quote
ewtrader, From what I understand the agency is not unconstitutional now. The serious problem is the FHFA Regulator breaking the law.
Vancmike, the amount own greater than 50%
Barron Quote: “Whether or not they explicitly guarantee doesnt determine if they can avoid putting the liabilities on the nations balance sheet. The Treasury used appropriations to provide a $200 billion commitment, own greater than 50% of the GSEs, and asserted non regulatory control of the GSEs through the SPSPAs. These are the 3 conditions listed under FSAB for consolidation. Only one of which is necessary to require Treasury to consolidate. Treasury has met all 3 since 2008, and has chosen to break federal law thereby resulting in the Treasury unconstitutionally repudiating the nations debt. Those 3 criteria show a complete nationalizing of the GSEs. The fact the shares still trade is a giant securities fraud” End of Quote
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=171432357
Absolutely!
Charter Act SEC. 304. SECONDARY MARKET OPERATIONS
(c) Terms and Rates
Quote: “All redemptions, purchases, and sales by the Secretary of the Treasury of such obligations under this subsection SHALL BE TREATED AS PUBLIC DEBT TRANSACTIONS of the United States.” End of Quote Page 14
The CFO act requires the Treasury department based on published accounting standards to determine if their actions of funding through appropriations, ownership of 100% of the GSEs net worth and non-regulatory control of the GSEs through the SPSPA require the consolidation of the GSEs liabilities onto the nations balance sheet. Do the actions of Treasury under the SPSPA require such consolidation under the plain language of the Chief Financial Officers Act?
The Congressional Budget Office publication states, “Federal Government effective ownership of Fannie Mae and Freddie Mac.”
The Enterprises have been Nationalized by the Government according to the CBO: The liabilities have not been added to the National Debt nor have the Shareholders been compensated by U.S. Law of the 5th Amendment.
Congressional Budget Office
From: Estimates of the Cost of Federal Credit Programs in 2023
Page 1, Foot Note 1.
Quote: “Fannie Mae and Freddie Mac have been in federal conservatorship since September 2008. CBO treats the two GSEs as government entities in its budget estimates because, under the terms of the conservatorships, the federal government retains operational control and effective ownership of Fannie Mae and Freddie Mac. For more discussion, see Congressional Budget Office, Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions (August 2020), www.cbo.gov/publication/56496; and Congressional Budget Office, The Effects of Increasing Fannie Mae’s and Freddie Mac’s Capital (October 2016), www.cbo.gov/ publication/52089” End of Quote
Link: https://www.cbo.gov/system/files/2022-06/58031-Federal-Credit-Programs.pdf
The United States Treasury in violation of the Charter Act has failed to treat as public debt the transactions of the United States when the FHFA placed Fannie Mae and Freddie Mac into conservatorship. This obligation was never recorded as public debt as required by law.
The Charter Act the Law of the Land.
Charter Act SEC. 304. SECONDARY MARKET OPERATIONS
(c) Terms and Rates
Quote: “All redemptions, purchases, and sales by the Secretary of the Treasury of such obligations under this subsection SHALL BE TREATED AS PUBLIC DEBT TRANSACTIONS of the United States.” End of Quote Page 14
Link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
Barron Quote: “What I am saying is that if it is found that the actions of Treasury since 2008 would require that the GSEs be consolidated on the nations balance sheets as required by FASAB, then that would be an actual takings requiring Treasury to also include the mbs liability (trillions) on the nations balance sheet. The result would be that the Treasury’s actions recreated FNMA as an agency of the united states as they were created in 1938. This was not intended by Congress when they amended the charter act under HERA. So this is a major question doctrine case, a constitutional debt clause case, a takings case, and a major questions case. Treasury was told to buy GSE stuff in 2008-2009 to help them out. Not take them over and nationalize them violating all the accounting and budgeting laws of the United States.” End of Quote
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=171242334
https://files.fasab.gov/pdffiles/2022_%20FASAB_%20Handbook.pdf
The real reason for the Cram Down?
LuLeVan said Quote “If the SPS (or LP, or LP - SPS) are converted to commons, the government will receive about $100 billion (99.5 % ownership).”
At 99.5% the counterfeit shares disappear and the Market Makers that created the counterfeit shares are off the hook. Are the ones pushing the cram down working for the Market Makers??
In a "naked" short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard two-day settlement period. As a result, the seller fails to deliver securities to the buyer when delivery is due; this is known as a "failure to deliver" or "fail."
COUNTERFEITING
INFORMATION FROM: U.S. Securities and Exchange Commission web site.
The counterfeiting of U.S. assets. Theft from pension funds, State employee retirement accounts, and U.S. Citizens. The counterfeiting of shares of Fannie Mae and Freddie Mac. Where are our regulators and who are they protecting?
https://www.sec.gov/comments/s7-08-09/s70809-407a.pdf#:~:text=Fannie%20Mae%20and%20Freddie%20Mac%20are%20publicly%20traded,was%20occurring%20in%20the%20trading%20of%20the%20GSEs.
https://www.sec.gov/answers/nakedshortsale
navycmdr, made an excellent point.
ANYONE: What appropriation was afforded the Regulator to give a capital distribution??
What law gave the Regulator the authority to give away the companies' money while the enterprises are undercapitalized??
Cmdr Quote: "so how did FHFA under Calabria "Distribute" $1.09 Billion to the
Affordable Housing TRUST FUND from UNDER Capitalized GSEs?
and FHFA acting director Sandra L. Thompson announced that the
Housing Trust Fund and Capital Magnet Fund will receive a total of
$1.138 billion for affordable housing initiatives from Fannie Mae and Freddie Mac ?
Posted on: February 28, 2022 AFFORDABLE HOUSING FINANCE
FHFA Announces Largest Amounts for Housing Trust Fund and Capital Magnet Fund" End of Quote
To stay within Congressional Law governing the Enterprises the Jury award will have to be collected after the companies are adequately capitalized. IF NOT the FHFA will violate the law yet again just as the FHFA has numerous violations already.
THE LAW
Code of Federal Regulation
1237.12 Capital distributions while in conservatorship.
(a) Except as provided in paragraph (b) of this section, a regulated entity shall make no capital distribution while in conservatorship.
(b) The Director may authorize, or may delegate the authority to authorize, a capital distribution that would otherwise be prohibited by paragraph (a) of this section if he or she determines that such capital distribution:
No 1: Will enhance the ability of the regulated entity to meet the risk-based capital level and the minimum capital level for the regulated entity;
No 2: Will contribute to the long-term financial safety and soundness of the regulated entity;
No 3: Is otherwise in the interest of the regulated entity; or
No 4: Is otherwise in the public interest.
Section c, this section is intended to supplement and shall not replace or affect any other restriction on capital distributions imposed by statute or regulation.
DID THE NET WORTH SWEEP
Enhance the ability to meet risk-based capital level? NO
Contribute to the long-term financial safety and soundness of the regulated entity? NO
In the interest of the regulated entity? NO
Is otherwise in the public interest? NO
(The taxpayers are responsible for the liabilities of the enterprises).
The Net Worth Sweep could not possibly have any rehabilitative effect and that one of the principal duties of the FHFA Director is to preserve and conserve assets.
Fannie is allowed to retain its earnings until it fully meets its applicable risk-based capital requirement (it’s currently short by $247.8 billion), but those increased retained earnings are matched by a dollar-for-dollar increase in Treasury’s liquidation preference.
https://gov.ecfr.gov/current/title-12/chapter-XII/subchapter-B/part-1237/subpart-D/section-1237.12
Fannie Mae and Freddie Mac sent tons and tons of money to the Treasury Department above the 10% Dividend.
The Net Worth Sweep!
When all the money was swept into the dark hole of the Treasury nothing left over to pay down the Liquidation Preference, redeem the Senior Preferred Stock. The Companies could have applied the overage of the 10% to the pay down and turned to the Equity Market Secondary IPO and the commitment from the Treasury would have been of no value. No need for the Treasury to continue the commitment.
DaJester, if the lawyers would apply the law maybe we can get out of this prison.
This is the argument of the Cram Down People, they reference the
The Senior Preferred Stock Purchase Agreement Optional Pay Down of Liquidation Preference Following termination of the Commitment.
Quote: “The companies can't terminate the commitment anyway no matter what without Treasury's approval. The funding commitment doesn't have anything to do with the NWS. The funding commitment came into existence when the original SPSPAs were signed in 2008.” End of Quote.
The Senior Preferred Stock Purchase Agreement is an illegal contract.
THE LAW THE REGULATOR DOES NOT NEED TREASURY’S APPROVAL.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
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 Senior Preferred Stock Purchase Agreement is an illegal contract.
Explained: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172666360
The FHFA / Treasury continue to change the contract, letter agreement dated January 14, 2021, So, the Statute of Limitations are not up. PAGE 6 Liquidation Preference increases dollar for dollar for all the retained earnings of the enterprises.
https://home.treasury.gov/system/files/136/Executed-Letter-Agreement-for-Fannie-Mae.pdf
Barron Quote: "Statute of limitations would rely on DOJ guidance for recurring claims due to material changes introduced in the letter agreements. For example the new increase of liquidation preference for free introduced within the last 6-years." End of Quote
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172340943
Quote: "It is not a law, but at this point any legal challenge made to it would be time-barred by the statute of limitations." End of Quote This statement appears to be not correct. The FHFA / Treasury continue to change the contract, letter agreements. So, the Statute of Limitations are not up.
Kthomp19 said Quote: “ I get it, the way the Supreme Court ruled makes no damn sense to any of us. But it's the reality we have to deal with. Contradicting the Supreme Court is not going to get you very far.” End of Quote
As you also said, Quote: “While this is correct, according to the Supreme Court it doesn't matter.” End of Quote
The Lawyers brought the wrong argument the lawyers focused on the contract FHFA and Treasury signed.
The Senior Preferred Stock Purchase Agreement, Optional Pay Down of Liquidation Preference Following termination of the Commitment. The Senior Preferred Stock Purchase Agreement is a contract not the law.
Bryndon, gave us the calculation of the pay down of the liquidation preference . Now if he will apply the LAW written in HERA.
https://drive.google.com/file/d/15978NWfDcTtuClMBnwgWFmoPnwK94vWn/view
THE LAW
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
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.
Vancmike, News Release: FHFA Announces Suspension of Capital Classifications During Conservatorship.
The FHFA freely with out restriction admitted in the SAME NEW RELEASE both companies were adequately capitalized at the exact same moment the Regulator suspended the capital classifications.
The Suspension of Capital Classifications by the FHFA did not affect the Restriction on Capital Distributions; The FHFA Regulator cannot just up and decide to change the Law.
Minimum Capital
Fannie Mae’s FHFA-directed capital requirement on June 30, 2008 was $37.5 billion and its statutory minimum capital requirement was $32.6 billion. Fannie Mae’s core capital of $47.0 billion exceeded the FHFA-directed capital requirement by $9.4 billion.
Freddie Mac’s FHFA-directed capital requirement on June 30, 2008 was $34.5 billion and its statutory minimum capital requirement was $28.7 billion. Freddie Mac’s core capital of $37.1 billion exceeded the FHFA-directed minimum capital requirement by $2.7 billion.
Risk-Based Capital
As of June 30, 2008, Fannie Mae’s risk-based capital requirement was $36.3 billion. Fannie Mae’s total capital of $55.6 billion on that date exceeded the requirement by $19.3 billion.
As of June 30, 2008, Freddie Mac’s risk-based capital requirement was $20.1 billion. Freddie Mac’s total capital of $42.9 billion on that date exceeded the requirement by $22.8 billion.
THE TAKE DOWN!
Tim Howard Quote: “Fannie and Freddie’s regulatory guidelines [FHEFSSA] would have prohibited them from paying cash dividends while severely undercapitalized, but FHFA suspended those guidelines because it wanted the companies to have to draw more senior preferred stock from Treasury to pay the annual dividends in cash, to balloon their outstanding senior preferred and increase their required annual dividends by still more. It was only after it was obvious that the companies were about to enter a “golden age of profitability” (because of the end and then the reversal of the non-cash expenses put on their books by FHFA), that FHFA and Treasury claimed to be concerned about a “death spiral” of borrowing to pay the senior preferred dividends in cash—and their solution was not the 12 percent annualized accrual of Treasury’s liquidation preference specified in the SPSPAs, but to impose the net worth sweep.” End of Quote
https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Suspension-of-Capital-Classifications-During-Conservatorship-and-Discloses-Minimum-and-RiskBased-Cap.aspx
Stockanalyze, government agencies do not make laws. Congress made the law. FHEFSSA is law. The FHFA / Treasury cannot just up and decide to change the Law.
As pointed out on this board the suspension of capital classifications did not affect the Restriction on Capital Distributions,
To stay within Congressional Law governing the Enterprises the Jury award will have to be collected after the companies are adequately capitalized. IF NOT the FHFA will violate the law yet again just as the FHFA has numerous violations already.
THE LAW
Code of Federal Regulation
1237.12 Capital distributions while in conservatorship.
(a) Except as provided in paragraph (b) of this section, a regulated entity shall make no capital distribution while in conservatorship.
(b) The Director may authorize, or may delegate the authority to authorize, a capital distribution that would otherwise be prohibited by paragraph (a) of this section if he or she determines that such capital distribution:
No 1: Will enhance the ability of the regulated entity to meet the risk-based capital level and the minimum capital level for the regulated entity;
No 2: Will contribute to the long-term financial safety and soundness of the regulated entity;
No 3: Is otherwise in the interest of the regulated entity; or
No 4: Is otherwise in the public interest.
Section c, this section is intended to supplement and shall not replace or affect any other restriction on capital distributions imposed by statute or regulation.
DID THE NET WORTH SWEEP
Enchance the ability to meet risk-based capital level? NO
Contribute to the long-term financial safety and soundness of the regulated entity? NO
In the interest of the regulated entity? NO
Is otherwise in the public interest? NO
(The taxpayers are responsible for the liabilities of the enterprises).
The Net Worth Sweep could not possibly have any rehabilitative effect and that one of the principal duties of the FHFA Director is to preserve and conserve assets.
Fannie is allowed to retain its earnings until it fully meets its applicable risk-based capital requirement (it’s currently short by $247.8 billion), but those increased retained earnings are matched by a dollar-for-dollar increase in Treasury’s liquidation preference.
https://gov.ecfr.gov/current/title-12/chapter-XII/subchapter-B/part-1237/subpart-D/section-1237.12
ewtrader, said Quote: “ FHFA due to the improper unconstitutional structure of the federal agency.” End of Quote
Kindly direct us to the unconstitutional structure of FHFA Per Supreme Court ruling. Where is this information written? Thanks
I was under the impression the Director position was unconstitutional by reason the Director could not be removed without cause. But you are saying the Supreme Court ruled the FHFA is unconstitutional structured. ??
That is a good question Sir, what appropriation was afforded the Regulator to give a capital distribution??
Quote: "so how did FHFA under Calabria "Distribute" $1.09 Billion to the
Affordable Housing TRUST FUND from UNDER Capitalized GSEs ?"
Guido2, this is worth repeating what you said my friend.
Quote: "Government agencies don't make laws. That authority rests with Congress. Government agencies are allowed to interpret laws through regulations. FHEFSSA is law and not suspendable by FHFA. In a national emergency, I suppose (not sure) the President could issue an Executive Order to SUSPEND a law. I didn't see George Bush's signature on the SPSPA. I say $301 billion dividends to Treasury is illegal." End of Quote.
The FHFA / Treasury cannot just up and decide to change the Law.
FHFA suspended those guidelines
FHFA suspended those guidelines
FHFA suspended those guidelines
Tim Howard Quote: “You are correct that Fannie and Freddie’s regulatory guidelines [FHEFSSA] would have prohibited them from paying cash dividends while severely undercapitalized, but FHFA suspended those guidelines because it wanted the companies to have to draw more senior preferred stock from Treasury to pay the annual dividends in cash, to balloon their outstanding senior preferred and increase their required annual dividends by still more.” End of Quote
Keep in mind the FHFA is regulator the FHFA cannot change the law.
Link: https://howardonmortgagefinance.com/2023/06/05/response-to-fhfa-pricing-rfi/#comments
It will be distributed out of the cash account of Fannie Mae and Freddie Mac, to pay for damages inflicted by the FHFA.
It will be distributed out of the cash account of Fannie Mae and Freddie Mac, to pay for damages inflicted by the FHFA.