Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Happy June19th - Barron, Rodney and Robert - Kelly Amended Complaint seems brilliant !
https://www.glenbradford.com/category/uncategorized/
Several references to Tyler and the Charter and Bylaws.
https://www.glenbradford.com/category/uncategorized/
Separation of Powers Restoration Act has passed the House. It wont go anywhere but it passed the House.
https://justthenews.com/government/congress/gop-led-house-passes-separation-powers-restoration-act
I am thinking it should go to the House Financial Services whistleblower portal. It is almost to salacious so that it doesnt fit in well with any reasoned response. If you make this the main point of a comment or brief it almost seems so unbelievable that it will be discounted. Its not - it was part of the Financial Crisis Investigation Commission docs that were released 5 or more years later. It kind of blows you away especially when you look at all the emails associated with the memo - the NEC and UST actually blew up a bailout that was being negotiated by Senator Shelby over the weekend. Bear Stearns failed a week after the Barron's Story because all the credit lines were pulled.
Check out the email trail: Daniel Mudd was trying to raise capital in HK thinking that the UST actually wanted to get Shelby to arrange a combo of USG and private capital. Steel plays him and then gets the Memo from Thomas. Next he sets up Lockhart and over the weekend before they can meet with Shelby everything blows up and Bear Stearns fails in the week.
https://fcic-static.law.stanford.edu/cdn_media/fcic-testimony/2007-2008_Fannie_Mae_Timeline_and_Supporting_Documents.pdf
Thanks for forwarding the Tim Howard post on the " For your Eyes Only Memo" from the Special Advisor to GWB at the NEC to the Under Secretary of the UST on March 8th 2008
We do not know when the Nationalization Plan started but we know it was as early as March 8, 2008. It may have been in 2007 when there were several series of JPS issued by both FNMA and FMCC but it is clear before FNMA issued $ 2 bn of FNMAT in May of 2008 - just two months after the NEC stated " as shareholders get wiped".
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
If it wasnt the UST and if it wasnt because of HERA it would have been a clear case of Securities Fraud to the tune of $ 2 bn.
Tim Howard included this as a footnote in his Amicus Brief for Collins at SCOTUS and the Mike Kelly Lawsuit also makes reference to the" For Your Eyes Only Memo."
Here is the Calhoun and Raneri Paper on the Utility Model - probably the game plan if Bernstein really wants to do something. There is a lot in the paper on the Charters and the SPSAs
https://www.brookings.edu/wp-content/uploads/2021/02/20210219_CRM_CalhounRanieri_FINAL.pdf
The other good thing is that Jared was not at the White House when the NWS was implemented. He had been on VP JB staff as an economist but left around the time that Larry Summers stepped down as Head of the NEC. He seems to be a true believer.
His relationship with Parrott and his Partner is problematic as was evidenced in his Revolving Door blog post in response to Greta Morgenstern's NYT article.
That being said if he wants to do something and not risk having it be unwound the best thing he can do is settle with the JPS suits and the avoid a common suit by settling with Wazee, Fisher and Kelly.
This is probably a 1 pct probability but I am a 1 pct person because I believe it is the right thing to do.
Disagree - UST is about to make one of the best trades in the History of Finance :
1. Come of with a secret plan to Nationalize
2. Create a crisis and help out your friends while Bear Stearns and Wachovia and the rest are run out of business or nationalized
3. Use the Crisis to hoodwink Congress to come up with all powerful legislation to effect the secret nationalization plans
4. Get 80 pct of the GSEs and a SPS that you later that you modify to allow you to garner $ 200bn to $ 300 bn of preferential equity
5. Say that you want to work with Congress to exit after you have completely worked them over for 15 years
6. Make over $ 300 bn of interest and gains based off above market interest rates and preferential equity via a cramdown.
Who are the stupid ones - the investing public that is who.
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
You may also want to attach the " For Your Eyes Only Memo to the UST Undersecretary Regarding the planned Nationalization of the GSES in March of 2008 a couple of months before retail and JPS investors were stuffed with billions of JPS at $25 Par in May 2008
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
Thank you Robert. - You are a scholar and a gentleman - and a real Patriot! God Bless!
Good Morning Huntbeachwhale - I was a Fool to trust that the USG would not set up private investors and let them invest in the GSEs while they had a Nationalization Plan in place. I bought FNMAT in May of 2008 at $ 25.
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
I am a fool to expect that the Appointments clause actually means something.
If you want to call me a Moron and a Total Fool - that is fine - that is the cost of being an American some times. Just like all the kids that volunteered for wars that and conflicts and died in vain - like Vietnam and Afghanistan - some people call them total Fools to have believed in their Government.
You have every right to call me a Moron and Total Fool because we still have Constitutional rights to Free Speach. I still have the right to high light the judicial process knowing that I have 99% odds against me.
Really sad but true so far. We will have to see what happens in the 5th Circuit now. Mkt expectations according to Familymang was 99% so as expected in an overwhelming way given the position taken by the DOJ. Get ready for serial Acting Directors.
These lawsuits will make their way through the Court - I just want to thank the investors who have funded this extensive litigation for so long - true Patriots!
It is amazing to me also Airbus320 - Keith Hennesey was the Head of the NEC at the time of the Jason Thomas Memo - You can see that Jason Thomas is on his staff:
https://www.keithhennessey.com/2009/05/29/senior-staff/
Keith Hennesey was also a FCIC Commissioner :
https://fcic.law.stanford.edu/about/biographies/keith-hennessey
The Memo is part of the FCIC archives which I think were non public until 2018 or so ( have to confirm date). The FCIC Staff obviously ignored it or thought it was a positive thing because of the spin about the GSEs being the cause of the GFC
The problem is that no one other than Kelly and Washington Mutual and maybe Bryndon Fisher have challenged the Conservatorship and there HAS BEEN NO FACTUAL DISCOVERY ABOUT THIS UP TO THIS DATE.
Hi Glenn,
Got to say you sound a lot like Jason Thomas - maybe you can work with him at Carlye?
From:
To:
Subject:
Date:
Attachments:
Jason Thomas
Steel, RobertDisabled;
Source document for Barron"s article on FNM
Saturday, March 08, 2008 12:50:05 PM
FNM Source Document for Barrons.pdf
Attached is the document used as the sourcing for today's Barron's article on the
potential collapse of Fannie Mae.
This is for your eyes only. I send it only to help inform potential internal
Treasury discussions about the potential costs and benefits of nationalization.
Thank you for your discretion,
Jason Thomas
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
Totally agree with you tuzedaze - why would the JB Admin want to screw common? Especially when they intentionally had a plan to screw JPS and Common as early as March of 2008. The GSES sold billions of JPS in the Spring of 2008 to stabilize the GSEs while the GWB NEC and the UST stood by with a plan to Nationalize the GSEs and wipe out all of the existing investors and the new investors that were purchasing JPS at $ 25.
Here is the summary of the capital raise for FNMAT on May 13, 2008 as disclosed in the 8-K filing on May 13, 2008:
On May 13, 2008, Fannie Mae (formally known as the Federal National Mortgage Association) agreed to sell 80,000,000 shares of 8.25% Non-Cumulative
Preferred Stock, Series T (the "Series T Preferred Stock"), plus an option to purchase up to an additional 12,000,000 shares to cover over-allotments that is
exercisable until June 12, 2008. The Series T Preferred Stock was sold through a syndicate of underwriters led by Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Citigroup Global Markets Inc., Morgan Stanley & Co. Incorporated, UBS Securities LLC and Wachovia Capital Markets, LLC.
The initial public offering price for the Series T Preferred Stock was $25 per share, with the total proceeds to Fannie Mae for the offering of the Series T Preferred
Stock (after application of the underwriting discount of $0.7875 per share of Series T Preferred Stock sold to non-institutional investors and $0.50 per share of
Series T Preferred Stock sold to institutional investors, for an aggregate underwriting discoun t of $53,128,343, and exclusive of the expenses of the offering and
any advisory fees) being $1,946,871,658.
https://fanniemae.gcs-web.com/static-files/d2ff8e7f-ff59-479f-ad54-fe135914569c
FNMAT raised $ 2bn and this offering was only one of several offers for Fannie and Freddie at the same time.
Two months earlier Jason Thomas who was Special Advisor to GWB at the NEC sent a "For your Eyes Only" Memo the Robert Steel who was the Under Secretary of the UST laying out the plan to Nationalize the GSEs and wiping out Shareholders which came to include the billions raised from retail investors and institutional investors like The Growth Fund of America.
Here is what the For Your Eyes Only March 8, 2008 Memo stated:
As shareholder capital gets wiped, the government will have no choice but to seize the company and
place it in conservatorship or receivership. Importantly, mortgage-backed security holders guaranteed
by Fannie Mae will see no losses. The government will likely allow debt holders to fare okay, with either
no or token losses, perhaps 1%.
Shareholders, both common and preferred, are likely to be left with nothing. However, these
shareholder losses have already been locked in by the company's credit decisions over the past few
years and cannot be helped. It must be remembered that Fannie is the biggest mortgage risk holder in
the biggest mortgage crisis.
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
This is why we need to hope that the Mike Kelly suit proceeds and the Wazee Suit for Unjust Enrichment proceed.
Raneri did the Urban Institute Paper with Parrott and then Calhoun. Basically same idea since 2016
https://www.brookings.edu/research/government-sponsored-enterprises-at-the-crossroads/
Here is another Utility Model Paper for Susan Wacter out of Biden's UPenn
https://penniur.upenn.edu/uploads/media/2-Cooperstein-Fears-Wachter.pdf
Jared and Jim on Youtube
Jim' Urban Institute Utility Model Paper
https://www.urban.org/research/publication/more-promising-road-gse-reform-why-it-leads-government-corporation
Are Jared and Revolving Door Boys going to work on a common cramdown?
https://jaredbernsteinblog.com/not-every-door-is-a-revolving-door-housing-finance-gse-reform-and-the-nyt/
Here is to the 1 pct chance of Cert for Rop according to familymang on Monday! Also we should be looking for a new FHFA Annual Report sometime next week since the current version came out on June 15th of 2022.
My bag got stuffed with FNMAT at $ 25 in May of 2008. Wish Jason Thomas had sent the Memo to Merrill Lynch who was the lead Underwriter!
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
Hi Neo - didnt Ackman buy his common before August 2012? If he did - he has standing for some type of suit once a cramdown is announced. Dont you think that once a deal is announced all the dynamics change and then we will see if the USG really can execute on a cramdown? Could happen across Admins and most likely sessions of Congress - really complicated political game theory to determine outcomes. For example - could the JB Admin get an Exit and cramdown finalized without unwind risk of a GOP Admin before this JB Term?
Thats right trunkmonk - Ackman will make money from both JPS AND Common "over time". There is $ 10 to $ 50 bn on the table that could accrue to legacy common. He would be a full not to litigate or strongly advocate for the fair economic value of common over time.
Thanks for your analysis LuLeVan
Regarding the write down of the SPS this is footnote No. 30 of the CBO Restructuring Paper:
"Section 902.2 of title 31 of the Code of Federal Regulations sets forth standards for the “compromise of debts” by the Administration. On the basis of its review of those standards, CBO believes that a reduction in the value of the Treasury’s preferred shares could be undertaken as part of the recapitalization of the GSEs."
One of the basis for "reduction of value " under CFR 31 902.2 is litigation risks. It would seem that if the UST wanted to exit prior to final resolution of all the litigation around the SPS they would compromise because they can under CFR 31 902.2.
Wow - please thank them on behalf of all GSE shareholders. David Thompson and his team are real patriots - they have worked so hard for a 1% chance of success at SCOTUS. We also really really need to thank the hedge fund managers that have spent gobs and gobs and gobs of money pursuing this litigation for a decade knowing that they only have a 1 % chance at SCOTUS. We were founded by patriots that believed in 1% chances - David Thompson and his clients continue in being real life patriots spending huge sums of money pursuing justice.
Sorry familymang - you can have your opinion but you dont know how the separation of powers cases will turn out. I think you are giving the success of these cases a 1 pct chance and that seems to be market consensus for a 44 cent stock. Lets see how the separation of powers cases turn out - it is clear you dont think they will.
Hi No Name - we will not know what will happen with the SPS Liquidation Preference until the separation of powers cases are final. If they are written down 20% of the face value of the SPS will accrue to the market value of the legacy common.
Hi No Name - you are right that some day we will find out about how much the SPS Liquidation Preference is worth and we will have much more information about the possible outcomes once we have a decision in Collins and Bhatti. We will know soon if Rop gets Cert which will mean that it will be the most important Separation of Powers cases since it will be the first Separation of Powers remedies case. The prayer for relief is the voiding of the SPS Pref or conversion at some undetermined value and conversion ratio.
The question is whether the SPS should be written down to $ 2 billion or zero. Conversion will probably require extensive Discovery
and it is not clear what the value of SPS to be converted - it too could be $ 2 billion which will be converted to common - this conversion amount is just as viable as the current SPS face value because the increase in the SPS would be declared void.
FHFA Annual Report was issued June 15 last year. Probably new report in same time period?
Howard is on the record that he doesn't believe in the common cramdown. The common cramdown is just as problematic as the conservatorship itself because the whole thing is a roadmap for future nationalizations of systemically important financial systems. Hope the GSE haters are learning the lesson that if you compromise your principles for expediency then you become the compromised one next.
Hi Robert - I am with stockanalyze on this one. I think familymang is 99 % NO CERT - I will take the 1% and CERT.
Really like that Judge Thapar is the minority in the 6th and that Kavanaugh brought it up for consideration - reminds me of the position Kavanaugh took with Seila in the DC Circuit.
It almost seems like SCOTUS has to grant Cert due to the wording of the Solicitor General and the position that UST took in the oral hearings. Thapar specifically asked that if it would be Constitutional to have a series of Acting Appointees and the UST attorney said yes.
Cant believe this is 1 % odds but we should see on the 12th! Thanks for raising the issue - stockanalyze has been on top of this one!
No!!! - say its not true Glenn!!
Hi Glenn - the value of the SPS would be only $ 2 bn at best if the Liquidation Preference is voided. Just be patient and see how the separation of powers cases work out in 2023.
Good to hear Glenn - that would be great. Any proposal by the FHFA would be great and we go from there. Give her our regards - south side of Chicago girl does good!
Waiting for 2022 FHFA Annual Report to Congress - the 2021 Report was issued June 15
https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHFA-2021-Annual-Report-to-Congress.pdf
Hi Glen - you sound like Jason Thomas in March of 2008:
"As shareholder capital gets wiped, the government will have no choice but to seize the company and
place it in conservatorship or receivership. Importantly, mortgage-backed security holders guaranteed
by Fannie Mae will see no losses. The government will likely allow debt holders to fare okay, with either
no or token losses, perhaps 1%.
Shareholders, both common and preferred, are likely to be left with nothing. However, these
shareholder losses have already been locked in by the company's credit decisions over the past few
years and cannot be helped. It must be remembered that Fannie is the biggest mortgage risk holder in
the biggest mortgage crisis."
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
You should pity me because I paid $ 25 per JPS share in May 2008 after Jason Thomas said that the shareholders would be wiped in March of 2008. The Fools including Mike Kelly and myself are the ones who believed that the NEC and the UST were honest and transparent.
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
Do you think Merrill Lynch who was the lead Underwriter for FNMAT knew about the Jason Thomas Memo? He was the Special Advisor to GWB at the NEC and the memo was written to the Undersecretary of the US
You should also pity all the investors of the The Growth Fund of America like my kids 529 plan who were investors in the GFA via the Commonwealth of Virginia 529 Plan. GFA were very large investors of GSE common and preferred as the GSEs sold new JPS in April and May of 2008
To be fair most - many people give the cases a 1 pct chance of succeeding - I say I hope Hamish Hume gets very very rich!
Here is a big thank you to Tim Pagliara!! Read his book - seems like a good guy who has done a lot of good charity work.
Ackman probably continues to own them for standing in a new suit when the cramdown is announced - why sell common or JPS at these prices?