Jog - can u explain why the arguments before Scotus has changed? Why isn’t the gov arguing shall vs may that was successful everywhere except the 5th circuit?

Bradford, I hate to burst bubbles, but it is JPS who didn’t understand the lawsuits. All of you failed to do your due diligence on Scotus and thoguht the issue was only stopping the NWS and not writing down the liquidation preference to 0 as well. This was also asked in the 5th circuit ...

All JPS posters on this board thought the issue was only stopping the NWS. There is a historical record on this forum proving that fact. That is a huge miscalculation ... you also have misplaced confidence in the warrants.

Again, JPS over focus on restructuring ... and if the senior preferreds are wiped out by Scotus? Then what ...

It’s one thing to want a more conservative investment, it is an entirely different approach when you think JPS gets all rewards with no risk. $300+ billion repaid ... show me a restructuring close to that? Good luck ...

With JPS shareholders like these, who needs gov enemies ... so true ... some big miscalculations on the JPS investment thesis ... good luck, JPS!

Can we get Guido’s post with Bryndon stickied?

Golfbum - see below ... straight from the horse’s mouth.

Holden - Have you read through the oral arguments? I listened to Thompson's calls. Here are excerpts from SCOTUS oral arguments, which is the latest "update" from the distinguished Mr. Thompson. I bolded and highlighted key sections so it is plain as day what is being asked for for Commons and JPS.

Pages 69 to 70
Quote:
JUSTICE THOMAS: But how would we unscramble the egg here? How do we put the parties back into the position they were in prior to Amendment III?

MR. THOMPSON: Thank you, Your Honor. Our preferred remedy that we articulated to the Fifth Circuit Court of Appeals en banc is that the overpayments measured against the 18.9 billion dollars of dividends that were being paid, that anything above that be treated as a paydown of principal on the government's liquidation preference. And if you do the math, the government's been paid back in toto plus 10 percent interest and there's 29.5 billion dollars left over.

The Fifth Circuit Court of Appeals asked the parties to address three questions. They gave the government 100 pages between FHFA and Treasury to address it, as it said, "in practical terms, what would setting aside the Net Worth Sweep entail and how would it affect other functions of the FHFA."

And in response to our preferred remedy, the government and FHFA said precisely nothing. They did not object. They had no practical concerns that they gave voice to.

JUSTICE THOMAS: Thank you.

MR. THOMPSON: And it's an accounting adjustment.


Pages 98 & 99
Quote:
JUSTICE BARRETT: And -- and let me just -- I just want to be certain I understand what you're asking for. Are you asking us to say if we agreed with you on the whole thing you want an injunction ordering Treasury to pay back the billions of dollars?

MR. THOMPSON: No -- no -- no, Your Honor. So this is very important. We're seeking two things. Numbering 1, we're seeking prospective relief so that in your hypothetical the Senate confirmed director would be enjoined from making any future sweep dividend, approving any future sweep dividend payment; and, number 2, we're asking to go back and have the overpayments, over and above the $18.9 billion, to be treated as a pay down of principal. And that would essentially deem the government paid back.


https://www.supremecourt.gov/oral_arguments/argument_transcripts/2020/19-422_3e04.pdf

Rick, that came out days ago ...

Rob, fascinating ...

Tough times do not afford the Gov omnipotence ... 5th Circuit said as much in Collins ...

Fence, agreed. And the important point I’m making to JPS is Biden very well may try for a utility model, but it will take time to fail and this rush to recap after Scotus is fairytales and make believe. “Release from conservatorship responsibly” means don’t shock the system where a fast raise would increase rates hitting affordable housing which is a Dems pillar.

Now Scotus could crush the whole thing which renders all this jibber jabber (jaw) moot.

Some very basic logic escapes the quagmire ...

Guido, Bradford seems to think Mnuchin will profit from FnF now that Mnuchin can as a private citizen. I admit I’ve had similar thoughts, and if it were true, albeit speculative, then of course the Letter Agreement would be meant, among other objectives, to maintain gov optics of GSE control to keep a low SP for a Mnuchin fund entrance point. What better way to do that then to tout the warrants. I’m not sure Bradford has gone through the evolutions on possible outcomes.

Regardless of the LA, Scotus can box the gov in with a couple paragraphs citing “profiteering” and “nationalization.” Warrants become DOA if you get those terms in the opinion.

Guido - it’s quite obvious on motive ... the huge miscalculation on the JPS investment is, at minimum, a sternly worded opinion admonishing the gov on their profiteering and nationalization of private companies that will set the stage for liquidation preference going to 0 and warrants being fully negotiated in good faith or outright cancelled.

Where “words really matter” are in Scotus law, not bureaucratic lip service and Letter Agreements published for politcal optics only. If Scotus says the gov has been beyond repaid, warrants in federal circuits are DOA. JPS, misinterpret at your own risk.

Rob, that’s the tip of the iceberg. Biden will begin revising the cap rule after Scotus, he may make a legislative push for a utility model, etc. This will all take time and meanwhile the GSEs with favorable Scotus will be retaining beaucoup money.

Scotus and the “Loan” to repay the gov. If Scotus writes down the loan principal to 0 that Fannie has already paid $300+ Billion on, as Ackman says, this is a game changer. It is that simple ...

I love the comparisons of Ackman to little k - are they even in the same universe? Laughable ...

Scotus zeroing out the Liquidation Preference either directly or indirectly would be a game changer and renders all prior analysis meaningless.

I have yet to see any analysis on a favorable Scotus outcome outside of Ackman ... The gov is not incorporating Scotus into their analysis, the industry isn't, no one is except Common shareholders ...

Has Pags touted Scotus as much as the contract claims before Lamberth? Buehler?

Good luck!

JPS’s Shares are a quagmire. The former CFO of the GSE Tim Howard stated “JPS’s Shares are a Quagmire trade.“ There are no dividends for JPS’s Shares and the warrants will be considered DOA after Scotus, and therefore, there’s a lot more upside to the commons than there are shareholders to JPS.

Donot - you are 100% wrong and it is proven that the government was looking for repayment. The Liquidation Preference was the only way to track repayment.

The legal system is approaching the PSPA as a loan. Nice try!

JPS is a quagmire.

I see the JPS quagmire trade is holding on for dear life. It is becoming accepted by the JPS crowd that Commons are the better investment. This scares some diehard JPS investors because more and more JPS are rotating into Commons.

Regarding the Letter Agreement:.

The letter agreement is all about optics and politics and is setup to be mooted by Scotus and Biden. With a Scotus favorable opinion citing the GSEs having repaid their debt to the taxpayer and all but zeroing out the liquidation preference based on the GSEs paying $300+ billion to Treasury, the Treasury taking 80% control of the GSEs becomes excessive and will not happen. (Corrected)

Given the $300+ billion paid to Treasury, a favorable Scotus ruling will make it difficult for Treasury to exercise the warrants along with the threat of prolonged litigation on a takings claim. Also, 120+ companies were allowed to settle their warrants without them being executed.

Collins is also asking for $30 billion in overpayments, which can easily be used as a bargaining chip on all sorts of items, including the warrants.

There is no precedent for private companies paying the government $300+ billion, which has absolutely caught the attention of the Justices (see Gorsuch’s comments on amounts).

The inconvenient truth about JPS is there are no dividends and all they have is a court date in June 2022. They think they have a chance. Good luck with that!

Good luck JPS!

https://www.google.com/amp/s/www.multihousingnews.com/post/amp/new-plan-for-fannie-freddie-threads-the-needle/

Skeptic - your JPS investment is predicated on a suspect legal claim touted as a sure thing in June 2022.

Good luck, Skeptic!

I see the JPS quagmire trade is holding on for dear life. It is becoming accepted by the JPS crowd that Commons are the better investment. This scares some diehard JPS investors because more and more JPS are rotating into Commons.

Regarding the Letter Agreement:

The letter agreement is all about optics and politics and is setup to be mooted by Scotus and Biden. With a Scotus favorable opinion citing the GSEs having repaid their debt to the taxpayer and all but zeroing out the liquidation preference based on the GSEs paying $300+ billion to Treasury, the Treasury taking 80% control of the GSEs becomes excessive and will not happen.

Given the $300+ billion paid to Treasury, a favorable Scotus ruling will make it difficult for Treasury to exercise the warrants along with the threat of prolonged litigation on a takings claim. Also, 120+ companies were allowed to settle their warrants without them being executed.

Collins is also asking for $30 billion in overpayments, which can easily be used as a bargaining chip on all sorts of items, including the warrants.

There is no precedent for private companies paying the government $300+ billion, which has absolutely caught the attention of the Justices (see Gorsuch’s comments on amounts).

The inconvenient truth about JPS is there are no dividends and all they have is a court date in June 2022. They think they have a chance. Good luck with that!

Good luck JPS!

https://www.google.com/amp/s/www.multihousingnews.com/post/amp/new-plan-for-fannie-freddie-threads-the-needle/

Do you think the Letter Agreement is set in stone?

Fred - so you think Treasury will take 80% of the GSEs after the GSEs paid $300+ billion? Don’t you think that is excessive?

I think folks confuse NWS and liquidation preference. Think of the liquidation preference being the loan principal and the NWS being the interest payments. In the case of the PSPA, the NWS “interest” was never applied to the “principal” liquidation preference. If you as a homeowner only paid interest without gaining equity in your home you’d go to court.

The liquidation pref going to 0 all but ends the NWS, but Collins is also asking for an injunction on the PSPA so no further NWS’s can be implemented. Liquidation pref to 0 ends everything except a reasonable commitment fee and responsibly raising capital.

Golf - Ending the NWS is not the key point. Writing the liquidation preference (LP) to 0 is the key point.

Writing the LP to 0 by default ends the NWS. If that is done it de facto ends the warrants through marginal repurchase or outright cancellation given the PSPA contractual out clause, the Treasury precedent of 120+ companies being given an opportunity to settle the warrants, and the threat of further litigation as the warrant issue (needs to be excercised) is not ripe for adjudication on a takings claim.

If the LP going to 0 is referred to in the SCOTUS opinion, then I suspect ~$10 per share holding until further legal issues are understood.

If SCOTUS points to the $300+ billion repayment as being sufficient, Treasury will have a hard time justifying the execution of warrants for 80% of the company before a federal judge.

If SCOTUS issues an injunction themselves, we could see $20 or $30 per share in a matter of days.

All depends on the opinion of SCOTUS. Anything referring to the GSEs paying their debt to the taxpayer, and how the GSEs should be allowed to operate as private companies while the legislative branch needs to do drive reform which is their job. The opinion could further define the NWS executive/4th branch overreach, which would really put a solid floor on the SP as any further legal proceedings will rely on SCOTUS's opinion on the "GSEs paying their debt to the taxpayer" language.

Heck, SCOTUS could go as far as bulldozing the whole thing which would send us very high, issuing an injunction on the whole conservatorship, etc. Possible ...

Bradford, it could be argued a denial of cert to hear Collins would have by default reconciled the differing circuits where Scotus essentially agrees with the 5th circuit.

As for the imminent remedy from Scotus, the point is there will be enough Direction from the opinion where summary judgment becomes a real possibility in the lower courts.

Scotus will solve for the hard calculations while the lower court will do the basic arithmetic. At the end of the day if Scotus rules that way it’s all a foregone conclusion and investors will fully understand this perspective, so there may not be a tangible remedy day one but there will be a high high degree of certainty of a remedy on day two or three or four which means the share price will appreciate significantly.

Skeptic - your POV makes no sense. Why would SCOTUS accept the case? The only alternative is they will overrule the en banc and say the en banc is wrong.

I don't see that happening. I believe there will be specific items in the opinion that will be directly influential on remand enabling plaintiff motions for summary judgement.

The lawsuits are the best thing going for us. The LA mean nothing.

The zeroing out of the liquidation preference is the key.

The economy is built on boom or bust cycles? Tell us more!

The obvious answer is DonkeyStrength - everyone knows that!

Mnemonic - if Scotus admonishes Treasury for the $300+ billion repayment due to the de facto nationalization, and then Treasury goes ahead and takes 80% ownership of the companies, more litigation will follow. Another federal judge could read SCOTUS’s admonishment of Treasury and could easily say Treasury went too far again, especially given the 120+ companies that received a bailout were afforded an opportunity to settle the warrants.

The above will be incorporated into Treasuries calculus with a favorable Scotus opinion.

The power of Scotus is either not understood or is intentionally being misrepresented.

Bradford, ok, so it goes back to the lower courts. The Calculus is done. It's academic block and tackling from there on out. I believe a Summary Judgement is on the table.

Why is September 30th a hard deadline? Please tell me the Letter Agreement isn't considered set in stone ...

Scotus will basically admonish the executive branch for attempting to implement change beyond their powers that should’ve been handled by the legislative branch. They will say the legislative needs to define GSEs status - free-market, implicit, explicit, more charters, utility, or or or ...

Defining the status of the GSEs is not an executive role and the de facto nationalization of the GSEs was an ultra vires act by the executive. I suspect a favorable Scotus ruling would incorporate some variation of the above.

Here is JPS’s investment thesis ... Scotus be darned

So if Scotus admonishes the gov on the PSPA, and words an opinion basically telling the gov it’s over, according to Bradford et al, the gov will go further because “Treasury hates us.” $300+ billion dollar repayment and further potential takings claims based on warrant execution be darned. According to JPS these items will certainly not factor into Treasury’s decision making. Ok, bridges in Brooklyn for sale ...

Surely, the gov must, on top of the $300+ billion extract, every ounce of blood out of FnF and take 80% ownership of the companies. Not to mention the Treasury precedent where 120+ companies were given the option to repurchase warrants. Creative financing...

The PSPA could easily have another amendment deeming the entire obligation paid to the government and “voiding” the PSPA going forward.

Deeming the PSPA paid, zeroing out the liquidation pref is front and center for the very remedy shareholders (Commons & JPS) are looking for before Scotus.

The legal perspectives escape JPS comprehension.

Why wouldn’t Treasury want to do that? FnF have paid $300+ billion. When the Supreme Court says that the gov has been paid back at a huge profit, why wouldn’t Treasury feel obligated to deem the entire PSPA contract paid and void?

You have no idea whether or not that will happen. JPS must believe it won’t to justify their trade, which is actually a quagmire, but it is absolutely a solid possibility and even if it isn’t, warrants will become part of any settlement.

Good Luck!

Action - yep - and I will expect Yellen to cancel the whole thing ... warrants included - FnF have paid $300+ billion to gov - debt paid

Someone is playing games with JPS - If I were a JPS investor I wouldn't be trusting anything from any of the usual suspects. Seems they're in cahoots with their messaging for trading purposes.

JPS outsiders, beware!

The whole JPS trade last week on Friday was done to increase the price, get some folks to bite and purchase the illiquid shares so the buyers on Friday could sell their shares this week.

All I know is there was conveniently a realvision promoting JPS and a SeekingAlpha promoting JPS.

Coordinated? I told ya newly minted JPS bagholders would be made this week.

Skeptic - JPS's dream of Mark Calabria doing anything is misplaced.

You should understand JPS is a quagmire trade and Mark Calabria will be gone in a couple months.

Skeptic - JPS dreams of Calabria helping them are about to be destroyed because he won’t be here.

Kilshaw - i’d definitely do that and mine as well put your parents retirement into the trade.

JJ - and all the JPS over the past year had access to all that privy information and what happened? JPS prognostication has been at the absolute bottom of the barrel.

Bradford, why so concerned on when the announcement happens? Could be anytime between March and June - place your bets - or more importantly take the time to get out of the JPS trade - cause if SCOTUS is earlier JPS will continue to lose more relative to commons ...

Tim Howard: How about the Cap Rule is amended once Calabria is gone?

I've been talking about that ...

Bradford - restructure the Treasury's agreement with the GSEs, it doesn't say restructure to give the JPS investors a windfall ... yadda yadda yadda ...

What it is saying is Treasury and the GSEs will figure out a way for the Senior Preferred Shares to be restructured, not the Junior.

That is a pretty ginormous leap of faith from an investment standpoint to think that snippet points to a windfall restructuring for the Junior Preferred Shares where the person who issued those shares, former CFO of the GSEs Tim Howard, called the JPS shares a "quagmire."

Words matter ... or at least that's what I'm told ...

Corrected the above from prior post