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I believe that I have contracted ficd. Fannie information consumption disorder.
Apparently I am consumed. I am reading this damn forum in 30 second intervals between the rounds of the fight that I am watching. Ohh Martrosyan just won.
Props to kabanch. Excellent
Payments end when sweep ends. Hope she is right
Just don't forget the AIG trial. It could be over in 6 to 8 weeks. Which ever way it goes for them the pps will move
With the volume and huge buys this week whales were investing and skiddish small fish retail were leaving. This all good for longs.
The articles that I have read about Lamberth's decision indicate that he has left the door wide open to appeal.The judges own reasoning for his decision can be used in the appeal. At least that is what I understand from reading articles posted on ihub. It was really picked apart and it seems he just wanted to kick the can down the road and did such a horrid job to ensure the plaintiffs have grounds for an appeal. Or maybe he is just a senile old guy that needs to stay retired.
I was reading a post earlier that described the conservator's decision to release when conservator decides that the gses are safe and solvent. Well I can already imagine Watt's arguement. The gses have no capital so they are neither safe nor solvent. Yea I know how can they build capital when it is all swiped by the treasury. You can see this circular arguement actually taking place in court. Reminds me of navy's photo that he is not allowed to post any more. I hope intelligent minds and justice prevails.
The Top Five Bank Bailouts We Never Heard About
Joshua Holland's picture
Banks | Economic Policy
by Joshua Holland | October 4, 2014 - 10:57am
— from Moyers & Company
Gallons of ink have been devoted to Wall Street executives’ lack of accountability for a global financial meltdown that was built on top of a mountain of fraud.
Nobody at the top has faced criminal prosecution. Executive compensation and bonuses have rebounded nicely. And while taxpayers committed trillions to keeping those “too-big-to-fail” institutions afloat, the foreclosure crisis persists six years after the crash.
And while the Troubled Asset Relief Program (TARP) sparked outrage, it wasn’t the only bailout Wall Street bankers have enjoyed since their casino came crashing down around them.
Elizabeth Warren flagged a special ruling by the Treasury Department that allowed AIG to carry over losses it incurred before the bailout for tax purposes. In 2012, she and several colleagues wrote in The Washington Post that the insurance giant’s “profits increased a staggering $17.7 billion — from a loss of $2.2 billion a year earlier — because of [the] special tax breaks.”
In 2010, economist Dean Baker and others argued that Fannie Mae and Freddie Mac’s continuing losses were in fact a matter of intentional policy — that the government-owned lenders were acting as a conduit to take bad securities off of the big banks’ balance sheets without raising the public’s ire by creating another TARP-style pot of cash.
And that same year, Newsweek’s Stefan Theil reported that the Fed’s “near-zero interest rates are shifting hundreds of billions from the pockets of savers — including millions of pensioners now earning next to no interest on their investments — into the coffers of banks and their investors.” Theil described it as a “stealth bailout…worth nearly $1 trillion in the US alone.”
But what may be the most egregious of these behind-the-scenes bailouts have been a series of settlements with the big banks for blatant wrongdoing that were structured in such a way that they could write the penalties off of their tax bills.
The dollar figures may not be as large as the $700 billion TARP program, but TARP was ostensibly an effort to pull the global economy back from the brink of another Great Depression. These settlements are about financial institutions’ wrongdoing — and compensating their victims. There’s no economic rationale for taxpayers to pick up a share of the tab. The opposite is true: by subsidizing the banks’ settlements, we’re only encouraging them to commit more fraud in the future.
Here’s a little bit of background: Under the law, punitive fines for criminal or civil wrongdoing aren’t tax deductible, but fees and compensation to victims are.
Settlements can be negotiated to stipulate that a bad actor can’t write any part of a settlement off of its tax bill — earlier this year, for example, the DoJ refused to let Credit Suisse deduct its $2.6 billion settlement for helping Americans evade US taxes. But as Gretchen Morgenson reported for The New York Times, “the government rarely specifies what the tax treatment of a settlement should be, leaving enforcement to the Internal Revenue Service.” And when left up to their legions of tax lawyers, financial corporations take an expansive view of what’s deductble.
In order to bring these stealthy bailouts into the sunlight, we take a look below at five of the biggest taxpayer-subsidized settlements reached with financial institutions as a result of the financial crisis — and what they did to earn their sanctions.
1. The 2012 National Mortgage Settlement (NMS)
The NMS was announced with great fanfare. Billed by the Justice Department as “the largest consumer financial protection settlement in United States history,” five of the country’s largest lenders reached a deal with 49 states and the federal government to compensate borrowers to the tune of $26 billion for “mortgage servicing, foreclosure, and bankruptcy abuses.” They included the widespread practice of “robo-signing” — the practice of falsifying documents when a bank couldn’t prove that it actually owned the loan on a property. Two million homeowners were promised relief.
Earlier this year, the banks completed their obligations, and it didn’t work out quite as expected. According to the government, 600,000 homeowners got help from the settlement, but as Alan Pyke reported for ThinkProgress, “that official figure falls apart under scrutiny, and in fact fewer than 85,000 homeowners got the kind of mortgage modifications that actually help keep people in their homes.”
A good chunk of the “damages” were just an accounting gimmick: The banks were already writing down principle on some loans — with the collapse of the housing market, they often had no choice — and some of these write-downs that they had to do anyway were counted as homeowner assistance under the settlement.
We don’t know exactly how much those five giant banks wrote off of their tax bills, but we do know that a majority of the settlement was in the form of direct compensation to homeowners and the states, and we can therefore assume that they wrote off the lion’s share. At the 35 percent corporate tax rate, that’s a subsidy of around $8.4 billion, courtesy of Joe and Jane taxpayer.
2. BofA’s $17 billion 2014 settlement
You may have heard of this one — it created outrage when it was announced in August.
Bank of America, and companies it had purchased, including Countrywide Financial, knew that they were selling a lot of garbage loans that would go belly up if the housing bubble didn’t continue to expand. Rather than disclose what they knew to investors, as they were required to do by law, they kept the good loans on their books and sold off the junk to investors. It was a massive case of fraud, and the DoJ had internal memos and emails to prove it — certainly enough evidence to bring criminal charges.
Instead, they agreed to a settlement of $16.65 billion — the largest amount paid by a single institution in the aftermath of the financial crisis.
As The New York Times reported, “the actual financial burden for Bank of America, however, may not exceed $12 billion.”
At issue is how much of the cost of the $7 billion in “soft dollars,” or help for borrowers, the bank will bear under the settlement. Some of the relief the bank will provide involves cutting the principal of a loan to make it easier for the borrower to pay. The dollar amount of that reduction gets credited toward what it needs to fulfill the settlement. But Bank of America wrote down many of its troubled mortgages years ago. And investment firms, not Bank of America, may now own some of the loans that get written down, potentially shielding the bank from a financial hit.
But even if BofA ends up on the hook for all $16.65 billion, they’ll get help from you and me and other taxpayers: The Justice Department allowed BofA to write $12 billion of it off the bank’s taxes, according to tax attorney Robert Wood. That amounts to around $4 billion that we may end up paying for their fraud.
3. JPMorgan Chase’s $13 billion 2013 settlement
The facts of this case were similar to that of the one above. According to Reuters, the Justice Department concluded that JPMorgan Chase “had regularly and knowingly sold mortgages to investors that should have never been sold.” Again, the bank admitted that it had defrauded investors by telling them that “the loans it was selling them met particular standards.”
But in this case, the Justice Department allowed the mega-bank to write $11 billion in penalties — 85 percent of the total settlement — off of its tax bill. At the 35 percent corporate tax rate, that’s a subsidy of around $3.9 billion.
4. BofA’s $10 billion settlement with Fannie Mae
As Chris Isadore reported for CNN, “the purchase of bad home loans by Fannie Mae led to massive losses, a government takeover in 2008 and a $116 billion bailout to keep it functioning as a major source of home loans.” The loans were originated by the notorious predatory lender, Countrywide Financial.
But the $10.3 billion value of the settlement is an overstatement. BofA paid Fannie Mae $3.55 billion in cash, and then it repurchased 30,000 shaky mortgages for $6.75 billion. It is expected to take losses on the loans it repurchased, but it won’t lose every dollar. Nobody knows how much they’ll ultimately recoup on those loans, but we do know that despite the fact that Fannie Mae is owned by the government, the settlement is considered to be one between two private parties, so the whole enchilada will be tax-deductible.
5. BofA/ Countrywide’s 2008 predatory lending settlement with 11 states
Countrywide’s lending practices were frequently compared to the hustles featured in the 2000 crime movie, “Boiler Room.” In 2007, Gretchen Morgenson reported that “Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrowers.” They used heavy-handed sales pitches, routinely steered customers into higher cost loans when they were eligible for cheaper ones and wildly misrepresented the terms of the mortgages they were peddling.
In 2008, then-Attorney General of California Jerry Brown announced that he and top law enforcement officials from 10 other states had reached an $8.68 settlement with Countrywide, which had already been acquired by BofA at that point.
The settlement didn’t require Countrywide/BofA to admit any wrongdoing, and didn’t include any punitive fines. It was all tax deductible. Had Countrywide completed the settlement before being taken over by BofA, the latter wouldn’t have been able to carry those losses over to its own books (and wouldn’t be able to deduct them from its taxes). But BofA completed the purchase three months before the settlement was reached and took an active role in the negotiations.
_______
http://www.smirkingchimp.com/thread/joshua-holland/58768/the-top-five-bank-bailouts-we-never-heard-about
It is a curious coincidence that David Stockman and Judge Lamberth are both Reagan appointees. Not trying to stir up political debate. It is just an observation. Cranky old men from the Reagan era complaining. Voicing now senile opinions unteathered by reason or facts and uninfluenced by the rule of law. CRAZY ! I hope Lamberth has made it very clear that he is unfit to Judge anything and he will now be permanently moth balled.
David Stockman to pay $7.2 mln in SEC settlement
NEW YORK, April 19, 2010
NEW YORK, April 19 (Reuters) - Former White House Budget Director David Stockman would pay $7.2 million under a settlement with U.S. market regulators, who sued him and others on allegations of accounting fraud at bankrupt auto parts maker Collins & Aikman Corp [CKCRQ.UL], court documents filed Monday said.
Stockman agreed to pay $4.42 million plus prejudgment interest of $2.37 million and a civil penalty of $400,000, according to the final judgment filed in U.S. District Court in New York in a lawsuit brought by the U.S. Securities and Exchange Commission (SEC) in 2007.
The judgment has yet to be approved and signed by the presiding judge, who halted proceedings in the case in January when the SEC said the parties had reached a settlement in principle.
According to Monday's filing, Stockman would receive credit against his $7.2 million obligation, up to $4.4 million, for any amounts paid by him within 14 days of the final judgment in settlement of two shareholder claims against a private equity firm he co-founded, Heartland Industrial Partners LP.
In January 2009, prosecutors dropped criminal fraud charges against Stockman and three other Collins & Aikman officials. Stockman, a former U.S. congressman from Michigan and President Ronald Reagan's budget director from 1981 to 1985, became a private equity investor after leaving government.
He became a Collins & Aikman director in 2001 and served as its chief executive officer from August 2003 to May 2005. The company filed for bankruptcy protection five days after Stockman's departure as CEO.
The SEC sued Stockman and eight other former Collins & Aikman officers and directors in March 2007. The suit alleged that Stockman fraudulently inflated the company's income by accounting improperly for supplier payments.
The case is Securities and Exchange Commission v. Collins & Aikman Corp et al, U.S. District Court for the Southern District of New York No. 07-2419 (Reporting by Grant McCool, editing by Gerald E. McCormick)
http://mobile.reuters.com/article/idUSN1921195120100419?irpc=932
A few more opinions of Stockman
Sunday, March 31, 2013
'David Stockman Goes Way, Way Over the Top'
The wingnut of the day award is easy to pick, it's David Stockman:
Cranky Old Men, by Paul Krugman: ... Actually, I was disappointed in Stockman’s piece. I thought there would be some kind of real argument, some presentation, however tendentious, of evidence. Instead it’s just a series of gee-whiz, context- and model-free numbers embedded in a rant — and not even an interesting rant. It’s cranky old man stuff, the kind of thing you get from people who read Investors Business Daily, listen to Rush Limbaugh, and maybe, if they’re unusually teched up, get investment advice from Zero Hedge. Sad.
David Stockman Goes Way, Way Over the Top, by Jared Bernstein: He has a featured piece in today’s NYT which, while about 11.8% absolutely and totally on target, is mostly a horrific screed, an ahistorical, dystopic, Hunger-Games vision of America based on debt obsession and willful ignorance of macroeconomics and the impact of market failure. ...
David Stockman wants to pee in your cornflakes, Kids Prefer Cheese: Wow. David Stockman confuses cause and effect, goes all gold-buggy, slanders Milton Friedman, and just generally comes unhinged in a massive hissy fit in today's NYT. ...
Update: See also David Henderson's "David Stockman Screeches."
http://economistsview.typepad.com/economistsview/2013/03/david-stockman-goes-way-way-over-the-top.html
David A. Stockman was indicted Monday on charges of conspiracy, securities fraud and obstruction of justice.
Stockman, 60, who faces the prospect of three decades in prison, is accused of defrauding investors and banks during his stewardship of Collins & Aikman, a large Southfield, Mich., auto-parts maker that descended into bankruptcy in 2005.
First elected to the House of Representatives at age 30, the boy wonder grew in stature when he was named Reagan's first director of the Office of Management and Budget. In that post he became the highly visible point man for the "trickle-down" economic doctrine of the 1980s. But his private conversations about the budget with a journalist instigated a falling out with Reagan, who took him, he said, to the "woodshed." Disillusioned with Washington, Stockman eventually left for the world of investment banking in New York.
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Stockman turned himself in at the U.S. Postal Inspection Service on Church Street in lower Manhattan shortly before 10:30 a.m., when investigators removed his blue-and-gold tie as a security precaution. Two hours later, he appeared in court wearing a navy pinstriped suit, tasseled loafers and a pair of tortoiseshell glasses. In a firm voice, Stockman pleaded "not guilty." He was released on a $1 million personal recognizance bond.
Manhattan U.S. Attorney Michael J. Garcia said that Stockman and a team of handpicked executives entered into secret agreements with suppliers, created false documentation to fool auditors and lied repeatedly about a cash squeeze to ensure that banks would continue to finance their operations. Stockman also misled company investigators examining deals between Collins & Aikman and a business owned by a board member, according to the grand jury indictment.
"Stockman did not only have money at stake," Garcia said at a news conference. "His reputation was on the line as well."
Prosecutors charged three other former Collins & Aikman officials, including a former finance chief and a former controller. Four other employees have pleaded guilty and agreed to testify against their onetime supervisor.
Outside the courthouse, Stockman presided over an impromptu news briefing, calmly discussing his efforts to move to a motel and work 16-hour days to save the company in the midst of an unprecedented cash crunch. "I took from my pocket to help," Stockman said. "I didn't line my pockets in any way."
By all accounts, Stockman operated Collins & Aikman with both hands on the wheel, fielding questions from reporters and analysts, negotiating directly with key clients, hoisting a canvas sack filled with fiscal projections and installing trusted subordinates into top posts at the auto firm, which once equipped more than 90 percent of all North American vehicles with dashboards, floor mats and other parts.
He is pursuing his defense in the same driven, detail-oriented way. Stockman blasted the charges against him as "hypertechnical" disputes about accounting policies and business judgments in an environment where board members still run scared from lawsuits after scandals at Enron and WorldCom. Stockman and prominent New York defense lawyer Elkan Abramowitz met twice with law enforcement officials in an unsuccessful bid to prevent the government from bringing the case after nearly two years of investigation.
At their news conference Monday, investigators pointed to what they called "purposeful lies" by Stockman and his team, all with an eye aimed at digging Collins & Aikman out of an ever-deepening financial hole. Ron Walker, inspector in charge of the Postal Inspection Service's New York division, said Stockman and his allies engaged in "increasingly desperate attempts to lie to lenders . . . to get them to throw good money after bad."
Stockman blamed his May 2005 ouster from the company and the multiple federal probes that followed as a "reckless spasm" of the Sarbanes-Oxley corporate accountability law. He argued that his case could not be more different than accounting scandals five years ago. "This wasn't any kind of joyride," he said. "This was Detroit" at a time when auto suppliers and the Big Three car makers were struggling to survive.
Stockman is almost certain to take the witness stand when the case goes to trial no earlier than next year, in part because he already has provided sworn testimony to securities regulators. Abramowitz told reporters Monday that the idea of a guilty plea "never came up."
A former babysitter for then-Sen. Daniel Patrick Moynihan (D-N.Y.), Stockman enjoyed a meteoric rise. He served two House terms as a Republican from Michigan and, at 34, was appointed the youngest Cabinet secretary in a century. Stockman's eventual exit from government in the mid-1980s made him hugely wealthy. The long-haired workaholic with the oversized eyeglasses wrote a book about the perils of political life and the struggles of truth-telling in Washington. Eventually he joined the Blackstone Group, a lucrative private investment partnership that brought him tens of millions of dollars.
But he remains best known for his bold projections as Reagan's first OMB director. Reagan chastised his young budget chief for expressing doubts to a Washington Post editor about massive defense spending, tax cuts and the resulting deficits at the same time he was selling the plan to the public and the Congress. The article threw Washington into uproar.
Stockman and his advisers hasten to point out that he and his Greenwich, Conn., investment firm, Heartland Industrial Partners, lost more than any other investor when Collins & Aikman veered off course. Heartland poured $360 million into the auto business, and Stockman lost $13 million more. Moreover, Stockman said he and Heartland continued to buy stock throughout his tenure at the company, on more than 150 trading days between 2002 and 2004, without unloading shares on the open market.
Linda Chatman Thomsen, enforcement director at the Securities and Exchange Commission, which filed related civil charges against Stockman on Monday, said that Heartland had received $45 million in fees and services over Stockman's tenure, half of which she said Stockman personally collected. Government lawyers are seeking forfeiture of more than $1.35 billion, a portion of the $1.6 billion in outstanding debt and financing the company received from such banks as Credit Suisse and J.P. Morgan Chase, lead prosecutor Helen V. Cantwell said.
In the end, Collins & Aikman, founded in 1843, will not survive intact. The company, which will pay no criminal or civil fines in connection with Monday's court filings, shed more than 11,000 employees. Current officials are selling off the company in pieces, a process that may be complete long before the Stockman case goes to trial.
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/26/AR2007032600518.html
Pelosi insider trading just one of many articles
http://www.newsmax.com/InsideCover/pelosi-stock-insider-60minutes/2011/11/13/id/417848/
Not just you Jbear. It bothers me and just about everybody that I talk to. It is a double standard and polticians make the rules which they believe that everybody else needs to follow. An example is that it is not illegal for a member of congress to trade a stock based on insider information. That one really chaps my fannie.
It was interesting to read the responses on SA to the author's article. Only one response was in agreement with the author and some responses have been deleted. Yet there it remains for all the world to judge. After reading the responses on SA it seems as though the public is not falling for it. Maybe people are waking up.
Chuckle chuckle
I guess a small gap down then recovery and rise is better than a gap up since I am afraid of gaps now.
Legends in their own minds
Should You Invest In Fannie Mae Stock?
By Wendy Connett
Buying Fannie Mae stock is not for the faint of heart. The mortgage giant has been through the much since the housing and financial markets imploded in 2008.
Some Background
The Federal National Mortgage Association (FNMA), typically called Fannie Mae, is the largest funder or backer of 30-year fixed-rate mortgages. Fannie Mae does not provide mortgages directly to borrowers. It purchases and guarantees them through the secondary mortgage market and pools them to form mortgage-backed securities (MBS). Institutions including insurance companies, pension funds and investment banks purchase its MBS. (For more, see: Fannie Mae: What it Does and How it Operates.)
Fannie Mae is one of two of the largest purchasers of mortgages on the secondary market. The other is the Federal Home Loan Mortgage Corp., or Freddie Mac. Both are government-sponsored enterprises (GSEs).
Fannie Mae was founded in 1938 by Congress during the Great Depression to stimulate the housing market. By investing in the mortgage market it creates liquidity for lenders, which in turn allows them to underwrite more mortgages increasing availability to borrowers. (For more, see: How Does Fannie Mae Make Money?)
Bailout and Delisting From NYSE
In the latter half of 2008 during the height of the credit crisis, Fannie Mae and Freddie Mac were taken over by the government via a conservatorship of the Federal Housing Finance Committee. Both were saved from collapse after the government bailed them out to the tune of $187.4 billion. Under the conservatorship both the GSEs’ profits go to the government.
Fannie Mae has been publicly traded since 1968 and now trades over the counter under (FNMA). It traded on the New York Stock Exchange until 2010 but was delisted after its stock plummeted below the minimum capital requirements mandated by the NYSE. (For more, see: How Fannie Mae and Freddy Mac Were Saved.)
Shareholder Lawsuits
Fannie Mae has caught the eye of some big investors, including hedge fund managers, some of whom have filed lawsuits against the government that essentially allege it is violating the rights of shareholders by allocating the GSE’s profits to the U.S. Treasury.
In late September a court threw out the first of approximately 20 suits filed so far. (For more, see: Fannie Mae, Freddie Mac and the Credit Crisis of 2008.)
Proposed Bills
How, if and when Fannie Mae will emerge from conservatorship status is up in the air. Several proposed bills have sought to remake Freddie Mae and sibling Freddie Mac entirely. One bill that has cleared the Senate Banking Committee would phase out both of them. They would be replaced with a private insurance system for mortgage securities and the Federal Mortgage Insurance Corp. would be established to provide a partial federal guarantee for mortgage-backed securities.
It's unclear how any remake of Fannie Mae and Freddie Mac would mean for investors at this point.
Profitability
Fannie Mae has come a long way since it was rescued by the government in September 2008. It has been profitable for the last 10 quarters. In the first and second quarters of 2014 it earned $5.3 billion and $3.7 billion in net income, respectively. To date it has repaid the government more than what it received in the bailout. Fannie Mae’s stock price has ranged from a high of $6.25 to a low of $1.26 in the last year as of the end of September 2014. It closed at $2.69 on Sept. 30. (For more, see: What you Need to Know about Fannie Mae Mortgages.)
The Bottom Line
Despite a major turnaround, Fannie Mae’s future remains in limbo. If you're adverse to high-risk investments, you should probably steer clear. But if you are able to ride the roller coaster for the long term, high risk could turn out to be high reward. (For more, see: The Over-the-Counter Market: An Introduction to the Pink Sheets.)
http://www.investopedia.com/articles/investing/100314/should-you-invest-fannie-mae-stock.asp
Relatively speaking they are not long. They bash in hopes that price drops and then they can buy back in and get more shares cheap.
Hard to hold through all the haters in the media and weak panic selling but in the end our victory will be that much sweeter.
Refreshing isn't it. Hopefully more to come.
LMAO Nice thought.
I have held all the way down so I bought more and now I will ride it back up.
45 mil.vol.
Lots of big blocks. I hope we have more investors for this run.
41.5 mil. vol.
Fannie Mae and Freddie Mac Rebound
by iBillionaireOctober 03, 2014, 1:24 pm
Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) rebounded early in the day this Friday after a dismal week on the market, and Demandware Inc (NYSE:DWRE) climbed on the market as well. Posting significant losses midday today are Alpha Natural Resources, Inc. (NYSE:ANR), NovaGold Resources Inc. (NYSEMKT:NG) and Gold Fields Limited (ADR) (NYSE:GFI).
fannie mae
Fannie Mae and Freddie Mac Bounce Back
Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) – climbed +21.85% early in the day today, and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) – surged +21.62%. Both entities took a major hit this week after a court ruling barring investors from benefiting from the companies’ profits. This has implications for a number of billionaire investors, including Bill Ackman and Bruce Berkowitz, though today’s rebound may offer some relief.
http://www.valuewalk.com/2014/10/fannie-mae-freddie-mac-rebound/
? Pluto To Regain Its Planetary Status?
I agree but you know that my post was funny.
I would like to see more from them too but I think that they know what they are doing and how to proceed. They are paying the best lawyers that money can buy. They have a play book. It would not surprise me to learn that Lamberth's decision is no surprise to them and they use that decision as a weapon in the future.
Lamberth changed his mind, Buffet bought a bunch of commons, Watt has released FnF and and a representative from the Dow called and asked FnF if they could please uplist to a major exchange as soon as possible. Then the treasury refunded the excess dividends that they swiped and cancelled the third amendment so that shareholders could recieve their first dividend in years. Wouldn't you like to wake Monday morning to those headlines?
GSEs soar as Perry Capital appeals suit dismissal
Oct 3 2014, 13:09 ET | By: Stephen Alpher, SA News Editor [Contact this editor with comments or a news tip]
"The district court's decision overlooks important points of law and improperly resolved key questions of fact based on the government's cherry-picked record," says Perry Capital attorney Ted Olson. "The merits of this case deserve to be heard in court."
http://seekingalpha.com/news/2014615-gses-soar-as-perry-capital-appeals-suit-dismissal
About to break 35 mil.
31.5 mil.vol. and holding up nicely through lunch.
Sound reasoning.
No the appeal has not been denied. The author was referring to Judge Lamberth's denial to hear the case.
The Other Fannie and Freddie Lawsuit
by John Griffith and Andrew Jakabovics
OCT 3, 2014 12:00pm ET
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John Griffith is a senior analyst and project manager at Enterprise Community Partners, a national affordable housing organization. Andrew Jakabovics is the senior director for policy development and research at Enterprise Community Partners.
John Griffith is a senior analyst and project manager at Enterprise Community Partners, a national affordable housing organization. Andrew Jakabovics is the senior director for policy development and research at Enterprise Community Partners.
On Tuesday, a federal judge dismissed a lawsuit from a group of Wall Street investors claiming that the government's decision to "sweep" the profits of Fannie Mae and Freddie Mac violated the rights of the companies' shareholders. As a result, all quarterly profits at Fannie and Freddie will continue to flow directly to the U.S. Treasury for the foreseeable future, pending further legal action.
That's good news for taxpayers, who have invested $187.5 billion in the mortgage companies since they were placed under government conservatorship in 2008. Not so much for the speculators who bought up Fannie and Freddie stock after the crash: shares in the companies lost more than a third of their value on Wednesday after the decision was announced.
The lawsuit will surely leave its mark on Wall Street and influence the future of Fannie and Freddie. However, when it comes to pain felt on Main Street, another far-less-publicized lawsuit will likely have a bigger impact.
Last year, a group led by the National Low-Income Housing Coalition sued Fannie's and Freddie's regulator, the Federal Housing Finance Agency, to lift the agency's suspension of mandatory funding to affordable housing programs. In a separate decision this week, a federal judge dismissed the lawsuit, citing standing and jurisdictional concerns.
At the center of the lawsuit was the National Housing Trust Fund, which was created by Congress in 2008 to support state and local efforts to build affordable rental housing and provide homeownership opportunities for low-income families. As originally envisioned, the Housing Trust Fund and another important community development program, the Capital Magnet Fund, would receive funding through a modest assessment on Fannie's and Freddie's ongoing business. FHFA suspended those obligations when Fannie and Freddie were put into conservatorship a month later, and the Housing Trust Fund has sat empty since its inception.
For the past year, the FHFA has cited the ongoing lawsuit to defend its near radio-silence on the issue. When FHFA Director Mel Watt was asked about the Housing Trust Fund at a recent event in North Carolina, he evaded the question. Notably, Mr. Watt did not mention the issue in his first major policy address earlier this year, and neither the Housing Trust Fund nor the Capital Magnet Fund was referenced in the agency's five-year strategic plan released in August. The agency did, however, include a strategic priority of supporting America's renters with "a focus on the affordable and underserved segments of the market."
As the FHFA stalls on the issue, America's renters face a growing housing insecurity crisis. According to the Harvard Joint Center for Housing Studies, more than one in four renter households pay at least half of their monthly income on housing — an unprecedented number. Many of these families are forced to make toxic choices — between paying rent or buying groceries, between keeping the lights on or buying medicine — often with severe health and other consequences. Meanwhile, due to recent budget cuts, federal funding for rental assistance programs covers only a small fraction of the families who need it.
We cannot address this crisis without additional resources. Both Fannie and Freddie have been profitable since 2012 and have returned more money to taxpayers than they initially received in the bailout. According to the National Low-Income Housing Coalition, if Fannie and Freddie had been required to fund the programs in 2012 and 2013, a total of $760 million would have gone to communities to support more affordable housing.
The FHFA can take a meaningful step toward ending housing insecurity by lifting their suspension on funding the Housing Trust Fund and the Capital Magnet Fund. Now that the lawsuit has been dismissed — and since we now know that the government's relationship with Fannie and Freddie will not be changing anytime soon — it's time for the FHFA to make good on Fannie's and Freddie's legal obligations.
http://www.americanbanker.com/bankthink/the-other-fannie-and-freddie-lawsuit-1070349-1.html
Fannie Mae, Freddie Mac Investors Hope For Favorable Verdict
by ManiOctober 03, 2014, 10:33 am
Common shares of the two GSEs are each down approximately 44% since the news that the court dismissed two suits on their profits
Speculators in Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA)’s and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s common stock are gearing up again on hopes a lawsuit will fare better in appellate court or other suits will gain traction.
Both Perry Capital and Fairholme gave indications of pursuing with their suit.
Fannie Mae, Freddie Mac: Court’s dismissal of two suits
As reported on Tuesday, a judge in the U.S. District Court for the District of Columbia dismissed claims brought against the federal government and U.S. officials by Perry Capital LLC and Bruce Berkowitz’s Fairholme Funds Inc. They filed a case for breach of contract over allegedly promised dividends and liquidation preferences and what they called an illegal “taking” under the U.S. Constitution.
Royce Lamberth, U.S. District Judge, rejected their claims, stating that Congress had, in effect, given the GSE’s regulator and the Treasury Department the power to take the companies’ profits as a provision under the Housing and Economic Recovery Act.
Hedge fund manager Bill Ackman’s Pershing Square Capital is also involved with an active suit against the government on Fannie Mae and Freddie Mac. However, Tuesday’s dismissal by the court didn’t cover Pershing Square’s lawsuit.
Suit will be pursued
Following the court’s dismissal of the suit, Fairholme Capital Management LLC, the investment management firm headed by Bruce Berkowitz, vowed to pursue the rights of private shareholders to profits from Fannie Mae and Freddie Mac.
Hedge fund manager Bill Ackman’s Pershing Square Capital is also involved with an active suit against the government on the two GSEs. However, Tuesday’s dismissal by the court didn’t cover Pershing Square’s lawsuit.
Suit will be pursued
Following the court’s dismissal of the suit, Fairholme Capital Management LLC, the investment management firm headed by Bruce Berkowitz, vowed to pursue the rights of private shareholders to profits from Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC).
In a statement to investors Wednesday, he said: “While we strongly disagree with the court’s conclusions, we remain steadfast in our belief that – at a minimum – shareholders are due just compensation for the taking that has occurred.” He added: “We will continue to pursue our legal rights with the same conviction held in our other G-SIFIs [global systemically important financial institutions] – American International Group Inc (NYSE:AIG) and Bank of America Corp (NYSE:BAC) – deemed essential to our way of life.”
Yesterday afternoon, Perry Capital filed a notice of appeal in its case which was recently denied. In a statement to StreetInsider.com on the matter, Perry Capital’s attorney, Theodore B. Olson of Gibson, Dunn, & Crutcher LLP, said: “The district court’s decision overlooks important points of law and improperly resolved key questions of fact based on the government’s cherry-picked record. The merits of this case deserve to be heard in court. Today’s filing brings us closer to that objective.”
http://www.valuewalk.com/2014/10/fannie-mae-freddie-mac-stockholders-hope-for-favorable-verdict-in-appellate-court/
29.5 mil. Vol.