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Navy, any idea if there is an audio link to the 5th Circuit Collins Case Oral arguments scheduled for today?
As of 2Q23, the TBTF FDIC insured banks are sitting on $558,400,000,000.00 (1/2T) in unrealized losses on their Assets. The FDIC Insurance Fund for American Deposits is $117,000,000.00 ($117B).
"This chart shows the elevated level of unrealized losses on investment securities due to the increases in market interest rates since the beginning of 2022. Unrealized losses on available-for-sale and held-to-maturity securities totaled $558.4 billion in the second quarter, up 8.3 percent from the prior quarter, primarily due to increases in market interest rates and mortgage rates during the second quarter."
https://www.fdic.gov/news/speeches/2023/spsept0723.html
Does the CFPB get funding for these lawsuit settlements from their annual determination on self-funding of "reasonable" expenses from the Federal Reserve?
https://www.americanbanker.com/news/cfpb-agrees-to-settle-employee-discrimination-lawsuit-for-6-million
Exactly! And according to Fannie Mae's 2Q23 10q, the WEIGHTED AVERAGE MARK TO MARKET LTV OF THE ENTIRE SINGLE FAMILY BOOK OF BUSINESS IS 51%!
See chart on PG. 27
https://www.fanniemae.com/newsroom/fannie-mae-news/second-quarter-2023-financial-results
RELEASE THE TWINS!
Great posts, Guido! Let's see if the Supremes reign in the Administrative State more this Fall Term!
Good times, good times!
Oh Sandra, "...the time has come to end what was intended to be a short-term timeout for the enterprises."
"Multiple reform plans were debated by both houses of Congress, but none ever made it to a floor vote. The reason was simple—the market was working well, and no one wanted to ruin it."
"And because the FHFA director effectively runs both companies and answers to the president, the GSEs serve as a de facto arm of the administration to further its policy agenda."
"As conservator and regulator, the FHFA can also dictate credit, pricing, and operational policy, in addition to its customary safety and soundness responsibilities. The agency can direct the GSEs to create programs and initiatives that further a political agenda regardless of long-term viability or costs—an agenda that is subject to dramatic shifts as administrations change. This type of control can have unintended consequences, destabilize the mortgage market, and put taxpayers at risk.
Meanwhile, the GSEs cannot access the capital markets to raise outside equity because the Treasury and FHFA have not or will not take action to resolve the government’s ownership stake. So, the GSEs remain in a netherworld between being able to operate like any other federally chartered, shareholder-owned, privately run corporate entity (which they are) and a government agency run by political appointees, similar to the Department of Housing and Urban Development or Ginnie Mae."
Most FHFA employees will be fully vested in their Retirement Accounts by then!
Don't spend the money yet!
Oh no, it's a 'dividend' implemented because you know, of the DEATH SPIRAL ! HeeeeHeeee! The Supremes bought that, why can't you and the 12 random Jurors?
12 random Jurors found that the FHFA engaged in unfair dealing and bad faith with the Shareholders.
Future Disclosure of Material Risks for a RE IPO:
WE HAVE BEEN FOUND IN THE PAST TO ENGAGE IN UNFAIR DEALING AND BAD FAITH WITH THE SHAREHOLDERS AND UNDER HERA WE COULD DO IT AGAIN.
UNDER HERA THE LEGAL FEES AND COURT COSTS AND OR DAMAGES AWARDS COULD BE DEDUCTED FROM THE CORPORATIONS BALANCE SHEETS EVEN THOUGH THE FHFA ENGAGED IN UNFAIR DEALING AND BAD FAITH WITH THE SHAREHOLDERS.
FHFA WILL VIGOROUSLY DEFEND ALL SHAREHOLDER INITIATED LAWSUITS AND THE COMPANIES, NOT THE US GOVERNMENT WILL PAY ALL OUR EXPENSES.
UNDER HERA THE FHFA SELF FUNDS ITS ANNUAL BUDGET FROM THE CORPORATIONS BALANCE SHEETS AND WHATEVER WE FEEL IS REASONABLE WILL BE EXTRACTED ANNUALLY INTO PERPETUITY.
UNDER HERA, THE FHFA AND THE US TREASURY HAS IN THE PAST AND COULD IN THE FUTURE TAKE VIRTUALLY ALL THE CORPORATIONS FUTURE PROFITS INTO PERPETUITY.
The "Superior Minds" or "Mental Giants", Ed Demarco and Timothy Geithner, mistakenly thought that the August 17, 2012, Net Worth Swipe would "Wind down" the GSES and a flood of Private Capital would rush in.
11+ years later, the EXACT OPPOSITE has happened.
Soooo typical when the Gubmint interferes with the Financial Markets.
"Rent Control" is another failed Gubmint overreach experiment that had the opposite results.
Nationalization is a horrible public policy.
Here's Edward J. Pinto (2015), talking about the origination and emergence of the 30 year prepayable at anytime Fixed Rate Mortgage, did the Gubmint create it? Yes, and American Homeownership Rates increased:
"FHA introduced the 30-year, self-amortizing mortgage during the 1930s, which along with low-downpayments, helped raise the homeownership rate from 43.6% in 1940 to 61.9% in 1960."
https://www.aei.org/housing-center/housing-finance/housing-finance-fact-or-fiction-fha-pioneered-the-30-year-fixed-rate-mortgage-during-the-great-depression/
Damn! "These people" should be paying me rent instead in my latest housing development for rent, Pottersville! HeeeeHeeee !
HeeeeHeeee! Come on Skeptic, we miss the old you, tell us what's REALLY going on here!
We're big boys and girls, WE CAN HANDLE THE TRUTH!
"Another factor that may be at play with Fannie and Freddie, some industry experts speculate, is concern over so-called “counterparty risk.” Merger and acquisition experts expect continued contraction of the IMB industry in the months ahead, given originations have plummeted from the historic highs of 2020 and 2021.
That creates a scenario in which loan-defect protection (via rep and warranty coverage) could be jeopardized on loans that Fannie or Freddie have acquired from lenders (or counterparties) that subsequently go out of business.
“I’m not saying they’re [Fannie and Freddie] doing it, but I’m saying I share the concern that there may be an element of counterparty risk-management in this [repurchase] process, and it this should be based on loan-level determinations,” Mills said. “[Unlike IMBs], if a bank fails, the FDIC [Federal Deposit Insurance Corp.] finds a successor, so the GSEs [Fannie and Freddie] … worry less about banks because they have federal backstops.”
The unintended consequences for underserved borrowers
Tim Rood is head of government and industry relations for SitusAMC, one of the largest providers of technology and services related to loan origination, servicing, quality control and sales across real estate sectors. The company works with both private-sector and public-sector clients, including Fannie and Freddie.
“I’ve had plenty of conversations with the GSEs [Fannie and Freddie executives] regarding the topic of repurchases in the past few years,” Rood said. “…And they seem to be genuinely anxious over the problem of FHFA compelling them to be more vigorous on the repurchases while also being consistent with both the [rep and warranty] framework that was negotiated in 2015-2016 between the MBA and the GSEs … and also to be consistent with reviews in the past.”
Rood added that Fannie and Freddie face a dilemma created by the FHFA’s seemingly conflicting missions to have a focus on serving underserved, riskier borrowers while at the same time protecting taxpayers from loan-credit risks.
“That’s a perfect opportunity for them to count those [social-mission loans] and how relevant they are to the administration’s economic and social agendas … while at the same time, when defensible, mitigating the actual credit risks associated with those loans by being hypervigilant on repurchases for at-fringe credit-risk loans.
“The problem is [lenders] will be less willing to originate goals-rich business if they know those loans are going to be scrutinized, and they further understand that originating a perfect loan is darn near impossible.”
The Current administration using the GSE'S and the 16 year CONservatorships to hand out benefits to their targeted voting base:
"Their letter asked FHFA to “condition” Fannie Mae- and Freddie Mac-backed mortgages based on various tenant protections, including limits on “egregious rent hikes.” Rents have risen 25%, or more than $400, since 2019, according to the apartment search engine Rent.com."
"What does rent control research say?
“There’s decades of research that show ultimately, rent control increases prices because owners or developers can’t cover costs if they rise,” Geno said.
An often-cited 2019 Stanford University study said rent control intensified San Francisco’s housing shortage. Faced with a strengthened ordinance, landlords either converted their units into condos or exited the rental business, resulting in 15% fewer apartments and higher rents, it said.
The measure "appears to have increased income inequality in the city by both limiting displacement of minorities and attracting higher income residents” with new condos, the study said.
Rent control also incentivizes people to occupy apartments longer - "even when their apartment no longer fits their needs" - which means more competition and higher prices for fewer vacant units, Geno said. (Think the hit show "Friends": Monica's New York City apartment was rent-controlled, and she inherited the lease after her grandmother died and paid just $200 a month. In the series finale episode, as Monica and her husband prepare to move out, he says, "Thanks to rent control, it was a friggin' steal.")"
https://www.usatoday.com/story/money/personalfinance/2023/09/05/federal-rent-control-laws-debate/70666376007/
THE 4TH BRANCH OF GUBMINT, WHAT'S NOT TO LIKE !
https://m.facebook.com/reel/1055963942441429/
Fannie Mae and Freddie Mac make possible the 30 year prepayable at anytime Fixed Rate Mortgage to all 333,000,000 Americans, thus avoiding interest rate resets every 1 to 5 years on their homes as is the case throughout virtually every other country in the World.
What do hard working Americans and Retirees get in return for providing the private capital for Fannie Mae and Freddie Mac? 16 year plus Defacto Nationalized Corporations.
Here's what's happening to our neighbors in the north:
"Unlike in the United States, it’s difficult for homeowners to lock in their rates for long periods. Most either have mortgages where the rates are fixed for one to five years, or variable-rate mortgages that reset with every move in the central bank rate."
https://financialpost.com/real-estate/mortgages/homeowners-extend-amortization-banks-mortgage-data
"It's up to the US Congress to decide the future of the US Housing Finance Market."
--Sandra L Thompson, FHFA Director, Testimony to the Senate Banking Committee
Nice, thanks, here's the reasons for granting an En Banc Hearing in the USCAFC, (Pg. 25):
Subject: BASES FOR HEARING EN BANC OR REHEARING EN BANC
1. En banc consideration is required to overrule a prior holding of this or a
predecessor court expressed in an opinion having precedential status.
2. Upon the concurrence of the majority of active judges, the court will, for any
appropriate reason, conduct an en banc hearing, rehearing, or reconsideration. Judges
who are recused or disqualified from participating in an en banc case are not counted as
active judges for purposes of this IOP. Among the reasons for en banc action are:
(a) Necessity of securing or maintaining uniformity of decisions;
(b) Involvement of a question of exceptional importance;
(c) Necessity of overruling a prior holding of this or a predecessor court
expressed in an opinion having precedential status; or
(d) The initiation, continuation, or resolution of a conflict with another circuit.
But as I recall in Collins, the EnBanc Appeal is conditioned on a Majority (I believe) of all the Active federal Judges in the Circuit agreeing to hear it, otherwise it would be Petition for a Writ of Certerrori time and those are sparsely granted.
I think that's right....
I think this is new, so maybe 3 Judge Panel on Appeal and then ask for En Banc in latest Fisher case.
One way to find out is just sit on our hands and wait.
Don't worry this Friday marks only the 5,844th Day since the "Temporary CONservatorships" were announced.
Nothing to see here, our 'dear leaders' have everything under control !
I think we're approaching the 4 year mark on the 4th Amendment and organically the Capital Rebuild from Earnings is ROUGHLY 1%-1.5%, excluding the Voodoo Accounting.
Hard to predetermine upcoming court hearing results and/or litigants strategies.
The US Government has had nothing short of a recalcitrant attitude toward the biggest heist of Shareholder Property in US History, which next week will enter its 16th YEAR.
Well, I believe EN BANC is something that happens ONLY after:
(1). There has been an appeal to a 3 Judge panel and they have ruled against you; AND
(2) Either a Majority of all the Judges or ALL the Judges in the that Circuit agree to hear the appeal from the 3 Judge panel.
However, Sweeney's federal court is a relatively special federal court, the US Court of Federal Claims (i.e., it is NOT one of the 12 or 13 federal circuits) and the rules of the court may or may not be different there.
Needless to say, multi Billion Dollar Litigation just takes time.
"Even if this court believed that Tyler contains a takings analysis that
conflicts with the Federal Circuit’s analysis in Fairholme, it would be for the Federal Circuit, en
banc, to revise its own precedent. See id. (stating that a trial court that disagrees with controlling
precedent is nonetheless obliged to follow it)."
https://www.glenbradford.com/2023/09/fisher-v-u-s-4/
Their book of business has never been better - RELEASE THE TWINS!!!!
I found it interesting as well. You're never to old to learn.
Appreciate your response. Historically, Fannie Mae was originally a part of the federal government whereas Freddie Mac was not. Whether or why that may or may not be significant is beyond me.
Latest from AJ Pollock, todays WSJ:
The New Bank Bailout
Taxpayers are bailing out Federal Reserve member banks -- institutions that own the stock of the Fed's 12 district banks -- and hardly anyone has noticed. For more than 100 years, our central-banking system has made a profit and reliably remitted funds to the U.S. Treasury. Those days are gone. Sharp rate hikes have made the interest the Fed pays on its deposits and borrowing much higher than the yield it receives on its trillions in long-term investments. Since September 2022, its expenses have greatly exceeded its interest earnings. It has accumulated nearly $93 billion in cash operating losses and made no such remittances.
The Fed is able to assess member banks for these losses, but it has instead borrowed to fund them, shifting the bill to taxpayers by raising the consolidated federal debt. That tab is growing larger by the week. Under generally accepted accounting principles, the Fed has $86 billion in negative retained earnings, bringing its total capital to around negative $50 billion.
Each of the Fed's 12 district banks, except Atlanta, has suffered large operating losses. Accumulated operating losses in the New York, Chicago, Dallas and Richmond, Va., district banks have more than consumed their capital, making each deeply insolvent. A fifth district bank, Boston, is teetering on insolvency. At the current rate of loss, five others will face insolvency within a year and the taxpayers' bill will grow by more than $9 billion a month until interest rates decline or the Fed imposes a capital call or assessments on its member banks.
The Federal Reserve Act requires that member banks subscribe to the shares issued by their district bank in a dollar value equal to 6% of a member institution's "capital" and "surplus" -- the definitions of which depend on the depository institution's charter. Member banks must pay for half their subscribed shares, while the remaining half of the subscription is subject to call by the board.
The act empowers the Fed to compel member banks to contribute additional funds to cover their district reserve bank operating losses up to an amount equal to the value of their membership subscription. The provision reads: "The shareholders of every Federal reserve bank shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such bank to the extent of the amount subscriptions to such stock at the par value thereof in addition to the amount subscribed, whether such subscriptions have been paid up in whole or in part" (emphasis added).
In the century when district banks were reliably profitable, these provisions posed only a remote risk to Fed shareholders. The central bank didn't need member banks to make any additional contributions. As district banks' consolidated losses approach $100 billion, however, the risks to Fed stockholders have risen. If called on, member banks are legally responsible to make these payments. At a minimum, they should disclose this potential liability.
The risk is that the more than 1,400 Fed-shareholder banks could receive a call on their resources equal to as much as 9% of their capital and surplus -- a call for a 3% additional equity investment and 6% cash payment to offset district bank losses. Member banks could be on the hook to contribute three times the capital they currently own in their district bank, or $108 billion in total for the central-bank system.
The Securities and Exchange Commission requires every registered firm to include in its annual 10K reports "an explanation of its off-balance sheet arrangements." The provision applies to securities issued by banks and bank holding companies that are traded on national exchanges, but enforcement is delegated to the federal regulatory agencies that aren't requiring Fed member banks and their holding companies to disclose the Fed's contingent resource claim as a material risk or as a contingent liability.
Consider the Goldman Sachs Group, which includes at least two Fed member banks. The company's 10K for 2022 includes page after page devoted to discussion of the group's regulatory, market, competition, operational, sustainability and climate-change risks. Not included in that list is the risk of being compelled to recapitalize and share in the losses of its Fed district banks.
The larger of the two is a member of the New York Federal Reserve Bank, a district bank with accumulated losses of nearly $62 billion, or more than four times its $15 billion stated capital. A smaller Goldman Sachs Trust bank is a member of the Philadelphia Fed, a bank with $821 million in accumulated losses.
Goldman's member banks had almost $44 billion in capital and surplus, according to our analysis of its June regulatory-call report data. Applying the 3% equity-investment and 6% cash-payment requirements, we calculate that Goldman would face a maximum contingent call of approximately $4 billion -- a sum that would exceed the combined 2022 income of its two Fed member banks.
Those sums aren't mere rounding errors, and they shouldn't be placed on taxpayers' tab. Federal bank regulators should require Fed member banks that are registered with the SEC and their holding companies to disclose their risks of being called on to prop up the finances of their Federal Reserve district banks.
---
Mr. Kupiec is a senior fellow at the American Enterprise Institute. Mr. Pollock is a senior fellow at the Mises Institute and a co-author of "Surprised Again! The Covid Crisis and the New Market Bubble."
Credit: By Paul H. Kupiec and Alex J. Pollock"
https://finance.yahoo.com/news/american-house-prices-still-rising-191124922.html
"Although demand for homes has fallen as rates have risen, the supply of properties has fallen almost in lockstep. Homebuyers typically obtain fixed-rate mortgages for 30 years—unheard of in most countries but viewed almost as a constitutional right in America, owing to the role of Fannie Mae and Freddie Mac, two giant government-backed firms, which buy up mortgages from lenders and securitise them. In enabling lenders to offer long-term fixed rates, their objective is to make it easier for people to buy homes. But at the moment long-term rates are serving as an impediment, since homeowners who got low-interest mortgages before the Fed ratcheted up rates have no desire to give them up, and so are unwilling to sell their homes. Redfin, a property platform, calculates that about 82% of homeowners have mortgage rates below 5%. Charlie Dougherty of Wells Fargo, a bank, calls it “a state of suspended animation” for the housing market."
History of the Government Sponsored Enterprises.pdf https://www.fhfaoig.gov/Content/Files/History%20of%20the%20Government%20Sponsored%20Enterprises.pdf
"On July 31, 2023, the U.S. District Court for the Southern District of Texas ordered the CFPB not to implement or enforce the small business lending rule against plaintiffs in Texas Bankers Ass'n, et al. v. CFPB, et al., No. 7:23-cv-00144, and their members. That order, a copy of which is available here , stays all deadlines for compliance with the small business lending rule for plaintiffs in that case and their members."
https://www.consumerfinance.gov/compliance/compliance-resources/small-business-lending-resources/small-business-lending-collection-and-reporting-requirements/
https://caselaw.findlaw.com/court/us-dis-crt-s-d-tex-mca-div/114780286.html
"As discussed supra, to succeed on the merits of their claim that the Final Rule is invalid based on the Bureau's unconstitutional funding structure, Plaintiffs must show the Bureau's “unconstitutional · funding inflicted harm.” Cmty. Fin. Servs. Ass'n of Am., Ltd., 51 F.4th at 643 (quoting Collins v. Yellen, ––– U.S. ––––, 141 S. Ct. 1761, 1788–89, 210 L. Ed. 2d 432 (2021)). When “the funding employed by the Bureau to promulgate [a] · Rule [is] wholly drawn through the agency's unconstitutional funding scheme, there is a linear nexus between the infirm provision (the Bureau's funding mechanism)” and an action that challenges the promulgation. Id. This is so because “without its unconstitutional funding, the Bureau lacked any other means to promulgate the rule.” Id. Here, the parties do not dispute Plaintiffs’ likelihood of success on the merits of their claim. See (Dkt. Nos. 13, Exh. 1 at § 1, 16 at § II.C, 17 at § II). This is because Plaintiffs in the present case have asserted the Final Rule is invalid because it was promulgated through the Bureau's unconstitutional funding scheme. See (Dkt. No. 13, Exh. 1 at § 1). Accordingly, this Court finds that a substantial likelihood exists that Plaintiffs would prevail in asserting that the Final Rule is invalid. Therefore, the “substantial likelihood” factor favors Plaintiffs."
Can we at least read the Fannie Mae Charter, isn't it public information? Have any idea where this is?
Fannie Mae was originally created in 1938, I believe as a Government Entity and then in 1968, I believe as a private Shareholder owned corporation that as I recall originally had S&L's required to purchase shares.
Freddie Mac came later in 1972, I believe to be a Competitor.
Why were Fannie Mae JPS included if they are equity holders and not Common?