Thanks for your continued hard work and diligence in this sorry saga of Gubmint overreach.

I think Fannie Mae's prejudgment interest was determined as a matter of law (Delaware ?) not by the trier of fact (i.e., the Jury).

Freddie Mac's prejudgment interest is probably determined pursuant to a prejudgment interest Virginia Statute since I believe Freddie Mac is headquartered in Virginia (i.e., McLean, Va.) which I'm guessing says to leave it up to the Jurors or 6% simple interest.

I'm just shooting in the dark and since I own ZERO shares of the Super Duper All Powerful Impervious from Gubmint overreach JPS (aka "THE FULCRUM SECURITY"), I could care less.

HERA seems pretty airtight on preventing the Conservatees (here, Fannie Mae and Freddie Mac) from suing the FHFA when he acts.

But given that a federal court has found his actions (here, DeMarco signing off on giving away ALL the profits into perpetuity) arbitrary or unreasonable, could the corporations on behalf of themselves sue the government if they are forced to pay for his arbitrary or unreasonable act?

Are the corporations bankrolling the Arnold & Porter lawyers fees and costs on behalf of the Conservator's bad acts?

Good times, good times!

P.S. "I'm from the Government and I'm here to help!"

According to Question 4 on the Verdict Form, "Do you award prejudgment interest on Freddie Mac Common and Preferred Shareholders?"

The Answer is............................No

Is that right, HERA protects an agent of the Government to act arbitrarily or unreasonably (here, Demarco when he signed off on the Net Worth Swipe) and the Conservatee is expected to transfer compensation for his bad acts?

Is that right?

I thought Collins was pretty clear that Constitutional Challenges and arbitrary and unreasonable actions by the FHFA were NOT protected by HERA.

Here's a crazy idea, end the 15 year CONservatorships and these types of problems will go away.

I haven't kept up with Collins in a while. Where are we on that currently? As I recall, the trial Judge denied any relief and so it's going to be heard by a 3 Judge Panel on Appeal, is that right?

All this because DeMarco and the UST couldn't follow HERA and instead choose to "Salt the Earth with the Shareholders Carcasses", Nationalizing the Corporations into perpetuity.

Unbelievably bizarre fact pattern! These federal agencies are out of control!

Relax, he's been on the bench for decades. Here's a recent speech he gave:

https://fedsoc.org/commentary/fedsoc-blog/sunshine-week-event-with-judge-royce-lamberth

Litigation moves at Glacial Speeds. Trial, verdict, appeals, etc. This case is only 11 years old.

I'm sure each side will wait until the last minute.

We'll see. Oral arguments are Tuesday, October 3rd, 2023 at 10am. The SCOTUS has been slowly reining in the 4th Branch of Government, like we saw with Collins.

Another big case is taking the Chevron Doctrine head on, should be an interesting term this Fall.

The Appeal will be interesting, hopefully we get some interest here, its only been over 11 years ago since the litigation was filed and we still ain't finished yet.

I think the GSES already send about $1B+/yr to an Affordable Housing Trust Fund.

What could be interesting is that a payment from the Fannie Mae and Freddie Mac balance sheets for an arbitrarily or unreasonably initiated action by the FHFA (here, the Net Worth Sweep) as an agent for the Government could conceivably initiate yet one or more legal actions by the Shareholders.

Ohh the drama! ! HeeeeHeeee!

https://news.bloomberglaw.com/banking-law/supreme-court-blocks-west-virginia-bid-to-challenge-cfpb-funding

"The Supreme Court is set to hear arguments on Oct. 3 in the CFPB’s appeal to a ruling by the US Court of Appeals for the Fifth Circuit that declared the agency’s funding unconstitutional. The October 2022 ruling found the CFPB’s independent funding through the Federal Reserve violates the Constitution’s appropriations clause.

The case is CFPB v. Community Financial Services Association of America, U.S., No. 22-448, Petition to Intervene and Bifurcate Argument Denied 8/21/23."

12-0

"We have reached a Verdict."

"YES, the FHFA acted arbitrarily or unreasonably in entering into the Net Worth Sweep."

I suspect what happened with the "Financial Advisors" that FHFA, Fannie Mae and Freddie Mac hired and paid millions for told them that the unprecedented August 17, 2012, Net Worth Swipe destroyed any confidence that Private Capital may have had toward entering into a long term Public Mission backed by Private Capital in a 1st Loss Position Partnership with the FHFA, the US Treasury, Fannie Mae and Freddie Mac.

Having DOJ and FHFA (at Fannie Mae's and Freddie Mac's expense) continuing their recalcitrant attitude and facade behind the Net Worth Swipe is also likely destroying future investor attitudes toward shelling out Private Capital.

Did I mention the way DeMarco demanded Fannie Mae and Freddie Mac float $20B in high coupon JPS Private Capital in 2007 and in 2012, decide to wind down the GSE'S when they were on the verge of World Record Profitability?

"Salting the Earth with the Shareholders Carcasses" is not a winning tag line in raising Private Capital.

Although its par for the course in Venezuela and other Banana Republic's.

TH and Bryndon today:

"Bryndon Fisher
AUGUST 21, 2023 AT 12:41 PM
“Had it not been for the sweep and the non-repayment provision of the Treasury senior preferred, the companies would have been able to use their torrents of retained earnings after 2012 to pay down their senior preferred, and then begin to build the capital necessary to allow them to exit conservatorship.”

Exactly. And, if the redemption of the senior preferred stock was done on a quarterly basis, beginning 1Q2013, both companies would have completely retired this obligation by 3Q2017 while simultaneously paying the originally agreed upon dividend. Moreover, this quarterly redemption process would have allowed the companies to keep approximately $220.4 billion more in retained earnings ($135.5 billion for Fannie and $84.9 billion for Freddie) than what actually occurred under the net worth sweep.

https://drive.google.com/file/d/15978NWfDcTtuClMBnwgWFmoPnwK94vWn/view?usp=drive_link

What Dr. Calabria and the “conversion crowd” don’t seem to understand (and I’m being kind with that characterization) is that converting the senior preferred stock to common shares does absolutely NOTHING to resolve the negative balance in each company’s retained earnings (i.e., accumulated deficit). The glaring accumulated deficit numbers will, at the very least, cause rational investors to question how and why these billion-dollar companies have these adverse amounts on their equity statements. Raising additional funds in the capital markets will be virtually impossible if the government follows the vaguely illustrated path outlined in Dr. Calabria’s book."

TH response:

"Bryndon—While you are correct that converting Treasury’s senior preferred stock to common “does absolutely nothing to resolve the negative balance in each company’s retained earnings,” it WOULD increase their regulatory capital by the amount of the converted senior preferred, thus bringing them much closer to their required capitalization (since common stock, even if owned by Treasury, is classified as regulatory capital by FHFA, whereas the Treasury senior preferred is not). But I agree with you that this conversion would very likely make it quite difficult, if not impossible, to attract new investor equity into the companies–or to allow Treasury to monetize the value of its virtually 100 percent ownership of Fannie and Freddie by selling its shares to third parties (while raising no net new capital).

You reference the “vaguely illustrated path [for exiting conservatorship] outlined in Dr. Calabria’s book.” There was literally no useful information in that book to indicate what Secretary Mnuchin might have been contemplating, and whatever it was, it seemed obvious that Calabria had not been in the loop on it (otherwise, he would not have described it so befuddlingly). Which makes me wonder: WAS there an actual plan, that the companies’ investment bankers thought could be executed successfully, and if so, what was it, and why wasn’t it carried out? The excuses Calabria gave for not doing so—first the impending election, then the fact that the Trump administration lost that election—are not convincing, since the timing of the election was known to everyone working on the alleged plan, and the possibility of losing it also would have been taken into account.

I’ve never understood how Treasury could continue to insist counterfactually that it had rescued Fannie and Freddie (as opposed to effectively nationalizing them for policy reasons, as the evidence shows it did), and that this rescue was of such value that full ownership of their earnings forever was fair compensation, while at the same time expecting them to ever be able to raise any significant amount of new equity again. If Treasury does want to “stick with its story” about a rescue of Fannie and Freddie of incalculable (and non-repayable) value, it seems its only real choice for their futures is formal nationalization. I suspect Mnuchin may have realized that—and wasn’t willing to just cancel the net worth sweep—so he pulled the plug on “recap and release” without ever telling Calabria, or anyone else, why."

HeeeeHeeee! DC Bureaucrats run amok with the reins of POWER!

"Nearly all men can stand adversity, but if you want to test a man's character, give him power."

-Abraham Lincoln

Thanks for the update! I appreciate your posts!

Lamberth's Defendant sentencing on Friday was a no show. Bench Warrant time for him...

https://www.google.com/amp/s/www.cbsnews.com/amp/news/proud-boys-member-and-jan-6-defendant-is-now-fbi-fugitive-after-missing-sentencing/

"On Friday, Lamberth issued a bench warrant for Worrell's arrest after he didn't show up for his sentencing hearing, court records indicated, and the FBI issued an alert asking for assistance in finding Worrell and taking him into custody."

So what's the situation with interest, any idea? Any idea on Appeal Deadlines?

"Yeah, like 2 quarters of profitability is a turn around!" J. Lamberth

2 quarters of profitability WAS a turnaround if you consider the very likely $50B to $70B in DTA's write ups and the $50B+ in Accumulated Loan Loss Reserves write ups coupled with the billions in legal settlements from the TBTF banks who started the whole mess with their Private Label MBS and their race to the bottom in both price and quality of Mortgages.

The Jury figured this out, we've known it for over a decade, not sure why the federal Judges can't see it.

DeMarco and the US Treasury decided to "wind down" the GSE'S in 2012 to increase the private sector footprint in the Secondary Mortgage Market but chose not to put them in receiverships.

Today, the market share of the GSES is actually higher.

Here's a crazy idea, follow HERA and exit from the Conservatorships!

SLT and all her predecessors: "We're waiting on Congress to decide the future of the US Housing Finance Market".

In Collins, the Supremes (without hearing a shred of evidence) bought the 'Death Spiral' argument hook, line, and sinker, from the Syllabus in Collins:

"Held:
1. The shareholders’ statutory claim must be dismissed. The “anti-
injunction clause” of the Recovery Act provides that unless review is
specifically authorized by one of its provisions or is requested by the
Director, “no court may take any action to restrain or affect the exer-
cise of powers or functions of the Agency as a conservator or a re-
ceiver.” §4617(f). Where, as here, the FHFA’s challenged actions did
not exceed its “powers or functions” “as a conservator,” relief is prohib-
ited. Pp. 12–17.
(a) The Recovery Act grants the FHFA expansive authority in its
role as a conservator and permits the Agency to act in what it deter-
mines is “in the best interests of the regulated entity or the Agency.”
§4617(b)(2)(J)(ii) (emphasis added). So when the FHFA acts as a con-
servator, it may aim to rehabilitate the regulated entity in a way that,
while not in the best interests of the regulated entity, is beneficial to
the Agency and, by extension, the public it serves. This feature of an
FHFA conservatorship is fatal to the shareholders’ statutory claim.
The third amendment was adopted at a time when the companies had
repeatedly been unable to make their fixed quarterly dividend pay-
ments without drawing on Treasury’s capital commitment. If things
had proceeded as they had in the past, there was a possibility that the
companies would have consumed some or all of the remaining capital
commitment in order to pay their dividend obligations. The third
amendment’s variable dividend formula eliminated that risk, and in
turn ensured that all of Treasury’s capital was available to backstop
the companies’ operations during difficult quarters. Although the
third amendment required the companies to relinquish nearly all of
their net worth, the FHFA could have reasonably concluded that this
course of action was in the best interests of members of the public who
rely on a stable secondary mortgage market. Pp. 13–15.
(b) The shareholders argue that the third amendment did not ac-
tually serve the best interests of the FHFA or the public because it did not further the asserted objective of protecting Treasury’s capital com-
mitment. First, they claim that the FHFA agreed to the amendment
at a time when the companies were on the precipice of a financial up-
tick which would have allowed them to pay their cash dividends and
build up capital buffers to absorb future losses. Thus, the shareholders
assert, sweeping all the companies’ earnings to Treasury increased ra-
ther than decreased the risk that the companies would make further
draws and eventually deplete Treasury’s commitment. But the suc-
cess of the strategy that the shareholders tout was dependent on spec-
ulative projections about future earnings, and recent experience had
given the FHFA reasons for caution. The nature of the conserva-
torship authorized by the Recovery Act permitted the Agency to reject
the shareholders’ suggested strategy in favor of one that the Agency
reasonably viewed as more certain to ensure market stability. Second,
the shareholders claim that the FHFA could have protected Treasury’s
capital commitment by ordering the companies to pay the dividends in
kind rather than in cash. This argument rests on a misunderstanding
of the agreement between the companies and Treasury. Paying Treas-
ury in kind would not have satisfied the cash dividend obligation; it
would only have delayed that obligation, as well as the risk that the
companies’ cash dividend obligations would consume Treasury’s capi-
tal commitment. Choosing to forgo this option in favor of one that
eliminated the risk entirely was not in excess of the FHFA’s authority
as a conservator. Finally, the shareholders argue that because the
third amendment left the companies unable to build capital reserves
and exit conservatorship, it is best viewed as a step toward liquidation,
which the FHFA lacked the authority to take without first placing the
companies in receivership. This characterization is inaccurate. Noth-
ing about the third amendment precluded the companies from operat-
ing at full steam in the marketplace, and all available evidence sug-
gests that they did. The companies were not in the process of winding
down their affairs. Pp. 15–17."

Could be another nothing burger as I don't think the current administration has really thought about releasing the GSE'S until, "Congress decides the future of the American Housing Finance Market".

But it would seem that the FHFA Director could use the Jury Verdict as a door opener for negotiations with the US Treasury.

Will the Lamberth trial unanimous Verdict give Sandra L Thompson any leverage in removing the US Treasury's foot off the GSE'S necks to facilitate a release from the CONservatorships?

Does UST even have a plan or have they even looked into it?

Fannie and Freddie's latest 10Q said they didn't reserve a dime in legal verdict set asides.

https://www.americanactionforum.org/insight/the-gses-and-the-net-worth-sweep-federal-judge-rules-against-the-fhfa-and-treasury/

"...the government had realized the unprecedented control that effective nationalization of the mortgage giants gave them over housing markets. This was only one of the key benefits of retaining the GSE conservatorship; it has been subsequently alleged that key government figures were aware that the GSEs stood to turn a tidy profit. Against this backdrop, Treasury and the FHFA doubled down on the conservatorship, creating what came to be known as the “net worth sweep.” The Senior Preferred Stock Purchase Agreements were amended to direct the GSEs to return all profits generated to Treasury, excluding the bare minimum required to keep them afloat, canceling the 10 percent dividend and essentially locking shareholders out of receiving dividends from their investments in perpetuity."

Only Freddie Mac Common gets about either $46m or $79m, I can't remember, you can look it up on Glens court docs page.

Fannie Mae Common was excluded from the class in the Lamberth trial.

Freddie Mac and Fannie Mae JPS were the winners if the case survives appeal. I think they split the roughly 1/2B based largely on the 1 day drop in share price on the day the Net Worth Swipe was announced.

More significant is that 8 random citizens found that the FHFA broke the Shareholders Implicit Contract with Fannie Mae and Freddie Mac and acted in bad faith and unfair dealing when the FHFA Nationalized our Corporations with the August 17 2012 Net Worth Sweep.

Took them less than 10 hours of deliberations to make the decision.

"Let’s not beat about the bush here. What the court has really said is that the government stole the two companies."

https://www.dhakatribune.com/financial-markets/322750/fannie-mae-otcqb-fnma-up-22%25-yep-the

"Mornings with Maria’ Overtakes CNBC’s ‘Squawk Box’ for Third Consecutive Month"

https://www.businesswire.com/news/home/20230502006099/en/FOX-Business-Network-Marks-Full-Year-Outpacing-CNBC-in-Business-Day-With-Viewers

TH on NAR and NAHB comments on ERCF: "...the National Association of Realtors DID file a comment on FHFA’s pricing and capital RFI—they slipped it in late on Sunday, the day before the deadline, and I missed it. I’ve now read it, and it is very strong and useful, leading off with the statement that “we strongly believe that some of the inputs to the pricing process, in particular non-risk related additions to the Enterprise Capital Rule Framework (ERCF) are inefficient, undermine pricing, run counter to the Enterprises’ charter duties, and should be eliminated.” The NAR said it specifically “objects to the minimum risk weight of 15% [actually 20%] and the stability capital buffer.” The NAR also believes that Fannie and Freddie should have return on equity targets comparable to public utilities, noting that with those, and fewer non-risk-based elements in the ERCF, the companies’ guaranty fees could be lowered, to the benefit of all homebuyers.

The comment from the third of the “Big Three” housing groups (along with the MBA and the NAR), the National Association of Homebuilders, was less useful. While the NAHB also lists non-risk based elements of the ERCF—”(i) a risk-weight floor minimum requirement for single-family mortgage exposures, (ii) a countercyclical adjustment to single-family credit risk capital requirements that elevates single-family requirements when real single-family house prices are significantly above their long-run trend, and (iii) capital buffers, which include capital buffers for stability and stress”—instead of calling for the reduction or removal of these elements, it says, “only FHFA has the detailed data and models to explain fully how the Enterprises’ current loan-level risk-based pricing aligns loan-level risk with the ERCF” (which isn’t really true), and that “We urge FHFA to provide transparency in the data and decision making that determines the pricing across the loan-level risk categories relative to the ERCF capital standards.” Finally, the NAHB’s exhortation to FHFA of “caution before [it] considers further changes and increases to guarantee fees” is weak gruel compared with the NAR’s advice that the warranted revisions to the ERCF would enable FHFA to LOWER fees."

"The government deserved and would have received, without the net worth sweep, a huge profit on its investment. But it was not entitled to 100% of all profits forever. That was not the deal made in September 2008. Private preferred shareholders invested over $32 billion, of which $20 billion was at the behest of government regulators during the housing crisis years of 2007 and 2008," lead attorney for the shareholders, Hamish Hume with Boies Schiller Flexner, said, reported National Mortgage Professional."

https://www.fool.com/investing/2023/08/16/why-fannie-mae-stock-was-up-big-today

Imbellish, any way you can pull up these puppies? I'd like to look at these again!:

PX-0273 Email from Jim Parrott to Timothy Bowler re Garrett Statement on Treasury Decision to Amend Terms of Fannie and Freddie Bailout

PX-0274 Email from Michael Stegman to Jim Parrott re Garrett Statement on Treasury Decision to Amend Terms of Fannie and Freddie Bailout

Judge Edith H. Jones in WSJ today: "Greg Dolin and Philip Hamburger's op-ed "Judges Attack Judicial Independence" (Aug. 11) in defense of Judge Pauline Newman of the Federal Circuit is exactly right. Judge Newman is a brilliant, capable jurist as well as a friend of mine.

Except for short and precise periods, no Article III federal judge can be removed from judicial duties other than by congressional impeachment proceedings. As the chief judge of the U.S. Court of Appeals for the Fifth Circuit, I had significant experience with federal judicial discipline. I presided over two matters, involving extrajudicial misconduct by federal district judges, that led our circuit's Judicial Council to recommend impeachment.

One judge was removed after impeachment and conviction, and the other resigned. Thankfully, such outcomes are rare in federal judicial history. In each case, we scrupulously followed the statutes and regulations that protect judges from peremptory, biased and ill-considered punishment. Neither judge was removed from a docket involuntarily pending the conclusion of our lengthy investigations.

But in Judge Newman's case, it appears that career-ending removal from her judicial duties is being imposed by her court, with no time limit and with little heed for the regulations and case law. At odds with fundamental due process, members of her own court sit in inherently conflicting positions as prosecutors, judges, jurors and witnesses.

To obviate unethical conflicts and provide objectivity, the normal application of judicial misconduct rules requires that a matter about a circuit-court judge be transferred to another circuit's chief judge and Judicial Council. The chief justice and a committee of the Judicial Conference of the U.S. could enforce this norm. Why the usual practice wasn't followed here is inexplicable.

Judge Edith H. Jones

U.S. Court of Appeals for the Fifth Circuit

Houston"

I think the case and 8-0 (12-0 if you count the previous trial) decision is significant!

I've decided to help Sandra out by drafting the FHFA Newsroom Announcement about the Jury decision in the US Federal District Court of the District of Columbia:

WASHINGTON, DC - Today we were busted by 8 (12 if you count the 1st trial) random American Citizens who determined that on August 17, 2012, we (in conjunction with our Co Conspirators, the US Treasury) stole hundreds of BILLIONS of dollars from hard working Americans and retirees and bankrupted many Community Banks that use to serve low and moderate income Americans but have been supplanted by the TBTF banks.

It also reduced Fannie Mae's and Freddie Mac's Capital to zero, which we later figured out endangers monoline insurance companies that back or guarantee some $7.3 TRILLION DOLLARS of American Families Mortgages.

We're probably going to appeal anyway because:

(1) Neither FHFA nor the US Treasury have to pay a dime of the damages and interest.

(2) FHFA and UST don't have to pay the 11 year plus legal fees and costs.

(3) The US Government pays ALL the Federal Judges salaries and benefits.

Mr. Market likes Fannie more than Freddie?

https://finance.yahoo.com/quotes/fmcc,fnma,fmckj,fmcki,fmccm,fmcck,fmcct,fmcci,fmckk,fmccg,fmcch,fmccl,fmccn,fmcco,fmccp,fmccj,fregp,fmckp,fmccs,fmcko,fmckm,fmckn,fmckl,fnmap,fnmao,fnmfo,fnmam,fnmag,fnman,fnmal,fnmak,fnmah,fnmai,fnmaj,fnmas,fnmat,fnmfm,fnmfn/view/v1?guccounter=1

ROLG in response: "Tim

if the GSEs in conservatorship in 2023 are required to make payment for a decision made by FHFA as conservator in 2021, then I have to believe that a new cause of action will arise in 2023.

rolg"

https://howardonmortgagefinance.com/2023/06/05/response-to-fhfa-pricing-rfi/

TH: "ROLG—The government’s willingness to appeal the jury verdict in the Lamberth case may be affected by the fact that FHFA isn’t on the hook for these damages; Fannie and Freddie are, as both made clear in their second quarter 2023 10Qs. Fannie said this, in Note 13: “In the [July 24, 2023] trial, plaintiffs requested $779 million in damages from Fannie Mae and prejudgment interest on the amount of any damages. We estimate that prejudgment interest, if awarded in the new trial, would be calculated at a rate of 5.75% and expect plaintiffs to seek such interest from August 17, 2012. Prejudgment interest calculated from August 17, 2012 through June 30, 2023 based on the amount of damages plaintiffs requested would be approximately $485 million…. At this time, we do not believe the likelihood of loss is probable; therefore, we have not established an accrual in connection with these lawsuits.” And Freddie said this about the Lamberth case in its second quarter 2023 10Q: “The retrial started on July 24, 2023 and is ongoing as of the date hereof. At this time, we do not believe the likelihood of loss is probable; therefore, we have not established an accrual in connection with these lawsuits. However, it is reasonably possible that the Plaintiffs could prevail in this matter and, if so, we may incur a loss up to $832 million plus pre-judgment interest as discussed above. We estimate that pre-judgment interest, if awarded, would be calculated at a rate of 6%.”"

TH response: "ROLG- I don’t know if you saw it, but in an article in the American Banker Tim Pagliara said, “If the government appeals the verdict, it could backfire and the $612 million verdict could balloon to over $30 billion because the government would be forced to pay 100% of the preferred stock that they’ve breached the contract on….There is controversy surrounding the damage model that the jury was allowed to consider in the trial that was just completed.”

ROLG today: "David Stevens, always quotable:

“The victory in Berkley v. FHFA is sweet for shareholders, notably in that it’s their first one since the beginning of conservatorship,” said David Stevens, a former Federal Housing Administration commissioner and Mortgage Bankers Association president.

“Whether this sets the tone for a new direction for the conservatorship is yet to be seen,” Stevens said. “But without question, a political leadership that oversees these two companies in Washington will be likely focusing on options ahead. While the jury awarded less than what was asked for by the plaintiffs, it is without question victory for the shareholder interest. What happens next will be interesting.”

https://www.housingwire.com/articles/fannie-freddie-shareholders-awarded-612m/

this is a judgment that will almost certainly prevail on any appeal. the jury is the arbiter of fact questions, and the determination whether the facts supported a finding that the legal standard (implied covenant of fair dealing) was violated is not something that an appeals court can overturn. now, appeals of a factual determination can be successful if an appellant asserts, for example, that the judge’s jury instructions were improper under the law (and therefore led to an improper factual determination), but my sense was Lamberth was very cautious in his jury instructions, usually favoring the government over the plaintiffs in motions with regard to witness testimony and jury instructions.

which leads to my point: whether or not one may think this judgment is sufficient in amount given the law and facts, the government isnt used to getting black eyes at the hands of the courts, and doesn’t want to pay this judgment. the government engaged in the same type of contractual malfeasance in the AIG case, was found to have violated the law, and plaintiff Starr was able to receive exactly $0 as damages. this is what the government expected with the GSEs as well.

I believe that this judgment has the potential to lead to the government’s engagement on the GSEs in a way that arguments regarding proper housing finance policy lack. Cash on the barrelhead can focus even a faithless bureaucrat’s mind.

rolg"

"I expect the government to appeal, and I wonder (too) if FHFA has even the wherewithal to make this payment. as I recall, HERA prescribes FHFA to fund itself from GSE fees, not congressional appropriation or the Treasury general account. by appealing the government should be able to defer the payment reckoning date.

rolg"

TH today: "A jury verdict that Treasury and FHFA “wrongly amended the PSPAs” in agreeing to the net worth sweep does undermine Treasury’s contention that it is right not to count net worth sweep remittances as repayments of draws of senior preferred, and thus to insist on virtual full ownership of the companies (through conversion of at least its outstanding senior preferred stock, and possibly its entire liquidation preference) before they can be released.

I’m not predicting that this will happen–or that it might happen soon–but I do view it as a significant positive that’s been added to the landscape by virtue of the jury verdict in Lamberth."