TH today on ERCF and the MBA'S public comments: "Towards the end of its comment, the MBA reveals how it’s thinking about Fannie and Freddie’s capital when it says, “In the longer term, MBA recommends FHFA consider further revisions to the ERCF to improve effectiveness and transparency, pending the finalization of the proposed Basel III rule in the US. That rule is expected to impose a 15 to 20 percent increase in capital requirements for larger institutions, and MBA strongly opposes the proposal…Revising the ERCF post-Basel III finalization will give FHFA the opportunity to address compatibility, provide transparency, and lower complexity, which will allow the Enterprises to more accurately and effectively determine capital requirements based on actual risk.” In other words, the MBA still wants FHFA to set Fannie and Freddie’s capital with respect to bank capital requirements, even though there is no economic reason for it to do so. Fixing the ERCF for the benefit of homebuyers, rather than banks, will have to be done over the objections of the MBA."

Here's Freddie's 2Q23 10q (I bolded some of it) "In re Fannie Mae/Freddie Mac Senior Preferred Stock Purchase Agreement Class Action Litigations. This is a consolidated class action lawsuit filed by private
individual and institutional investors (collectively, “Class Plaintiffs”) against FHFA, Fannie Mae, and Freddie Mac.
Fairholme Funds, Inc., et al. v. FHFA, et al. This is an individual plaintiffs’ lawsuit filed by certain institutional investors (“Individual Plaintiffs”) against FHFA and its
Director, Treasury, Fannie Mae, and Freddie Mac.
Plaintiffs in each of the District of Columbia lawsuits filed an amended complaint on November 1, 2017 alleging claims for breach of contract, breach of the implied
covenant of good faith and fair dealing, breach of fiduciary duties, and violation of Delaware and Virginia corporate law. Additionally, the Class Plaintiffs brought
derivative claims against FHFA for breach of fiduciary duties and the Individual Plaintiffs brought claims under the Administrative Procedure Act. Both sets of claims are
generally based on allegations that the net worth sweep dividend provisions of the senior preferred stock that were implemented pursuant to the August 2012
amendments nullified certain of the shareholders’ rights, including the rights to receive dividends and a liquidation preference. Class Plaintiffs and Individual Plaintiffs
seek unspecified damages, equitable and injunctive relief, and costs and expenses, including attorneys’ fees.
On January 10, 2018, FHFA and its Director, Fannie Mae, and Freddie Mac moved to dismiss the amended complaints. On September 28, 2018, the District Court
dismissed all of the claims except those for breach of the implied covenant of good faith and fair dealing. On December 7, 2021, the District Court certified three classes
in the In Re Fannie Mae/Freddie Mac Senior Preferred Stock Purchase Agreement Class Action Litigations based on share type, including a "Freddie Preferred Class"
for holders of Freddie Mac junior preferred stock and a "Freddie Common Class" for holders of Freddie Mac common stock. To be included in one of these classes,
shareholders must have held their shares as of December 7, 2021 or acquired their shares after December 7, 2021 and before any final judgment is entered or
settlement is reached in the lawsuit. The parties filed motions for summary judgment on March 21, 2022 in both the In re Fannie Mae/Freddie Mac Senior Preferred
Stock Purchase Agreement Class Action Litigations and the Fairholme Funds lawsuit. On September 23 and October 11, 2022, the District Court ruled on the motions for
summary judgment and related matters. The rulings limited the Plaintiffs’ remaining damages theories."

8 random citizens saw through the shenanigans of the government here and reached a decision fairly quickly.

Nice to have a win! It shows that 8 random citizens had no problem unanimously seeing the injustice here after 8 hours of deliberations.

Will it change the recalcitrant attitude at FHFA and the UST, we'll see.

Meantime, I liked what I saw during the 2-3 week trial and oh yeah, the US Treasury is hiding a lot of information surrounding this defacto Nationalization of our companies and so is the FHFA!

Just a minor point, due to the unconstitutional funding mechanism the FHFA isn’t funded by printed money but by taking as much money as they want from Fannie and Freddie. That’s right, shareholders were paying the govt lawyers to fight us in court!

— FnFan (@FnFGateFan) August 14, 2023

Chris Whalen, global advisors of the same name commented on the shareholder verdict “it’s not anything somebody is going to be excited about- I guarantee you it is going to be appealed”

Mr. Whalen’s ethics align perfectly with an unethical government that was just found guilty…

— Tim Pagliara (@timpagliara) August 14, 2023

So what did you think of the win today?

No, appellate courts aren't determiners of fact, that's why when the SCOTUS gave their thumbs up that the Net Worth Sweep was a proper act of the FHFA, I was surprised.

The appeal will likely focus on getting a new trial based on improper Procedural Issues or other allegations by the FHFA.

But I have no idea.

We'll just wait and see what happens.

One thing for sure is that Courts are not usually in the business of overturning a Jury Verdict.

It's probably Sandra L Thompson's call whether to appeal or not. She will likely consult with the team of Arnold & Porter attorneys plus her General Counsel (Sherrod Browns former right hand man) to decide what she wants to do.

She's testified at Congressional Hearings that the 15 year conservatorships are unusual.

Maybe it's time to move forward and prepare for the eventual exit by allowing the US Congress not to have to be concerned about the outcome of this particular lawsuit when they decide to "determine the future of the Housing Finance Market."

Or maybe she wants to continue dragging this out longer. I'm sure the FHFA lawyers want to continue the billable hours here.

The Jurors seemed more mature this time, I think they saw through the shenanigans of the FHFA on this one.

Shame on Demarco for agreeing to Nationalize our Corporations and claiming he was preserving and conserving the corporations.

Shame on the US Treasury for failing to come clean here and vigorously hiding the ball of their true motives behind the August 17, 2012, Net Worth Sweep.

The misapplication of using International Commercial Bank Capital Ratios instead of those appropriate for a monoline insurance company should not be overlooked. Another major flaw is no credit for incoming Guarantee Fee Income paid by borrowers on the book of business during times of stress.

https://www.wsj.com/livecoverage/stock-market-today-dow-jones-08-14-2023/card/fannie-mae-freddie-mac-shares-jump-after-shareholder-victory-6GTbACt2OxhNjyw6WH01

As I discuss in my recent book, the net worth sweep of Fannie and Freddie was clearly inconsistent with responsibilities of a conservator https://t.co/HofetaXtao pic.twitter.com/oWd5O1yUAJ

— Mark Calabria (@MarkCalabria) August 14, 2023

NO PREJUDGMENT INTEREST for Freddie Mac from the Jury per Katie B, it will be determined by J. Lamberth.

Here's the link to the Jury Verdict Form:

https://www.documentcloud.org/documents/23909116-113-mc-01288-doc-392

BREAKING: A DC federal jury found the @FHFA wrongly amended stock purchase agreements related to the governments bailout of @FannieMae & @FreddieMac and awarded shareholders $612.4 million in damages, broken out as follows: pic.twitter.com/bZh2t1GwI2

— Katie Buehler (@bykatiebuehler) August 14, 2023

The FHFA, (acting in its capacity as the Conservator of the Corporations) wrongly amended the SPSA with the 3rd Amendment and breached the Corporations implied contract of fair dealing and good faith between the Corporations and the Shareholders.

Who pays the Judgment, FHFA, US Treasury, or the Corporations?

Congratulations #Fanniegate Fans! Today we are vindicated!
A jury of 8 Americans UNANIMOUSLY agreed with us that FHFA and DeMarco in particular acted unfairly and in bad faith when they entered into the Net Worth Sweep with Treasury.
This is a narrative sea change.

— FnFan (@FnFGateFan) August 14, 2023

https://www.google.com/amp/s/www.law360.com/amp/articles/1710685

https://www.cnbc.com/2023/08/14/ubs-to-pay-1point4-billion-for-fraud-in-mortgage-backed-securities.html

Congratulations KT and to all the jps holders who brought in $20B in much needed Capital in 2007 per the regulators request only to have the government come in on the verge of a turnaround and take Everything with the Net Worth Sweep.

Looks like green: 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

Nice call, 2-0?

Looks like 0.62B in Damages, not sure about interest, I think the interest will be included statutorily for one of the issues.

The ask was $1.6B plus interest.

STILL IT'S OUR FIRST MEANINGFUL WIN AND A SHOT IN THE ARM FOR THE BELEAGUERED SHAREHOLDERS 15 YEARS OF DRAMA AND SAGA!

Thanks for showing up, it showed the Jurors that yes hard working Americans and retirees were impacted by the FHFA overreach here!

I enjoyed watching the battle in the Courtroom, two army's of attorneys and support staff, great expert witnesses, and an overly prepped Demarco trying to strain reality.

I'm not there, but I can hear the Government Lawyer now, "Judge, we'd like to note our appeal!"

Sometimes good prevails! These Jurors saw through the shenanigans of the government here!

Great we won!

Read the trial transcript for how in depth this was covered and get back to me.

It's on PACER.

Just Google it.

Did the Jurors understand it? That's a different question.

Plaintiffs Attorney: "Dr. Thakpor, have you ever seen a Net Worth Sweep before in your decades of experience in banking business and advising?"

Dr. Thakpor: "It is unprecedented and has NEVER been done before or since."

US Court of Appeals, it's on the 5th floor, Lamberth's trial is on the 6th floor. No question about it though, a Jury Verdict for Plaintiffs would show that the FHFA has unclean hands here based on the opinion of 8 random citizens.

It is after all the greatest government heist in US History.

This is ONLY a legal action on the breach of the contract between the Corporations and the Shareholders. All corporations have a duty to engage in good faith and fair dealing with their Shareholders.

Corporations that agree to give away ALL their profits into perpetuity violate that contract. Here, the FHFA, acting as the Conservator, allegedly violated that contract.

Damages are limited to the one day drop in share price after the NWS was announced as Lamberth ruled that anything else was too speculative.

The SPSA will continue into perpetuity or until the FHFA and UST decide to release them, if that ever happens.

Thanks for the clarification! That could be very meaningful, because how does the public interest get served by depleting the capital of the GSES to near ZERO!

Both Dr. Thakpor and Dr. Dharan testified that the NWS actually IS THE OPPOSITE of serving the public interest, since it makes the GSES weaker financially and deprives them of something ALL monoline insurance companies need - CAPITAL!

Do you remember the exact Code Section in HERA? Is it like 4601?

https://www.housingwire.com/articles/freddie-mac-releases-2023-stress-test-results/

I suspect what happened here is Demarco was all in on the wind down of the GSES and that the US Congress would magically pass new legislation to replace the GSES with "Housing Finance Reform", increasing the private sector footprint in the Secondary Mortgage Market. He's still trying to sell this to the US Congress, as is Sandra Thompson when she says, "it's up to Congress to decide the future of the US Housing Finance Industry." Watt and Calabria wanted the same thing. I think Lockhart wanted this too.

That's NOT what HERA told any of them to do. The purpose of a Conservator is to right the ship and get out after the situation is stabilized.

Demarco (and Watt) were fundamentally opposed with the moral hazard of mortgage forgiveness.

It sounds like the Obama administration pressed UST hard to get mortgage forgiveness and incorporated it in the initial drafts of what became the 3rd Amendment or Net Worth Swipe.

DeMarco resisted and did tons of analysis on Mortgage Forgiveness (see Stegman memo). Since he was all in on wind down, likely reinforced by Alfred Pollard (a former tool of the TBTF banks) general counselor of FHFA, he didn't see a problem with giving away ALL the Corporations capital to the UST into perpetuity.

He probably felt good that mortgage forgiveness was out of the 3rd Amendment and that the GSES would eventually cease to exist as they would never be "pretend private" again.

That's the problem, most Jurors are watching and listening, (not taking copious notes) and trying to wrap their heads around this rather bizarre and mostly foreign fact pattern to them, which is missing a huge amount of facts because all the intra federal agency governmental motivations and policy discussions and motivations are hidden by Executive Privilege and National Security Exemptions.

The Jurors ain't getting the 100's of pages of HERA, just the small relevant parts of HERA approved by the court. The P's gave them and emphasized the Primary Powers of HERA, "to conserve and preserve the assets". The D's gave them and emphasized the Incidental Powers of HERA, "to act in the best interests of the FHFA and or the public it serves."

We'll see what happens.

These Jurors are older than the last set and seemed to be patiently paying attention to the trial proceedings.

It's a lot of information to digest in 2 or 3 weeks and P's ask seems big yet small compared to the $130B transferred from the corporations balance sheets in 2013 (with some of it being borrowed from the corporations to pay for it by issuing debt!) alone.

A win here would establish that the FHFA (acting in its capacity as the Conservator for the Corporations) breached the implied contract of good faith and fair dealing with the Shareholders on August 17, 2012.

I'll bet this guy, Alfred Pollard, General Counsel at FHFA during Demarco and a major lobbyist for the TBTF banks with the Financial Services Roundtable for some time, had something to do with the Net Worth Swipe and encouraged Demarco to Nationalize the GSES:

Alfred M. Pollard - Federal Housing Finance Agency https://www.fhfa.gov/AboutUs/Documents/Alfred_Pollard_Bio.pdf

https://www.squirepattonboggs.com/en/professionals/p/pollard-alfred-m

Okay good to know, in Florida attorneys do sit on Jury Duty. Many states prohibit it, like Virginia for instance: https://valawyersweekly.com/2012/05/24/so-who-wants-to-be-a-juror/#:~:text=The%20Virginia%20Code%20provides%20an,on%20civil%20and%20criminal%20cases.%E2%80%9D

The question is Does DC allow Jurors to be licensed attorneys?

If they do, the Government could use one of their peremptory strikes to get rid of them, but not before first asking them if they are familiar with the Collins decision.

About 1 out of 4 Professionals in DC is an attorney.

Thompson tried the APA angle and SCOTUS said, "NOPE", in Collins, remember?

Attorneys cost money, lots of money and this isn't a Pro Bono case. Both sides have a small army of attorneys, plus support staff and are fighting each other with every thing they have.

Here, the Government has legal exemptions from Disclosure of what really happened (Executive Privilege and National Security Exemptions) and they pay for the entire federal courts, including the Judge's lifetime salaries and benefits. Over 1/2 the payroll in DC is doled out from the Government and the other half receive revenues indirectly as contractors or servicing the government or their employees.

It's too bad Voir Dire is closed, I would have loved to see that!

Do you think either side hired Jury Consultants?

I'm pretty sure the Government used their peremptory strikes to exclude anyone with a finance or accounting background.

Voir Dire is closed, so we'll never know.

Probably why it took 2 days to pick 8 Jurors.

That's the Timothy Geithner Memo that Lamberth let into Evidence at the last possible second over P's objections.

I only read a couple of lines, but it looked like one of those official, "Cover Your Arse" memos used to justify Nationalizing the GSE'S.

THIS IS THE FRICKIN PROBLEM HERE, THE GOVERNMENT REFUSES TO SHOW US THE TRUTH AND CHOOSES TO HIDE BEHIND EXECUTIVE PRIVILEGE AND NATIONAL SECURITY SECRETS AT THE EXPENSE OF HARD WORKING AMERICAN SHAREHOLDERS!

Great private/public partnership isn't it?