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Plaintiffs Rest. Defendants start.
This is a Breach of Contract case, it's not an explicit written contract, it's an Implicit Contract between the Shareholders and their Corporations. FHFA is being sued because it makes decisions like the NWS when it is acting as the Conservator.
The Scope of Evidence in this case is limited to that sole issue only.
Like I said, I haven't looked into it.
No question about it, the winners of the twins 15 year CONservatorships and the biggest beneficiaries are in order of magnitude:
1. The US Treasury
2. The TBTF banks stuffing their Balance Sheets with higher portfolio mortgages with interest rates elevated by the elevated GFees. Hell, Bill, when I worked at Fannie Mae from 88-93, average MBS Guarantee Fees were 20-25bps (Tim Howard and Tom Lawler could earn a little over 100bps on the Portfolio mortgages), TODAY hard working American Families pay nearly 3 times that and the TBTF banks love the Status Quo.
3. The Lawyers
Louie, I haven't researched it. It seems originally 10 years ago, US Treasury WAS listed as a Defendant in the case. However, I believe that UST was removed as a Defendant.
Why?
Again I haven't looked into it, but I'm guessing that since this is a Contract case we are dealing with two parties here. The Shareholders (us-Class Plaintiffs) and the FHFA (the Defendant) in its ACTING CAPACITY AS THE CONSERVATOR ON BEHALF OF FANNIE MAE AND FREDDIE MAC.
DEMARCO was the mental giant that gave away ALL THE SHAREHOLDERS PROFITS AWAY INTO PERPETUITY (for nothing) by signing the 3rd Amendment or Next Worth Sweep.
The US TREASURY does NOT have what I believe is known as Privity of Contract with the Shareholders. They have Privity of Contract with the Corporations.
The Shareholders have an Implicit Contract with their Corporations that they won't give away ALL the Corporations profits into perpetuity. Since FHFA as the Conservator 'steps into the shoes' of the Corporations only the FHFA and the Corporations internal memos appear relevant to this Implicit Contract case.
The Government Attorneys will argue (or may have already) that the Jim Parrot Salt the Earth with the Shareholders Carcasses Memo is too prejudicial to the trial and irrelevant since the UST has no Privity of Contract in an Implied Breach of the Shareholders Contracts with the Corporations and not Treasury.
I don't remember seeing the Jim Parrot Memo in the 1st trial, I'm pretty sure that the Jurors won't see it because the UST was removed as a Defendant in the case.
I hope I'm wrong, but I think that's right. I believe that the US Treasury is no longer a Defendant, therefore I think the FHFA lawyers got the memo kicked via a pretrial Evidentiary motion.
I think St. Joe's has some really nice land in PUD'S along the Florida Gulf Coast and Bill Ackman's always held the Howard Hughes land trust as I recall which is loaded with large tracts of land near the outer growth rings of 3 or 4 mainly Southwest MSA'S.
There's lots of land but in real estate its all about Location, Location, Location and yeah, they ain't making any More of it and Zoning is important to.
Bruce Berkowitz today:
"July 29, 2023
Dear Fellow Shareholders:
Since the inception of The Fairholme Fund, cumulative performance with dividends reinvested and after expenses was more than twice the
cumulative performance of the S&P 500 Index. Fund assets totaled $1.2 billion. Cash and equivalents are 12% of assets. I and affiliates own 33%
of Fund shares.
Mark Twain was right when he said “buy land, they’re not making it anymore.” St. Joe’s land and entitlements are about or surround one of the
hottest residential markets in Florida, Scenic Highway 30A on the Gulf of Mexico.1 The company’s earnings per share in the first half of this year
increased by 48% from the first half of last year - with no extraordinary profits and while finishing five new hotel complexes.
Vaclav Smil’s How the World Really Works3 discusses the four pillars of modern civilization: fertilizer, steel, cement, plastics and petrochemicals, and
how each depends on crude oil, natural gas, and/or natural gas liquids. Enterprise Product Partners supplies midstream energy services that link
domestic drillers to global consumers of these critical building blocks. Their system of pipes, tanks, and process facilities is irreplaceable in today’s
world.
I recommend reading the news releases and shareholder reports of St. Joe4 and Enterprise Products Partners, L.P.5
to better understand their
progress and prospects.
Respectfully submitted,
Bruce R. Berkowitz
Chief Investment Officer"
BB's FMV of Fannie Mae and Freddie Mac holdings 0.7% of $1.2B = $8.4m
They quoted Ms Farland many times this afternoon and she was extremely accurate in retrospect.
The Plaintiffs Class chief case accounting Expert, Dr. Dharra, also showed that given the increases in Guarantee Fees in 2011-12, the higher market share of the GSES vis-a-vis 2006, the reversal of the Accumulated Loan Loss Reserves, the write up of the DTA, and the upward momentum in home sales and prices, Freddie Mac and Fannie Mae didn't need a Net Worth Sweep.
The Jim Parrot, "Salt the Earth with the Shareholders Carcasses" UST memo AIN'T COMING IN, it never has. US Government got that Smoking Gun incinerated early on.
This time has some twists and turns and tweaks from last time, the Jurors seem more mature and interested this time.
The Plaintiffs Class chief case seems more streamlined and less boring (which is hard to do with a dry subject like Mortgage Banking).
The Plaintiffs Class case is showing the Jurors WHY the Net Worth Swipe was unnecessary and appear to be covering all the angles. Soon Demarco will be gracing us with his presence.
The Plaintiffs Class case is showing the Jurors WHY the Net Worth Swipe was unnecessary and appear to be covering all the angles. Soon Demarco will be gracing us with his presence.
It's a lot of fun and pays very well and people are very appreciative.
Especially if they award Damages.
After Lunch topic: The Net Worth Sweep, Why It Was Unnecessary
With Professor (Dharra?-spelling), a PhD in Accounting:
Home Price/Sales Forecasts in 2012
DTA Discussion (very in depth)
Memos showing internal emails about Demarco saying a future draw would not be necessary., Including one on June 25, 2012. Both Fannie Mae and Freddie Mac Board of Directors were informed on August 12, 2012 that NO FURTHER DRAWS NECESSARY
Break time! Good News FandF is in the Courtroom! At least 4 shareholders in the Courtroom.
Sure it was packed on Opening Statement day. But later that afternoon the Courtroom cleared out and not many people were in there with the exception of the small army of attorneys and their support staff.
On Friday afternoon only one other Shareholder that I recognized was there, the pews/benches empty, so I get it no one really wants to spend time in a courtroom.
No, I hear you! When I've finished my morning work (which largely consists of reining in Gubmint overreach), I go down there to let you guys know what's going on.
I get it, there's hardly anyone in the Courtroom, I think Katie bailed and FandF is probably booked up too.
Besides, it's largely a recap of Trial 1, but more focused and with an occasional twist.
I know I hear you. The Supremes also denied our Takings Clause Case by letting the Appellate Judges ruling stand, where that particular court stated shareholders had NO taking because they lacked the "right to Exclude" necessary as property owners. Does that apply to all banking stocks?
Some observers are convinced that the Federalist Society is dead set on destroying the twins.
One party wants to destroy us whereas the other party wants us Nationalized, go figure.
We could win this one, the Jurors are fairly seasoned in age and it looks like from Opening Statement through early to midway through Plaintiffs Class chief case they are very skeptical of the Government here.
But Plaintiffs will rest and the Government Attorneys will give it everything they can to plant doubt with one or more of the 8 Jurors.
A win in Lamberth's courtroom (although the payout could be years away) might give a shot in the arm for some big holders to continue bankrolling challenges to this most bizarre and unique fact pattern in US business history.
We'll see what happens.
Plaintiffs Attorneys we're all over this in the 1st trial and it was a powerful argument. Of course the Government doesn't want this mentioned to the Jurors and is using another last minute tactic to pull it off.
That's also a major problem Shareholders have here, the Government wears 2 hats, CONservator AND Regulator.
That's right, HERA tells the Judiciary Branch to back off.
So how did this Implicit Contract Breach and subsequent potential damages end up in J. Lamberth's courtroom? Its been so long, I think I forgot.
That's interesting. Over a decade since the Fairholme Funds case was filed in the DC District federal court and the Government has neutered almost all of the Plaintiffs ask so far and here is asking the Jurors to check the ZERO damages box.
It's the Biggest Government Heist of Property Ever!
Sad commentary that very few Americans even care about it, except us. Let's see if 8 DC citizens give a sh*t or not.
I don't know, you haven't ever bothered to show up, how do you know that?
They all looked upset with the Government after the Plaintiffs Class Opening Statement, didn't they?
David Sterns and his team have about 2 weeks to sell their side to the Jurors, as does our side, we'll see what happens.
He was NEVER a big fan of big biz, nor is his right hand man who has his job today. They're big fans of the little guy and don't care where in the Gubmint the funding comes from, stealing from the 'evil mortgage banksters/evil hedge fund guys', that's ICING ON THE CAKE !
At the last trial, during the Demarco testimony, Demarco said he was super preoccupied with the then current administrations hard push for loan forgiveness on loans held or securitized by Fannie Mae and Freddie Mac. When that didn't work, here comes the August 17 2012, NET WORTH SWIPE.
Ed Demarco said NO, Watt said NO, to mortgage forgiveness.
Nobody in America seems to care about the Status Quo except us! Of the 333,000,000 Americans, how many Americans right now are talking about the Status Quo?
Practically none
All Americans really care about is getting a 30 year prepayable FRM whenever they need it.
His only opponent was a Republican that couldn't garner the votes about 2 years ago. Warner was a fairly good Governor as I recall, but the MBA keeps an overnight bag at his townhouse in Alexandria VA since he's always in bed with them !
HeeeeHeeee!
You're just saying its par for the course with this Judge, he dislikes the Plaintiffs, is that what you're saying?
Okay. What about Fannie Mae Common, any idea if they could ask for expectancy damages?
The US Treasury has over 300 BILLION DOLLARS in LP and/or Cash that it has extracted from the GSES. Not to mention the 80% warrants.
I don't even think there is an exit plan at UST. SM might have been working on one, but he really changed his tune from the interview with Maria B to having dinner and going biking with his little buddy Senator Warner.
Okay, give me an exact dollar damage fee as a result of the August 17, 2012 Net Worth Swipe, NOT BASED ON SPECULATION OR ASSUMPTIONS. Break it down further and tell me the exact dollar damages for Fannie Mae and Freddie Mac, then exactly how to split it between each individual class of JPS and then Common.
The Takings cases likely would have gotten us closer to some significant damages.
I think Dr. Mason did some work on this but Lamberth wouldn't let it in.
This case was originally filed on 07/10/13, and the Government has been quite effective SO FAR, in whittling down the Damages to as small as possible, with the Government Attorneys asking the Jurors to check the ZERO damages box at their Opening Statements.
HeeeeHeeee! He killed two birds with ONE STONE. He Nationalized the 'evil mortgage banksters/hedge fund guys' soon to be profitable GSES and he brought in $100B CASH to the government coffers when his political adversaries were trying to defund his signature legislation.
I think J. Lamberth ruled that any other damages besides the one day drop in share price on the Net Worth Swipe announcement date is too speculative.
We know for sure what the market impact was on the day of the announcement and it can be measured with a very high Confidence Interval.
Check out the ruling from July 25th that Navy just posted below.
Will that come up on appeal? TBD.
The Plaintiffs Expert Witnesses do a pretty good job on the dta discussion to the Jurors. Tomorrow, I think the next Plaintiffs Class Expert Witness specializes in Accounting and will show how the FHFA made the GSES write off the dta and then suddenly reversed that in 2013.
As I recall, in 2013, the government CASH SWEEP amounted to OVER $100 BILLION DOLLARS!
That money should have been used to rebuild and rehabilitate the Capital of the GSES.
Okay, so the Government asked the Jurors to check the ZERO damages box at opening and Plaintiffs ask is 1.6B + interest, going almost entirely to JPS.
The Gubmint has $2B + reasons to try and win! If they begin to lose any of these cases, they may decide to finally end these obnoxious and anti capitalist never ending CONservatorships, we'll see.