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The Treasury / FHFA is wrong if the Common Shareholders are wiped out.
kthomp Said Quote: “ He didn't need to because the plaintiffs' lawyers didn't try. The parts of the contract you wish those lawyers had read to the jury are completely irrelevant to the case. Such readings would only serve to confuse the jury.” End of Quote
The Jury Trial apparently will be rescheduled and the Plaintiffs will have another opportunity.
I am asking every Investor having an interest in Fannie Mae and Freddie Mac to kindly, take the time and read for yourself, THE CONTRACT, link provided below: After reading the contract for yourself compare your understanding of the writing to Professor Epstein's explanation in his writing provided in this post. Thank You
According to Professor Richard Epstein
The Senior Preferred Stock would have been redeemed.
Quote “The conflict of interest took a more ominous turn with the adoption of the Third Amendment between FHFA and Treasury nearly four years later. At that time, the market had quieted down, and the GSEs were making timely dividend payments on Treasury’s preferred stock. Nonetheless, FHFA and Treasury ripped up the old agreement, and substituted in its place a new deal that created a “net worth sweep” whereby all of the funds received by the GSEs were paid over to Treasury as a dividend, even in amounts far in excess of the original 10 percent dividend. The consequences have been huge. Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed. With the Third Amendment, about $128 billion that could have been used to redeem the preferred shares has been reclassified as a dividend payment, rather than a return of capital.” End of Quote
Please Note: “Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed.”
Link: https://ricochet.com/326448/fannie-freddie-fiasco/
Professor Richard Epstein explained the Optional Pay Down of the Liquidation Preference.
Link: Below
So why go through the charade of asking Fannie and Freddie raise additional capital to pay off the senior preferred in full when it has already been paid.
The mechanism is there as clear as day in the stock certificates and the repurchase option set out is fully consistent with the view that the government advances were, if possible, only a short-term backstop that Fannie and Freddie could refinance at any time with private capital.
Quote: “Section 3 then, set outs “Optional Pay Down of Liquidation Preference” that specifies that “[f]ollowing termination of the commitment” of the Treasury to make further advances of cash for new senior preferred shares, “the Company may pay down the Liquidation Preference of all outstanding shares of the senior preferred stock pro rata, at any time, in whole or in part, out of funds legally available therefore.” Since there are no unpaid cash dividends all, these payments immediately go to reduce the amount of the liquidation preference.
With or without the Third Amendment, the Treasury’s commitment to make further advances remains, even if no such advance has been made since the beginning of 2012. But that commitment is of little if any value now that further advances from Treasury are no longer needed. Most critically, Section 4 addresses “Mandatory Pay Down of Liquidation Preference Upon Issuance of Capital Stock.”
Its exact provisions need to be quoted to grasp the full legal position. This section comes into play “if the Company shall issue any shares of capital stock (including without limitation common stock or any series of preferred stock) in exchange for cash at any time while the Senior Preferred Stock is outstanding.” Note that this provision does not require the consent of that “the holders of record of the outstanding shares of the Senior Preferred Stock” (which need not be the US Treasury). These shareholders receive full protection because Fannie and Freddie are obligated to “use the proceeds of such issuance . . . to pay down the Liquidation Preference of all outstanding shares of Senior Preferred Stock pro rata, out of funds legally available therefor. . .”
In sum, Section 4, of the senior preferred stock certificate in essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full once Fannie and Freddie have sufficient capital to resume normal market operations. At this point, it is a fair inference that the Treasury commitment would end once that recapitalization is complete. In light of this arrangement, it seems incorrect to argue, as does Goodman, that “the GSEs were never provided with a mechanism to emerge from conservatorship because it was never expected they would do so.” The mechanism is there as clear as day in the stock certificates and the repurchase option set out is fully consistent with the view that the government advances were, if possible, only a short-term backstop that Fannie and Freddie could refinance at any time with private capital. Furthermore, FHFA would also refinance the expensive 10 percent preferred for cheaper preferred or common, once it became clear, as it is now, that these are healthy companies (in which case cheaper financing is available).
At this point, the Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. Once the Third Amendment is declared illegal, as it should be, the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
Nothing else makes sense. Suppose the government sought to just repay the extra money to Fannie and Freddie in order to reinstate the above-market 10 percent dividend. It still could not reasonably prevent Fannie and Freddie from exercising the mandatory repurchase under Section 4 So why go through the charade of asking Fannie and Freddie raise additional capital to pay off the senior preferred in full when it has already been paid. Read together, Sections 3 and 4 make it impossible for the government to keep the highly favorable 10 percent dividend in place when it is no longer warranted by market conditions.” End of Quote
https://www.forbes.com/sites/richardepstein/2014/09/10/what-happens-if-the-government-loses-on-the-third-amendment-the-senior-preferred-stock-certificates-spell-nothing-but-trouble-for-the-government/?sh=50886006a393
Smokescreen Quote: " following termination of the commitment." End of Quote
The money swept by the Treasury if it had been applied to LP and the 10% over payment returned to the companies the LP would be paid in full and the SPS would be redeemed and at that point in time SAME DAY IN TIME the companies could turn to the Market with a secondary IPO replacing the commitment.
NO MONEY LEFT TO PAYDOWN THE LP AND REDEEM THE SPS WHEN THE TREASURY SWEEPS THE ENTIRE NET WORTH...
I do not see how the judge could stop the plaintiffs from reading the contract to the jury.
This is the argument I suggest. The Shareholders are under contract.
It’s written in the contract Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
AGAIN
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates.
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Fourth-Amended-Restated-Certificate-04-13-21.pdf
kthomp 19 Said Quote: “ Your logic - that FnF would have used the money it paid to Treasury during the cash NWS years (2012-2019) to pay down the seniors - also fails for another reason: why aren't FnF doing so right now?” End of Quote
FHFA APPOINTED CEOs
The problem is not that the Treasury Swept the Net Worth of the companies. THE PROBLEM: The FHFA appointed CEOs failed by sending the NWS payments to the Treasury without the terms of the Pay Down of the Liquidation Preference applied.
Self-dealing FHFA appointed CEOs
WRITTEN AS CLEAR A DAY, Optional Pay Down of Liquidation Preference.
No one from the companies sent any letter to the Treasury stating the Liquidation Preference has been paid in full and the Senior Preferred Stock canceled. Instructions are written in the contract to do so. The FHFA appointed CEOs failed by sending the NWS payments to the Treasury without the Pay Down Option of the Liquidation Preference. The CEOs let the Treasury take it for free with no representation of the shareholders.
Man With No Name Said
Quote: “ You and Barron need to come to grips with reality. The NWS is legal, done and over..” End of Quote
I didn’t say the NWS was illegal. What I said,
I do not see how the judge could stop the plaintiffs from reading the contract to the jury.
This is the argument I suggest. The Shareholders are under contract.
It’s written in the contract Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
AGAIN
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates.
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Fourth-Amended-Restated-Certificate-04-13-21.pdf
We understand how the cram down works, the Treasury converts the Stolen Money into Common Stock diluting the Common Stock to 99% wiping out the Common Shareholders and then doing a reverse split afterwards selling the Treasury shares in an IPO. WE GET IT.
Thank you for explaining how the FHFA possibly will allow the Treasury to Steal from the shareholders. Possibility the greatest Naked Short failure to deliver theft in the History of Our United States.
BY CONTRACT THE TREASURY IS NOT ALLOWED TO CONVERT THE SPS INTO COMMON STOCK. THIS CAN ONLY HAPPEN IF THE FHFA ALLOWS IT.
The Truth should be reiterated as long as the misunderstanding of the Contract is continuing to be repeated on this board:
‘Wipe Out the Common Shareholders’.
I am asking every Investor having an interest in Fannie Mae and Freddie Mac to kindly, take the time and read for yourself, THE CONTRACT, link provided below:
FHFA and Treasury used a fancy set of legal maneuvers to strip both corporations of their assets. FHFA and Treasury ripped up the old agreement sweeping all of the Net Worth. If the FHFA allows the Treasury to convert the Stolen Money into Common Stock this will completely destroy the remainder of the Contract.
BY CONTRACT THE TREASURY IS NOT ALLOWED TO CONVERT THE SPS INTO COMMON STOCK. THIS CAN ONLY HAPPEN IF THE FHFA ALLOWS IT.
FOURTH AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF TERMS OF VARIABLE LIQUIDATION PREFERENCE SENIOR PREFERRED STOCK, SERIES 2008-2
FACT According to the terms of the contract:
The Senior Preferred Stock cannot be converted to common stock.
No 6 and No 7
Quote “No Conversion or Exchange Rights
The holders of shares of the Senior Preferred Stock shall not have any right to convert such shares into or exchange such shares for any other class or series of stock or obligations of the Company.
No Preemptive Rights
No holder of the Senior Preferred Stock shall as such holder have any preemptive right to purchase or subscribe for any other shares, rights, options or other securities of any class of the Company which at any time may be sold or offered for sale by the Company.” End of Quote
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Fourth-Amended-Restated-Certificate-04-13-21.pdf
Barron, I took your advice, and read what you wrote, listening to what you are saying.
The FHFA Director does not have the authority to transfer the Net Worth of the companies to the Treasury by reason of the Charter Act. The wording in the Charter Act did not change when Congress passed HERA therefore the FHFA Director signed the Third Amendment giving the Treasury the Net Worth of the companies is in Violation the Charter Act. For this reason the NWS is clearly ultra vires to the Charter act.
Ultra Vires: used in law to describe an act which requires legal authority but is done without it.
Quote: “This issue I bring up is a statutory challenge to the SPSPA. The language of the contract states that it cannot interfere with the responsibilities of the Director as regulator, and cannot violate the Charter Act. HERA does not enable the Treasury to do anything. Only the Charter Act enables Treasury and FHFA-C to enter into the agreements.” End of Quote
Quote: “The Charter act takes precident to HERA as the amended Safety and Soundness Act of 1992 arises from the fact the Congress created the GSEs.” End of Quote
Quote: “ the Charter act requires that all earnings of FNMA be transferred on an annual basis to the general surplus account of the enterprise. What Congress does not say is transfer all earnings quarterly to the Department of Treasury.” End of Quote
If this gets us out of prison go for it. May I ask are you a Lawyer? Recommend getting this information to a Lawyer. Best Regards
I think the Plaintiffs can win with the contract written just the way it is brought out in a court of law. WRITTEN AS CLEAR A DAY, Optional Pay Down of Liquidation Preference.
Read and explain the Contract to the Jury.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
Whatever is best for the Shareholders.
The SCOTUS ruled the NWS was legal. The SCOTUS did not rule the Optional Pay Down of Liquidation Preference as being void. No, it is not void, the court did not say it was void.
What matters is how the excess money above the 10% is applied. And according to the contract the Treasury has received more than enough to pay the LP, the SPS should be cancelled.
BY CONTRACT THE TREASURY IS NOT ALLOWED TO CONVERT THE SPS INTO COMMON STOCK. THIS CAN ONLY HAPPEN IF THE FHFA ALLOWS IT.
The Truth should be reiterated as long as the misunderstanding of the Contract is continuing to be repeated on this board:
‘Wipe Out the Common Shareholders’.
I am asking every Investor having an interest in Fannie Mae and Freddie Mac to kindly, take the time and read for yourself, THE CONTRACT, link provided below:
FHFA and Treasury used a fancy set of legal maneuvers to strip both corporations of their assets. FHFA and Treasury ripped up the old agreement sweeping all of the Net Worth. If the FHFA allows the Treasury to convert the Stolen Money into Common Stock this will completely destroy the remainder of the Contract.
BY CONTRACT THE TREASURY IS NOT ALLOWED TO CONVERT THE SPS INTO COMMON STOCK. THIS CAN ONLY HAPPEN IF THE FHFA ALLOWS IT.
FOURTH AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF TERMS OF VARIABLE LIQUIDATION PREFERENCE SENIOR PREFERRED STOCK, SERIES 2008-2
FACT According to the terms of the contract:
The Senior Preferred Stock cannot be converted to common stock.
No 6 and No 7
Quote “No Conversion or Exchange Rights
The holders of shares of the Senior Preferred Stock shall not have any right to convert such shares into or exchange such shares for any other class or series of stock or obligations of the Company.
No Preemptive Rights
No holder of the Senior Preferred Stock shall as such holder have any preemptive right to purchase or subscribe for any other shares, rights, options or other securities of any class of the Company which at any time may be sold or offered for sale by the Company.” End of Quote
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Fourth-Amended-Restated-Certificate-04-13-21.pdf
The argument cannot be “the GSEs were never provided with a mechanism to emerge from conservatorship."
“Optional Pay Down of Liquidation Preference”
Optional: available to be chosen but not obligatory.
Pay: give (someone) money that is due for work done, goods received, or a debt incurred:
Down: toward or in a lower place or position, especially to or on the ground or another surface:
of: expressing the relationship between a scale or measure and a value:
Liquidation: the clearing of a debt.
Preference: a prior right or precedence, especially in connection with the payment of debts:
Written in the Contract The Shareholders have the right:
“Optional Pay Down of Liquidation Preference”
kthomp 19 said Quote: “ Read the entire damn contract. Parsing the words of the title of a single section means nothing.” End of Quote.
Richard Epstein tried to explain it to you! The entire contract!
I am asking every Investor having an interest in Fannie Mae and Freddie Mac to kindly, take the time and read for yourself, THE CONTRACT, link provided below: After reading the contract for yourself compare your understanding of the writing to Professor Epstein's explanation in his writing provided in this post. Thank You
According to Professor Richard Epstein
The Senior Preferred Stock would have been redeemed.
Quote “The conflict of interest took a more ominous turn with the adoption of the Third Amendment between FHFA and Treasury nearly four years later. At that time, the market had quieted down, and the GSEs were making timely dividend payments on Treasury’s preferred stock. Nonetheless, FHFA and Treasury ripped up the old agreement, and substituted in its place a new deal that created a “net worth sweep” whereby all of the funds received by the GSEs were paid over to Treasury as a dividend, even in amounts far in excess of the original 10 percent dividend. The consequences have been huge. Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed. With the Third Amendment, about $128 billion that could have been used to redeem the preferred shares has been reclassified as a dividend payment, rather than a return of capital.” End of Quote
Please Note: “Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed.”
Link: https://ricochet.com/326448/fannie-freddie-fiasco/
Professor Richard Epstein explained the Optional Pay Down of the Liquidation Preference.
Link: Below
So why go through the charade of asking Fannie and Freddie raise additional capital to pay off the senior preferred in full when it has already been paid.
The mechanism is there as clear as day in the stock certificates and the repurchase option set out is fully consistent with the view that the government advances were, if possible, only a short-term backstop that Fannie and Freddie could refinance at any time with private capital.
Quote: “Section 3 then, set outs “Optional Pay Down of Liquidation Preference” that specifies that “[f]ollowing termination of the commitment” of the Treasury to make further advances of cash for new senior preferred shares, “the Company may pay down the Liquidation Preference of all outstanding shares of the senior preferred stock pro rata, at any time, in whole or in part, out of funds legally available therefore.” Since there are no unpaid cash dividends all, these payments immediately go to reduce the amount of the liquidation preference.
With or without the Third Amendment, the Treasury’s commitment to make further advances remains, even if no such advance has been made since the beginning of 2012. But that commitment is of little if any value now that further advances from Treasury are no longer needed. Most critically, Section 4 addresses “Mandatory Pay Down of Liquidation Preference Upon Issuance of Capital Stock.”
Its exact provisions need to be quoted to grasp the full legal position. This section comes into play “if the Company shall issue any shares of capital stock (including without limitation common stock or any series of preferred stock) in exchange for cash at any time while the Senior Preferred Stock is outstanding.” Note that this provision does not require the consent of that “the holders of record of the outstanding shares of the Senior Preferred Stock” (which need not be the US Treasury). These shareholders receive full protection because Fannie and Freddie are obligated to “use the proceeds of such issuance . . . to pay down the Liquidation Preference of all outstanding shares of Senior Preferred Stock pro rata, out of funds legally available therefor. . .”
In sum, Section 4, of the senior preferred stock certificate in essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full once Fannie and Freddie have sufficient capital to resume normal market operations. At this point, it is a fair inference that the Treasury commitment would end once that recapitalization is complete. In light of this arrangement, it seems incorrect to argue, as does Goodman, that “the GSEs were never provided with a mechanism to emerge from conservatorship because it was never expected they would do so.” The mechanism is there as clear as day in the stock certificates and the repurchase option set out is fully consistent with the view that the government advances were, if possible, only a short-term backstop that Fannie and Freddie could refinance at any time with private capital. Furthermore, FHFA would also refinance the expensive 10 percent preferred for cheaper preferred or common, once it became clear, as it is now, that these are healthy companies (in which case cheaper financing is available).
At this point, the Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. Once the Third Amendment is declared illegal, as it should be, the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
Nothing else makes sense. Suppose the government sought to just repay the extra money to Fannie and Freddie in order to reinstate the above-market 10 percent dividend. It still could not reasonably prevent Fannie and Freddie from exercising the mandatory repurchase under Section 4 So why go through the charade of asking Fannie and Freddie raise additional capital to pay off the senior preferred in full when it has already been paid. Read together, Sections 3 and 4 make it impossible for the government to keep the highly favorable 10 percent dividend in place when it is no longer warranted by market conditions.” End of Quote
https://www.forbes.com/sites/richardepstein/2014/09/10/what-happens-if-the-government-loses-on-the-third-amendment-the-senior-preferred-stock-certificates-spell-nothing-but-trouble-for-the-government/?sh=50886006a393
Smokescreen Quote: " following termination of the commitment." End of Quote
The money swept by the Treasury if it had been applied to LP and the 10% over payment returned to the companies the LP would be paid in full and the SPS would be redeemed and at that point in time SAME DAY IN TIME the companies could turn to the Market with a secondary IPO replacing the commitment.
NO MONEY LEFT TO PAYDOWN THE LP AND REDEEM THE SPS WHEN THE TREASURY SWEEPS THE ENTIRE NET WORTH...
I do not see how the judge could stop the plaintiffs from reading the contract to the jury.
This is the argument I suggest. The Shareholders are under contract.
It’s written in the contract Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
AGAIN
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates.
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Fourth-Amended-Restated-Certificate-04-13-21.pdf
LuLeVan,
Quote: “The government's handling of the GSEs to date can only be described as scandalous. In my opinion, the de facto expropriation of the existing shareholders is one of the biggest economic crimes ever committed in the U.S., and in this case the perpetrator is the state. The fact that the government and the courts are trying to give this farce a pseudo-legal veneer by constantly invoking the "gag law" HERA does nothing to change this.” End of Quote
FHFA and Treasury used a fancy set of legal maneuvers to strip both corporations of their assets. FHFA and Treasury ripped up the old agreement sweeping all of the Net Worth. If the FHFA allows the Treasury to convert the Stolen Money into Common Stock this will completely destroy the remainder of the Contract.
BY CONTRACT THE TREASURY IS NOT ALLOWED TO CONVERT THE SPS INTO COMMON STOCK. THIS CAN ONLY HAPPEN IF THE FHFA ALLOWS IT.
FOURTH AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF TERMS OF VARIABLE LIQUIDATION PREFERENCE SENIOR PREFERRED STOCK, SERIES 2008-2
FACT According to the terms of the contract:
The Senior Preferred Stock cannot be converted to common stock.
No 6 and No 7
Quote “No Conversion or Exchange Rights
The holders of shares of the Senior Preferred Stock shall not have any right to convert such shares into or exchange such shares for any other class or series of stock or obligations of the Company.
No Preemptive Rights
No holder of the Senior Preferred Stock shall as such holder have any preemptive right to purchase or subscribe for any other shares, rights, options or other securities of any class of the Company which at any time may be sold or offered for sale by the Company.” End of Quote
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Fourth-Amended-Restated-Certificate-04-13-21.pdf
What are you suggesting the Shareholders do? Just say it.
This reminds me of trying to reach an AT&T representative on the phone with an endless maze of confusion, transfer from one hold to another and finally some person answers the phone and states.
“Sir you have reached the wrong dept let me transfer you.”
Anyone that has examined the factual evidence of what has taken place can only come to the conclusion this is a CRIME.
“Optional Pay Down of Liquidation Preference”
Optional: available to be chosen but not obligatory.
Pay: give (someone) money that is due for work done, goods received, or a debt incurred:
Down: toward or in a lower place or position, especially to or on the ground or another surface:
of: expressing the relationship between a scale or measure and a value:
Liquidation: the clearing of a debt.
Preference: a prior right or precedence, especially in connection with the payment of debts:
Written in the Contract The Shareholders have the right:
“Optional Pay Down of Liquidation Preference”
The hung Jury Trail in the Court of Judge Lamberth looks to be rescheduled in the future. I do not understand how the Judge could not allow the Plaintiffs to read and explain the Contract to the Jury. Written in the Contract “Optional Pay Down of Liquidation Preference” was never changed in any of the amendments. And the Contract “Optional Pay Down of Liquidation Preference” exists in the same form as we speak today.
The SCOTUS ruled the NWS was legal. The SCOTUS did not rule the Optional Pay Down of Liquidation Preference as being void. No, it is not void, the court did not say it was void.
The argument cannot be “the GSEs were never provided with a mechanism to emerge from conservatorship."
Page 5 – link below
Quote: “In the course of negotiating the first two
amendments to the PSPAs, FHFA sent a letter to Treasury proposing a “simple revision to each [Treasury Stock] Certificate, easing the impediments to optional paydown” to correct the original Treasury Stock Certificates’ “unintended consequence of dissuading the companies from repurchasing preferred shares when they are able,” Letter from A. Pollard to S. Albrecht (Feb. 25, 2009), Ex. I to Defs.’ Mot. for S.J., Fairholme ECF No. 145-10, Class ECF No. 143-10. However, Treasury declined to adopt that proposed revision, DSUMF ¶ 10; PRDSUMF ¶ 10.” End of Quote.
NOTE: TREASURY DECLINED TO ADOPT THE PROPOSED REVISION EASING THE IMPEDIMENTS TO OPTIONAL PAYDOWN.
Page 16 – link below
Quote: "First, before the Third Amendment, the PSPAs and Treasury Stock Certificates prohibited the GSEs from paying down Treasury’s Liquidation Preference absent certain conditions that have never in fact occurred, and the Third Amendment did not change that" End of Quote.
Yes, - "absent certain conditions."
ABSENT CERTAIN CONDITIONS, Fannie and Freddie did not have the money at the particular time that is what was ABSENT; AND the Treasury knew Fannie and Freddie was about to show record net profits. AND THESE RECORD NET PROFITS WOULD HAVE PAID THE LP IN FULL AND THE SPS WOULD HAVE BEEN REDEEMED.
The Judge did not say the companies cannot pay down the LP. AND the third amendment did not change the “Optional Pay Down of Liquidation Preference” written in the Contract.
Link: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2013cv1053-206
I am not arguing the NWS is illegal or legal. What I said, It’s written in the contract Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
The problem is not that the Treasury Swept the Net Worth of the companies. THE PROBLEM: The FHFA appointed CEOs failed by sending the NWS payments to the Treasury without the terms of the Pay Down of the Liquidation Preference applied.
Self-dealing FHFA appointed CEOs.
WRITTEN AS CLEAR A DAY, Optional Pay Down of Liquidation Preference.
No one from the companies sent any letter to the Treasury stating the Liquidation Preference has been paid in full and the Senior Preferred Stock canceled. Instructions are written in the contract to do so. The FHFA appointed CEOs failed by sending the NWS payments to the Treasury without the Pay Down Option of the Liquidation Preference. The CEOs let the Treasury take it for free with no representation of the shareholders.
Link to the Contract: https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Fourth-Amended-Restated-Certificate-04-13-21.pdf
Grand Theft Treasury
By: Richard A. Epstein
Quote: "To call that money a “dividend” relies on a profound public misunderstanding of the complex transactions that generated this ill-begotten Treasury bonanza." End of Quote.
Quote: "It takes no special acumen to realize that the 2012 transaction was completely one-sided; FHFA and Treasury used a fancy set of legal maneuvers to strip both corporations of their assets for the sole benefit of the government. Generally, senior preferred shareholders are entitled to recover their principal and interest in full, after which their shares are cancelled. In this case, the government did precisely the opposite. It treated Fannie and Freddie as gifts that keep on giving, wiping out all shareholder profits." End of Quote
Link: https://www.hoover.org/research/grand-theft-treasury#:~:text=Grand%20Theft%20Treasury%20The%20U.S.%20government%20has%20unconstitutionally,full%20of%20good%20news%20for%20the%20body%20politic.
AGAIN
Kindly, provide a link where a Judge ruled that paying down the LP is not allowed.
I am not arguing the NWS is illegal or legal.
What I said,
It’s written in the contract Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
No, you are wrong.
WIPEOUT THE COMMON SHAREHOLERS IS WRONG!
Richard Epstein tried to explain it to you!
I am asking every Investor having an interest in Fannie Mae and Freddie Mac to kindly, take the time and read for yourself, THE CONTRACT, link provided below: After reading the contract for yourself compare your understanding of the writing to Professor Epstein's explanation in his writing provided in this post. Thank You
According to Professor Richard Epstein
The Senior Preferred Stock would have been redeemed.
Quote “The conflict of interest took a more ominous turn with the adoption of the Third Amendment between FHFA and Treasury nearly four years later. At that time, the market had quieted down, and the GSEs were making timely dividend payments on Treasury’s preferred stock. Nonetheless, FHFA and Treasury ripped up the old agreement, and substituted in its place a new deal that created a “net worth sweep” whereby all of the funds received by the GSEs were paid over to Treasury as a dividend, even in amounts far in excess of the original 10 percent dividend. The consequences have been huge. Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed. With the Third Amendment, about $128 billion that could have been used to redeem the preferred shares has been reclassified as a dividend payment, rather than a return of capital.” End of Quote
Please Note: “Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed.”
Link: https://ricochet.com/326448/fannie-freddie-fiasco/
Professor Richard Epstein explained the Optional Pay Down of the Liquidation Preference.
Link: Below
So why go through the charade of asking Fannie and Freddie raise additional capital to pay off the senior preferred in full when it has already been paid.
The mechanism is there as clear as day in the stock certificates and the repurchase option set out is fully consistent with the view that the government advances were, if possible, only a short-term backstop that Fannie and Freddie could refinance at any time with private capital.
Quote: “Section 3 then, set outs “Optional Pay Down of Liquidation Preference” that specifies that “[f]ollowing termination of the commitment” of the Treasury to make further advances of cash for new senior preferred shares, “the Company may pay down the Liquidation Preference of all outstanding shares of the senior preferred stock pro rata, at any time, in whole or in part, out of funds legally available therefore.” Since there are no unpaid cash dividends all, these payments immediately go to reduce the amount of the liquidation preference.
With or without the Third Amendment, the Treasury’s commitment to make further advances remains, even if no such advance has been made since the beginning of 2012. But that commitment is of little if any value now that further advances from Treasury are no longer needed. Most critically, Section 4 addresses “Mandatory Pay Down of Liquidation Preference Upon Issuance of Capital Stock.”
Its exact provisions need to be quoted to grasp the full legal position. This section comes into play “if the Company shall issue any shares of capital stock (including without limitation common stock or any series of preferred stock) in exchange for cash at any time while the Senior Preferred Stock is outstanding.” Note that this provision does not require the consent of that “the holders of record of the outstanding shares of the Senior Preferred Stock” (which need not be the US Treasury). These shareholders receive full protection because Fannie and Freddie are obligated to “use the proceeds of such issuance . . . to pay down the Liquidation Preference of all outstanding shares of Senior Preferred Stock pro rata, out of funds legally available therefor. . .”
In sum, Section 4, of the senior preferred stock certificate in essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full once Fannie and Freddie have sufficient capital to resume normal market operations. At this point, it is a fair inference that the Treasury commitment would end once that recapitalization is complete. In light of this arrangement, it seems incorrect to argue, as does Goodman, that “the GSEs were never provided with a mechanism to emerge from conservatorship because it was never expected they would do so.” The mechanism is there as clear as day in the stock certificates and the repurchase option set out is fully consistent with the view that the government advances were, if possible, only a short-term backstop that Fannie and Freddie could refinance at any time with private capital. Furthermore, FHFA would also refinance the expensive 10 percent preferred for cheaper preferred or common, once it became clear, as it is now, that these are healthy companies (in which case cheaper financing is available).
At this point, the Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. Once the Third Amendment is declared illegal, as it should be, the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
Nothing else makes sense. Suppose the government sought to just repay the extra money to Fannie and Freddie in order to reinstate the above-market 10 percent dividend. It still could not reasonably prevent Fannie and Freddie from exercising the mandatory repurchase under Section 4 So why go through the charade of asking Fannie and Freddie raise additional capital to pay off the senior preferred in full when it has already been paid. Read together, Sections 3 and 4 make it impossible for the government to keep the highly favorable 10 percent dividend in place when it is no longer warranted by market conditions.” End of Quote
https://www.forbes.com/sites/richardepstein/2014/09/10/what-happens-if-the-government-loses-on-the-third-amendment-the-senior-preferred-stock-certificates-spell-nothing-but-trouble-for-the-government/?sh=50886006a393
Smokescreen Quote: " following termination of the commitment." End of Quote
The money swept by the Treasury if it had been applied to LP and the 10% over payment returned to the companies the LP would be paid in full and the SPS would be redeemed and at that point in time SAME DAY IN TIME the companies could turn to the Market with a secondary IPO replacing the commitment.
NO MONEY LEFT TO PAYDOWN THE LP AND REDEEM THE SPS WHEN THE TREASURY SWEEPS THE ENTIRE NET WORTH...
I do not see how the judge could stop the plaintiffs from reading the contract to the jury.
This is the argument I suggest. The Shareholders are under contract.
It’s written in the contract Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
AGAIN
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates.
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Fourth-Amended-Restated-Certificate-04-13-21.pdf
You cannot argue, that “the GSEs were never provided with a mechanism to emerge from conservatorship.
Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full once Fannie and Freddie have sufficient capital to resume normal market operations. At this point, it is a fair inference that the Treasury commitment would end once that recapitalization is complete. In light of this arrangement, it seems incorrect to argue, as does Goodman, that “the GSEs were never provided with a mechanism to emerge from conservatorship because it was never expected they would do so.” The mechanism is there as clear as day in the stock certificates and the repurchase option set out is fully consistent with the view that the government advances were, if possible, only a short-term backstop that Fannie and Freddie could refinance at any time with private capital. Furthermore, FHFA would also refinance the expensive 10 percent preferred for cheaper preferred or common, once it became clear, as it is now, that these are healthy companies (in which case cheaper financing is available).
Yes, it says - "absent certain conditions."
ABSENT CERTAIN CONDITIONS, Fannie and Freddie did not have the money that is what was absent, and the Treasury knew Fannie and Freddie was about to show record net profits. AND THE LP WOULD HAVE BEEN PAID DOWN AND THE SPS WOULD HAVE BEEN REDEEMED.
THE OPTIONAL PAY DOWN OF THE LP IS IN THE CONTRACT AND IT NEVER CHANGED.
Page 5
In the course of negotiating the first two
amendments to the PSPAs, FHFA sent a letter to Treasury proposing a “simple revision to each
[Treasury Stock] Certificate, easing the impediments to optional paydown” to correct the original
Treasury Stock Certificates’ “unintended consequence of dissuading the companies from
repurchasing preferred shares when they are able,” Letter from A. Pollard to S. Albrecht (Feb. 25,
2009), Ex. I to Defs.’ Mot. for S.J., Fairholme ECF No. 145-10, Class ECF No. 143-10. However,
Treasury declined to adopt that proposed revision, DSUMF ¶ 10; PRDSUMF ¶ 10.
Link: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2013cv1053-206
I do not see where the Judge said the companies cannot pay down the LP.
Give me the link where the Judge said that, not a link to your post.
Keep in mind the same Judge suppressed evidence as well.
Even our friend Bradford knows it. In the same Court Room.
Bradford Quote: "Fhfa and Treasury conspired to steal from shareholders and executed flawlessly and ed demarco survived his first court appearance with a mistrial despite lying on the stand." End of Quote
Kindly, provide a link where a Judge ruled that paying down the LP is not allowed.
I am not arguing the NWS is illegal or legal.
What I said,
It’s written in the contract Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
Before the Committee on the Budget
United States Senate
Page 23
Quote: "CBO has long held that the federal government has subsidized the operation of Fannie Mae and Freddie Mac by providing what some have called an “implicit guarantee” of the GSEs’ debt.32 However, the federal government has never recognized the cost of the subsidy in its budget. The value of that guarantee (the existence of which has
now been demonstrated by the Treasury) is a large component of the estimated cost of the GSEs’ operations that CBO has included in its baseline budget projections." End of Quote
link: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/reports/01-28-financialmarkets_testimony.pdf
The CBO considers Fannie and Freddie as unfunded liabilities NOW.
The companies have been Nationalized.
December 7, 2022
Quote “In September 2008, the federal government took Fannie Mae and Freddie Mac into conservatorship. As a result, the Congressional Budget Office concluded, the institutions effectively became governmental entities whose operations should be reflected in the federal budget.” Paragraph 2
https://www.cbo.gov/budget-options/58642
The Congressional Budget Office (CBO) considers the conservatorship as Unfunded Liabilities, this is liabilities not added to the national debt but debt the U.S. States Government has said we will pay. The National Debt today stands at $31 trillion. The US Unfunded Liabilities are $181 trillion. So, in one sense the U.S. States Government has already Nationalized Fannie Mae and Freddie Mac. See link below...
Note: upper left hand corner US National Debt and bottom right US Unfunded Liabilities.
https://usdebtclock.org/
"You really have to admire these lawmakers, they come up with some great terminology. Net Worth Sweep, think about that for a minute. Sweeping all of your net worth.”
Author Charlie Potato,
shareholder Fannie and Freddie
I am asking every Investor having an interest in Fannie Mae and Freddie Mac to kindly, take the time and read for yourself, THE CONTRACT, link provided below: After reading the contract for yourself compare your understanding of the writing to Professor Epstein's explanation in his writing provided in this post. Thank You
According to Professor Richard Epstein
The Senior Preferred Stock would have been redeemed.
Quote “The conflict of interest took a more ominous turn with the adoption of the Third Amendment between FHFA and Treasury nearly four years later. At that time, the market had quieted down, and the GSEs were making timely dividend payments on Treasury’s preferred stock. Nonetheless, FHFA and Treasury ripped up the old agreement, and substituted in its place a new deal that created a “net worth sweep” whereby all of the funds received by the GSEs were paid over to Treasury as a dividend, even in amounts far in excess of the original 10 percent dividend. The consequences have been huge. Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed. With the Third Amendment, about $128 billion that could have been used to redeem the preferred shares has been reclassified as a dividend payment, rather than a return of capital.” End of Quote
Please Note: “Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed.”
Link: https://ricochet.com/326448/fannie-freddie-fiasco/
Professor Richard Epstein explained the Optional Pay Down of the Liquidation Preference.
Link: Below
So why go through the charade of asking Fannie and Freddie raise additional capital to pay off the senior preferred in full when it has already been paid.
The mechanism is there as clear as day in the stock certificates and the repurchase option set out is fully consistent with the view that the government advances were, if possible, only a short-term backstop that Fannie and Freddie could refinance at any time with private capital.
Quote: “Section 3 then, set outs “Optional Pay Down of Liquidation Preference” that specifies that “[f]ollowing termination of the commitment” of the Treasury to make further advances of cash for new senior preferred shares, “the Company may pay down the Liquidation Preference of all outstanding shares of the senior preferred stock pro rata, at any time, in whole or in part, out of funds legally available therefore.” Since there are no unpaid cash dividends all, these payments immediately go to reduce the amount of the liquidation preference.
With or without the Third Amendment, the Treasury’s commitment to make further advances remains, even if no such advance has been made since the beginning of 2012. But that commitment is of little if any value now that further advances from Treasury are no longer needed. Most critically, Section 4 addresses “Mandatory Pay Down of Liquidation Preference Upon Issuance of Capital Stock.”
Its exact provisions need to be quoted to grasp the full legal position. This section comes into play “if the Company shall issue any shares of capital stock (including without limitation common stock or any series of preferred stock) in exchange for cash at any time while the Senior Preferred Stock is outstanding.” Note that this provision does not require the consent of that “the holders of record of the outstanding shares of the Senior Preferred Stock” (which need not be the US Treasury). These shareholders receive full protection because Fannie and Freddie are obligated to “use the proceeds of such issuance . . . to pay down the Liquidation Preference of all outstanding shares of Senior Preferred Stock pro rata, out of funds legally available therefor. . .”
In sum, Section 4, of the senior preferred stock certificate in essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full once Fannie and Freddie have sufficient capital to resume normal market operations. At this point, it is a fair inference that the Treasury commitment would end once that recapitalization is complete. In light of this arrangement, it seems incorrect to argue, as does Goodman, that “the GSEs were never provided with a mechanism to emerge from conservatorship because it was never expected they would do so.” The mechanism is there as clear as day in the stock certificates and the repurchase option set out is fully consistent with the view that the government advances were, if possible, only a short-term backstop that Fannie and Freddie could refinance at any time with private capital. Furthermore, FHFA would also refinance the expensive 10 percent preferred for cheaper preferred or common, once it became clear, as it is now, that these are healthy companies (in which case cheaper financing is available).
At this point, the Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. Once the Third Amendment is declared illegal, as it should be, the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
Nothing else makes sense. Suppose the government sought to just repay the extra money to Fannie and Freddie in order to reinstate the above-market 10 percent dividend. It still could not reasonably prevent Fannie and Freddie from exercising the mandatory repurchase under Section 4 So why go through the charade of asking Fannie and Freddie raise additional capital to pay off the senior preferred in full when it has already been paid. Read together, Sections 3 and 4 make it impossible for the government to keep the highly favorable 10 percent dividend in place when it is no longer warranted by market conditions.” End of Quote
https://www.forbes.com/sites/richardepstein/2014/09/10/what-happens-if-the-government-loses-on-the-third-amendment-the-senior-preferred-stock-certificates-spell-nothing-but-trouble-for-the-government/?sh=50886006a393
Smokescreen Quote: " following termination of the commitment." End of Quote
The money swept by the Treasury if it had been applied to LP and the 10% over payment returned to the companies the LP would be paid in full and the SPS would be redeemed and at that point in time SAME DAY IN TIME the companies could turn to the Market with a secondary IPO replacing the commitment.
NO MONEY LEFT TO PAYDOWN THE LP AND REDEEM THE SPS WHEN THE TREASURY SWEEPS THE ENTIRE NET WORTH...
I do not see how the judge could stop the plaintiffs from reading the contract to the jury.
This is the argument I suggest. The Shareholders are under contract.
It’s written in the contract Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
AGAIN
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates.
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Fourth-Amended-Restated-Certificate-04-13-21.pdf
Donotundrstand, you get it.
I do not see how the judge could stop the plaintiffs from reading the contract to the jury.
This is the argument I suggest.
The Shareholders are under contract.
It’s written in the contract Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
AGAIN
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates.
INITIAL STOCK CERTIFICATES
Robert,
It’s already in court.
AGAIN
The SCOTUS sent the case back to the lower court to CALCULATE DAMAGES in Judge Lamberth’s court room and ended in a hung jury. My understanding is the case will come up again in the future, not sure when.
What was absolutely stupid the plaintiffs asked for damages in the amount of lost dividends!!!
THE SCOTUS sent it back to CALCULATE DAMAGES. And it doesn’t matter if the Third Amendment NWS was declared legal or illegal.
What matters is the Optional Pay Down of Liquidation Preference.
AGAIN
LOST VALUE!
We have lost both companies to the Treasury!
VALUE
Quote: “Intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.” – Warren Buffett" End of Quote
The Shareholders have lost both companies to the Treasury. ALL THE CASH THAT CAN BE TAKEN OUT OF THE BUSINESS DURING ITS REMAINING LIFE.
The Net Worth Sweep was by design sweeping all the net worth to shut the companies down, to wind down the companies to zero, -0- dollars. To never allow the companies ever again to be returned to the shareholders. The shareholders have lost both companies to the Treasury with this sweep of the net worth of Fannie and Freddie.
What is the Value of this Loss?
Quoted share price and value or two very different calculations.
The share price as of today's trading has absolutely nothing to do with the VALUE of Fannie and Freddie. The share price the day before or the day after the net worth sweep has absolutely nothing to do with the VALUE of the companies.
Value is a calculation of Property, Plant and Equipment and most important EARNINGS POWER OF THE BUSINESS.
JUSTICE BREYER: Quote: “Thank you. I think in reading this you could, with trying to simplify as much as possible, do you -- the shareholders' claim as saying we bought into this corporation, it was supposed to be private as well as having a public side, and then the government nationalized it. That's what they did. If you look at their giving the net worth to Treasury, it's nationalizing the company. Now, whatever conservators do and receivers do, they don't nationalize companies. And when they nationalized this company, naturally they paid us nothing and our shares became worthless. And so what do you say?” End of Quote, page 12
Link: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2020/19-422_3e04.pdf
READ THE CONTRACT
Link Below
AGAIN
The problem is not that the Treasury Swept the Net Worth of the companies. THE PROBLEM: The FHFA appointed CEOs failed by sending the NWS payments to the Treasury without the terms of the Pay Down of the Liquidation Preference applied.
Self-dealing FHFA appointed CEOs
WRITTEN AS CLEAR A DAY, Optional Pay Down of Liquidation Preference.
No one from the companies sent any letter to the Treasury stating the Liquidation Preference has been paid in full and the Senior Preferred Stock canceled. Instructions are written in the contract to do so. The FHFA appointed CEOs failed by sending the NWS payments to the Treasury without the Pay Down Option of the Liquidation Preference. The CEOs let the Treasury take it for free with no representation of the shareholders.
Self-dealing FHFA appointed CEOs
WRITTEN AS CLEAR A DAY, Optional Pay Down of Liquidation Preference.
Any loyal conservator of Fannie and Freddie would take advantage of the refinancing option to end the bailout arrangement, by paying off the senior preferred in full.
READ THE TERMS OF THE CONTRACT
According to the 'Contract' the companies did not need Treasury's permission to pay down the LP.
The money swept by the Treasury apply it to LP and the 10% over payment returned to the companies the LP would be paid in full and the SPS would be redeemed and the SAME DAY IN TIME the companies could turn to the Market with a secondary IPO replacing the commitment.
Link: https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Fourth-Amended-Restated-Certificate-04-13-21.pdf
Robert let me say this real slow, the Shareholder’s are under contract
Contract
Contract
Contract
It’s written in the contract Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment Net Worth Sweep is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
AGAIN!
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates.
INITIAL STOCK CERTIFICATES
Justice Breyer told the Plaintiffs how to win!
Again, Justice Breyer told the Plaintiffs how to win!
The central fundamental MISTAKE with the JPS Holders lawsuit.
THE SHAREHOLDERS DIVIDENDS ARE JEOPARDIZED. Wrong
The focus point should have been,
The Shareholders have lost both companies to the Treasury. ALL THE CASH THAT CAN BE TAKEN OUT OF THE BUSINESS DURING ITS REMAINING LIFE.
SUPREME COURT OF THE UNITED STATES
Justice Breyer told the Plaintiffs how to win! AND the Plaintiffs focus is on LOSS DIVIDENDS.
UPMOST IMPORTANT: JUSTICE BREYER: Quote: “Thank you. I think in reading this you could, with trying to simplify as much as possible, do you -- the shareholders' claim as saying we bought into this corporation, it was supposed to be private as well as having a public side, and then the government nationalized it. That's what they did. If you look at their giving the net worth to Treasury, it's nationalizing the company. Now, whatever conservators do and receivers do, they don't nationalize companies. And when they nationalized this company, naturally they paid us nothing and our shares became worthless. And so what do you say?” End of Quote, page 12
Link: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2020/19-422_3e04.pdf
Robert my friend,
The problem is not that the Treasury Swept the Net Worth of the companies. THE PROBLEM: The FHFA appointed CEOs failed by sending the NWS payments to the Treasury without the terms of the Pay Down of the Liquidation Preference applied.
Self-dealing FHFA appointed CEOs
WRITTEN AS CLEAR A DAY, Optional Pay Down of Liquidation Preference.
Donotunderstand Asked the question
Quote: “Is this - what you argue - still part of ANY non completed court case?
If "so argued" would it be a new case ?” End of Quote
Yes, it is still part of a court case.
The SCOTUS sent the case back to the lower court to CALCULATE DAMAGES in Judge Lamberth’s court room and ended in a hung jury. My understanding is the case will come up again in the future, not sure when.
What was absolutely stupid the plaintiffs asked for damages in the amount of lost dividends!!!
THE SCOTUS sent it back to CALCULATE DAMAGES. And it doesn’t matter if the Third Amendment NWS was declared legal or illegal.
What matters is the Optional Pay Down of Liquidation Preference.
AGAIN
LOST VALUE!
We have lost both companies to the Treasury!
VALUE
Quote: “Intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.” – Warren Buffett" End of Quote
The Shareholders have lost both companies to the Treasury. ALL THE CASH THAT CAN BE TAKEN OUT OF THE BUSINESS DURING ITS REMAINING LIFE.
The Net Worth Sweep was by design sweeping all the net worth to shut the companies down, to wind down the companies to zero, -0- dollars. To never allow the companies ever again to be returned to the shareholders. The shareholders have lost both companies to the Treasury with this sweep of the net worth of Fannie and Freddie.
What is the Value of this Loss?
Quoted share price and value or two very different calculations.
The share price as of today's trading has absolutely nothing to do with the VALUE of Fannie and Freddie. The share price the day before or the day after the net worth sweep has absolutely nothing to do with the VALUE of the companies.
Value is a calculation of Property, Plant and Equipment and most important EARNINGS POWER OF THE BUSINESS.
JUSTICE BREYER: Quote: “Thank you. I think in reading this you could, with trying to simplify as much as possible, do you -- the shareholders' claim as saying we bought into this corporation, it was supposed to be private as well as having a public side, and then the government nationalized it. That's what they did. If you look at their giving the net worth to Treasury, it's nationalizing the company. Now, whatever conservators do and receivers do, they don't nationalize companies. And when they nationalized this company, naturally they paid us nothing and our shares became worthless. And so what do you say?” End of Quote, page 12
Link: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2020/19-422_3e04.pdf
The Senior Preferred Stock held by the Treasury was not a perpetual equity investment in Fannie and Freddie at the moment in time when the companies were put in conservatorship. The misrepresentation or possibly the misunderstanding with the SPS is the fact the Liquidation Preference can be paid off by the companies and the SPS redeemed; And between both companies $301 billion paid to the Treasury more than enough pays the Liquidation Preference in full and cancels the SPS.
The pay down option of the Liquidation Preference and cancel of the SPS was worded in the documentation between the Treasury and the Companies at the time when Fannie and Freddie were put in conservatorship, This wording remains unchanged today. The misunderstanding came in the mind of investors when the two government agencies signed the 3rd Amendment between themselves taking all the NET WORTH of both Fannie and Freddie: AND by doing so the SPS has become a perpetual equity investment in the mind of many investors: AND RIGHTFULLY SO, for the monies paid to the Treasury has not be declared PAYMENT IN FULL.
The Facts remain the Liquidation Preference has been paid in full and the SPS should be cancelled.
Thank you Donotunderstand, you get it.
Donotunderstand Quote “I believe you are arguing that all amounts paid over 10% - could be considered a pay down (buy back) of SP obligation as measured by non NWS > 10% dividend” End of Quote Exactly!
And it’s written in the contract Optional Pay Down of Liquidation Preference.
Again
The Net Worth Sweep the Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
The problem is not that the Treasury Swept the Net Worth of the companies. THE PROBLEM: The FHFA appointed CEOs failed by sending the NWS payments to the Treasury without the terms of the Pay Down of the Liquidation Preference applied.
Self-dealing FHFA appointed CEOs
WRITTEN AS CLEAR A DAY, Optional Pay Down of Liquidation Preference.
The Third Amendment cannot be used to wipe out the 10 and 12 percent dividend rates in the initial stock certificates. IT DOES NOT MATTER if the Third Amendment is declared legal or illegal, THE DAMAGES ARE the extra payments to Treasury must be treated first as though they were a return of capital that calls for a dollar-for-dollar redemption of the senior preferred, thereby reducing the Treasury’s liquidation preference. Once all those shares are redeemed, the remainder of the money paid over to Treasury should be treated as excess payments that must be repaid in full to Fannie and Freddie with interest.
I understand our frustration jog49. I’m not saying you are wrong. Please help me understand why did the SCOTUS send the case back to have the damages calculated? I gave the Value of the damages.
What’s sad the plaintiffs asked for lost dividends! In the amount of $1.5 billion.