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You are wrong,
The money kept by the Treasury if it was applied to principle and 10% interest and over payment returned to the companies the LP would be paid in full and the SPS could be redeemed and at that point in time the companies could turn to the Market with a secondary IPO replacing the commitment. It's that simple
Maybe you missed my earlier post, posting again.
Regards
Professor Richard Epstein explained the Optional Pay Down of the Liquidation Preference. The Plaintiffs should pay close attention. Explain this to the Jury.
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
Set the record straight.
Quotes: “FnF do not and have never had the ability to pay down the seniors.
The seniors are equity, not a loan. There is no such thing as repayment of equity.
Even if the NWS hadn't happened, FnF still didn't have the ability to pay off the liquidation preference because of the terms of the contract that I quoted.
FnF did not have and never have had the ability to pay down the seniors any time they wanted to.” End of Quotes … Wrong!
In the Supreme Court of the United States, PETITION FOR A WRIT OF CERTIORARI
Hamish P.M. Hume Counsel of Record Samuel C. Kaplan Boies Schiller Flexner LLP
ELIMINATING THE NEED TO PAY ANY ONGOING SPS DIVIDEND.
Quote: “But this $149.4 billion estimate actually understates what Treasury has taken through the Net Worth Sweep, for two reasons. First, the Net Worth Sweep remains in effect, such that each quarter’s increase in net worth at GSE results in an increase in the Treasury’s liquidation preference in its senior preferred stock. Second, had it not been for the Net Worth Sweep, the GSEs would have been able to fully repay the amounts borrowed from Treasury, with interest, eliminating the need to pay any ongoing senior preferred dividend. “End of Quote page 13
https://www.supremecourt.gov/DocketPDF/22/22-98/230704/20220722162334690_Petition%20for%20Writ%20Of%20Certiorari.pdf
Thank you, Robert, for continuing with the updates...
Have the Plaintiffs brought up history leading up to the NWS?
Such as, Treasury Secretary at the time of the takeover, Paulson, revealed in his book On the Brink that the takeover of Fannie Mae and Freddie Mac was essentially a corporate decapitation “the first thing they’ll hear is the sound of their heads hitting the floor”, the imagery of an assassination. Employees felt blindsided. Paulson’s description of the takeover as an “ambush” ...
The intended effect was to drown the GSEs in debt that they never needed—a “concrete life-preserver”.
Hank being a straightforward person. He likes to be direct with people. But knew that they had to ambush Fannie and Freddie. Could not give them no room to maneuver.
'EATON PARK' Etc...
Former Secretary Treasury Hank Paulson Quote: “Nationalize them”...
“If we had not Nationalized Fannie and Freddie” Time 0:48
Link: https://www.bing.com/videos/search?q=hsank+paulson+said+nationazied+Fannie+mae+youtube&&view=detail&mid=15B845388A6B3F5FF99715B845388A6B3F5FF997&rvsmid=B7B8605AA635E875E8AEB7B8605AA635E875E8AE&FORM=VDRVRV
The Congressional Budget Office (CBO) considers the conservatorship as Unfunded Liabilities.
Constitution of the United States
Fifth Amendment
“nor shall private property be taken for public use, without just compensation."
nationalization (noun) · nationalizations (plural noun) · nationalization (noun) · nationalizations (plural noun)
The transfer of a major branch of industry or commerce from private to state ownership or control. Takings Clause A property owner may bring a claim in federal court under the Fifth Amendment when the government has violated the Takings Clause by taking property without just compensation.
When the FHFA with the Treasury took over Fannie and Freddie the Treasury received 79.9% warrants with an option to convert the warrants to common stock. If and when the Treasury converts the warrants to common stock any amount above the 79.9% is considered a takeover of the companies de facto Nationalization. The amount of debt the companies held at the time of the takeover if added to the National Debt this amount would have pushed passed the threshold of the limit of the debt ceiling: This is the reason for the limited amount of 79.9%.
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 $32 trillion. The US Unfunded Liabilities are $171 trillion. So, in one sense the U.S. States Government has already Nationalized Fannie Mae and Freddie Mac. See link below
The United States was not obligated after 1968 to back any debt of Fannie Mae. The United States Taxpayers became obligated when the government took over the two companies.
Originally, Fannie Mae had an explicit guarantee from the United States government; if the entity got into financial trouble the government promised to bail it out. This changed in 1968. Fannie Mae became a private stockholder owned company. Fannie Mae securities received no actual explicit or implicit government guarantee. This is clearly stated in the securities themselves, and in many public communications issued by Fannie Mae.
Quote: “Although we are a corporation chartered by the U.S. Congress, the U.S. Government does not guarantee, directly or indirectly, our securities or other obligations. We are a stockholder-owned corporation, and our business is self-sustaining and funded exclusively with private capital. Our common stock is listed on the New York Stock Exchange and traded under the symbol “FNM.” Our debt securities are actively traded in the over-the-counter market.” End of Quote.
Information from: Fannie Mae form 10K Dec 31, 2007
part I, page 1, item 1.
https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/quarterly-annual-results/2007/form10k_022708.pdf
Note: upper left hand corner US National Debt and bottom right US Unfunded Liabilities.
https://usdebtclock.org/
OPEN LETTER TO THE U.S. COURTS RE: GSE NATIONALIZATION
concrete life-preserver
“Treasury Secretary at the time of the takeover, Henry Paulson, revealed in his later book On the Brink that the takeover of Fannie Mae and Freddie Mac was essentially a corporate decapitation (“the first thing they’ll hear is the sound of their heads hitting the floor”), the imagery of an assassination resonated with anyone who had been at Fannie Mae in 2008. Employees felt blindsided. Mr. Paulson’s description of the takeover as an “ambush” is spot on. The “bailout”/takeover was unrequested, unexpected, and wildly unpopular.”
The intended effect was to drown the GSEs in debt that they never needed—a “concrete life-preserver”. “I'm a straightforward person. I like to be direct with people. But I knew that we had to ambush Fannie and Freddie. We could give them no room to maneuver.” Quoted from On the Brink.
Link: https://gselinks.com/pdf/OPEN_LETTER_TO_THE_US_COURTS_REGARDING_GSE_NATIONALIZATION.pdf
Can shareholders substantiate their claim that the Net Worth Sweep resulted in a “taking” of property without compensation, in violation of the 5th Amendment to the U.S. Constitution? The answer is unquestionably “yes!”
NATIONALIZATION OF PRIVATE PROPERTY
Quote:” By taking all of their profits going forward, we are making clear that the GSEs will not ever be allowed to return to profitable entities at the center of our housing finance system” End of Quote
Link: https://fanniefreddiesecrets.org/wp-content/uploads/2017/07/Email-re-Net-Worth-Sweep-rollout-8-15-12.pdf
Appreciate you attending the Trial and sharing with us. Thanks
Question, What is pcf?
You said,
"So by agreeing to the NWS you eliminated the pcf?"
Quote: “ bobstruthsbobstruths11 hours ago
In February of 2011 the Treasury and HUD delivered to Congress the White Papers titled REFORMING AMERICA’S HOUSING FINANCE MARKET, A REPORT TO CONGRESS. These white papers were never adopted by Congress, but they were adopted by the Obama Administration as the blueprint for Housing Finance Reform. The White Papers clearly state that the GSEs are based on a flawed business model and that business model must be eliminated in order to create new housing finance reform infrastructure. The GSE’s must be wound down, so that is exactly what they were determined to do with the Sweep Amendment.
In the Treasury’s announcement of the Sweep Amendment they state they are doing it “based on a commitment to the White Papers of Feb 2011”. The motive for the Sweep Amendment is….if the GSE’s are allowed to become profitable the Treasury will never be able to wind them down which is necessary in the White Papers of Feb 2011 in order to eliminate their FLAWED BUSINESS MODEL and to create new HOUSING REFORM INFRASTRUCTURE.” End of Quote
Call the Professor to the stand.
Your Honor for our next witness Plaintiffs call Richard A. Epstein to the stand.
Quote: “In closing, there is a simple test by which to measure the probity of the combined actions of FHFA and Treasury. If FHFA were replaced by a private trustee, and Treasury were replaced by a private supplier of fresh debt or equity capital, both parties would end up in jail if they concocted a scheme that resembled the NWS. Everyone would cut through the various smokescreens to see that the excess dividends were a naked raid on the interests of the other shareholders as happened here. The great tragedy of the majority opinion is it follows the all-too-common practice of giving the government a free pass when its own motives are as corrupt, or more so, than comparable private parties in similar roles and with similar legal duties. From the time that I started to work on this issue, I always said that litigating against the government is like playing craps with loaded dice.” End of Quote
Good one…
“ Ps: Why did Berkley sue?
Witness: FHFA didn't do what they said they were going to do; said they would preserve and conserve, they didn't do that, in fact they did the opposite, they took every dollar from 2013 into perpetuity.”
Thanks for posting the link.
Sounds like you are right.
What would this mean for the Fannie Mae Common Shareholders not included in the Lamberth lawsuit?
Expecting damage?
Treasury gets the goldmine and shareholders get the shaft.
Page 13 $149.4 billion
This chart shows that the total value of all cash
dividends paid to Treasury under the Net Worth Sweep
($245.9 billion) plus the net worth increases to Treasury’s
liquidation preference made in lieu of cash dividends ($78.3
billion) is equal to $324.2 billion. That is the current total,
using data available through the first quarter of 2022, of
the value transferred to Treasury under the Net Worth
Sweep regime – thus far. Had there been no Net Worth
Sweep, and had the GSEs instead paid the 10% dividend
at the 2012 level of $18.9 billion per year over the last nine
years and a quarter (FAC ¶64), their total payments to
Treasury would have been $174.8 billion (9.25 × $18.9
billion). Accordingly, one approximation of the excess
value transferred thus far to Treasury as a result of the
Net Worth Sweep is $149.4 billion ($324.2 billion received
under the Sweep minus $174.8 billion of 10% dividends
payable absent the Sweep).
But this $149.4 billion estimate actually understates
what Treasury has taken through the Net Worth Sweep,
for two reasons. First, the Net Worth Sweep remains in
effect, such that each quarter’s increase in net worth at
GSE results in an increase in the Treasury’s liquidation
preference in its senior preferred stock. Second, had it not
been for the Net Worth Sweep, the GSEs would have been
able to fully repay the amounts borrowed from Treasury,
with interest, eliminating the need to pay any ongoing
senior preferred dividend.
https://www.supremecourt.gov/DocketPDF/22/22-98/230704/20220722162334690_Petition%20for%20Writ%20Of%20Certiorari.pdf
How do these lawyers come up with a loss of a few billion? The Shareholders have lost both companies to the Treasury. All the cash that can be taken out of the businesses during their remaining life, gone.
.
In the Supreme Court of the United States
On August 17, 2012, Treasury and the FHFA executed a Third Amendment to the PSPA. Among other things, it changed the dividend on Treasury’s senior preferred stock from an amount equal to 10% of the liquidation preference (i.e., the principal amount) in the stock, to an amount equal to 100% of the net worth of each GSE, minus a small reserve that was set to shrink to zero by 2018 (the “Net Worth Sweep”). FAC ¶56.4
The Treasury provided nothing of value to the GSEs in exchange for having its senior preferred stock dividend changed from 10% of its liquidation preference to 100% of the net worth of the GSEs. FAC ¶58.
The Third Amendment’s Net Worth Sweep eliminated private shareholders’ ability to ever receive a dividend or any other distribution from the GSEs. It guaranteed that 100% of all future distributions would go to Treasury and ensured that none would go to shareholders no matter how large the profits generated by Fannie Mae and Freddie Mac. FAC ¶56. As Treasury stated on the day of the announcement, the Third Amendment was intended to ensure that “every dollar of earnings that Fannie Mae and Freddie Mac generate” would go solely to Treasury. FAC ¶57. In so doing, the Net Worth Sweep eliminated the contingent right to future dividends held by private shareholders as of the time the conservatorship was imposed and the original PSPAs executed, and provided that all contingent upside in the GSEs was instead held entirely by Treasury.
The latter is a “Get out Jail Free” card to the government that allows it to take anything it wants from regulated financial institutions and their shareholders without paying just compensation.
For example: government regulators have the power to put Bank of America, Wells Fargo, and Citibank into conservatorship or receivership. According to the Federal Circuit, that means that, no matter what the facts and circumstances are, those regulators have the power to take 100% of all dividends those regulated banks may pay in the future – no matter what.
This cannot be squared with the Takings Clause. This Court must therefore grant certiorari to ensure that the Takings Clause still exists for shareholders in regulated financial institutions.
https://www.supremecourt.gov/DocketPDF/22/22-98/230704/20220722162334690_Petition%20for%20Writ%20Of%20Certiorari.pdf
In the Supreme Court of the United States
Quote: "In August 2012, FHFA and Treasury changed the
PSPA dividend on Treasury’s senior preferred stock from
10% of the stock’s principal value to 100% of the net worth
of Fannie Mae or Freddie Mac (minus a small reserve that
would shrink to zero by 2018), in perpetuity. Under this
arrangement, private shareholders in Fannie and Freddie
could never receive any dividends no matter how much
money they earned, as 100% of all dividends would have
to be paid to Treasury. As a result, Treasury has taken
roughly $150 billion more than it could have received under
the original 10% dividend." End of Quote
https://www.supremecourt.gov/DocketPDF/22/22-98/230704/20220722162334690_Petition%20for%20Writ%20Of%20Certiorari.pdf
Sounds good to me, up to the point of explicit guarantee.
Personally, I think an explicit government guarantee is a mistake, this will open the door for the government to take over other industries leading this nation down the path of destruction: Venezuela is only one example. Why should the American Taxpayer backstop any publicly traded company? Fannie and Freddie did fine until Hank walked in the door.
For the Treasury to continue providing a comment until the companies can issue a Secondary IPO, that sounds great. Or, buy the Shareholders out at fair market value and afterword sell the companies with an IPO in the open market. The Treasury needs to get out of our business, one way or another.
Guido2 my friend, the FHFA will not allow Fannie and Freddie to operate without liquid assets, cash, or access to cash.
When Fannie was taken over the core capital as of June 30, 2008, was $47.0 billion, $14.3 billion above the statutory minimum capital requirement and $9.4 billion above the regulator-directed 15% surplus requirement.
I do not under your statement, DON'T KILL THE GEESE THAT LAY GOLDEN EGGS!"
The $1 billion commitment fee was before the company made a draw on funds from the Treasury. That fee was a charge to set up the line of credit.
You said, "The overpayments to date can be used for future commitment fees." I agree, if the Treasury will return the overpayment, overpayment above the 10%. But still there will remain a shortfall in capital. How will this get funded?
That sounds wonderful, but how will the companies fund the commitment, the capital requirement of the FHFA the companies regulator?
Something to consider. The funding commitment the companies could selloff part of their book of business to help raise in part some of the needed capital to satisfy the FHFA's capital requirement.
I hope the plaintiffs don’t blow this opportunity. Keep it simple.
The funding commitment cannot be terminated when all the NET WORTH IS TAKEN AWAY FROM THE COMPANIES, NO MONEY TO REDEEM THE SPS!
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.
The Senior Preferred Stock was not a perpetual equity investment in 2008 before the NWS took place. No Perpetual Dividend payment under the 2008 agreement when the companies were first taken over; All the money sent to the Treasury should be credited to the pay off of the Liquidation Preference and cancel the SPS. The SPS can be thought of as a kind of bond with a coupon amount of 10%, the SPS is not Common Stock.
Document from Treasury of The United States of America
Variable Liquidation Preference Senior Preferred Stock, Series 2008-2
OPTIONAL PAY DOWN OF LIQUIDATION PREFERENCE
Page 3 Quote:
“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 the funds legally available therefor with such payment first being used to reduce any accrued and unpaid dividends previously added to the Liquidation Preference to Section 8 below.” End of Quote.
Page 3 and 4 Quote:
“If after termination of the Commitment the Company pays down the Liquidation Preference of each outstanding share of Senior Preferred Stock in full, such shares shall be deemed to have been redeemed as of the date of such payment, and the dividend that would otherwise be payable for the Dividend Period ending on the pay down date will be paid on such date. Following such deemed redemption, the shares of the Senior Preferred Stock shall no longer be deemed to be outstanding, and all rights of the holders thereof as holder of the Senior Preferred Stock shall cease, with respect to shares so redeemed, other than the right to receive the pay down amount (which shall include the final dividend for such shares). ANY SHARES OF THE SENOR PREFERRED STOCK WHICH SHALL HAVE BEEN SO REDEEMED, AFTER SUCH REDEMPTION, SHALL NO LONGER HAVE THE STATUS OF AUTHORIZED, ISSUED OR OUTSTANDING SHARES.” End of Quote
If your personal calculation of lost value is 1.6 billion do yourself a favor and quit buying individual stocks. Invest in an index fund, maybe the S&P 500 are the Dow 30.
I hope the Plaintiffs don’t blow this opportunity. Lost value both companies. Compensation, return the companies to the shareholders.
Thank you
LOST VALUE! LOST VALUE! LOST VALUE! LOST VALUE!
We have lost both companies to the Treasury! Get it???
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.
And my calculation is only a 14-year period of time. That lets the Treasury off cheap. Price to Earnings Ratio of 14
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.
The lost value calculation should start with the number $436.1 billion. This is the Intrinsic Value of both companies businesses including the JPS, the estimated value of Fannie and Freddie. The question, what percent amount of the $436.1 billion should each equity holder receive?
$402.9 billion earnings power plus $33.2 billion JPS = $436.1 billion.
Fannie Mae
EARNINGS POWER OF THE BUSINESS
$263 Billion Intrinsic Value
Freddie Mac
EARNINGS POWER OF THE BUSINESS
$139.9 Billion Intrinsic Value
Fannie Mae JPS $19.1 billion par value
Freddie Mac JPS $14.1 billion par value
The amount of $402.9 billion is the calculated Intrinsic Value of the Earnings Power of both businesses combined using a Price to Earnings Ratio of 14.
401kobessive, so you feel that possibility 10 billion outstanding. I do not know the exact number if any at all are outstanding. How can a Market Maker cover a Naked Short in such a large amount and do it undercover? I do not know. I’m not accusing anyone here of wrong doing but the report has sit there on the SEC website for years and it’s public information.
Think about it, in 2008 when the the Market Makers took the companies down with the counterfeit shares (Naked Short) and with this amount of illegal shares outstanding the only way to cover this up is by keeping the companies in perpetual conservatorship or by placing the companies in receivership. Why else would this continue for 15 years with seemingly no ending?
The conservatorship cannot be justified to continue indefinitely nor justified by placing the companies making billions in profits in receivership. But the Treasury has to look good in the eyes of the public.
Solution, The Treasury could buy the shareholders out at fair market value, clean up the counterfeit shares behind the scenes, sell the companies in the open market with an IPO. And by doing this the lawsuits go away.
Returning the companies to the NYSE to trade at fair market value the Treasury could say “We saved the world” and made all this money for the taxpayers.
"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
"It was the darnedest thing. I paid off my car and went to pick up the title at the bank. They told me the car belonged to them even though I made all the payments. They said my payments were swept into the dealers bank account and none of the money went to paying off the car. They said if I want to keep driving the car I need to keep making the payments. I asked them when I would have the car paid off and they said never, I have to just keep paying. They told me I must maintain the car and keep it in good working order, and they might come over to my house and set it on fire one day, but they are not sure when."
Author Charlie Potato,
shareholder Fannie and Freddie
Mr Howard Quote: “ Treasury has two alternatives for eliminating the net worth sweep voluntarily. The first is to declare Fannie and Freddie’s draws to have been fully repaid, with interest (which is true), and cancel the senior preferred and the liquidation preference on its own. Doing so, however, would require it to reverse its stance that the sweep payments are legitimate compensation for its “heroic” efforts in rescuing the companies during the crisis (a fiction Treasury is responsible for having created), and also open it up to criticism for “giving the taxpayers’ money away” to shareholders (including the demonized hedge funds). The second alternative is to convert its $191 billion in senior preferred to common stock in the companies. But that would (a) give Treasury virtually total ownership of both companies, (b) render its warrants for 79.9 percent of the companies’ common stock—which most people see as a valid claim on the companies’ assets (even though it’s not)—essentially worthless, and (c) by forcing Fannie and Freddie to repay their draws of senior preferred twice (first through repayments that Treasury refused to count as repayments, and again through conversion to common), send an unmistakable message to potential future investors in their equity that Fannie and Freddie are treated differently, and more adversarially, than any other publicly traded company, thus imperiling the chances of success of their envisioned recapitalization.” End of Quote
https://howardonmortgagefinance.com/2022/02/01/a-six-year-retrospective/
Will you kindly explain to this board just who in their right mind would invest in a IPO under such conditions? That sounds stupid. Mistreat the existing shareholders and think the gov. can turn around and sell it in the open market?
Is this a misprint? I was under the impression that Fannie Mae Common was excluded and only the Preferred Shareholders of Fannie Mae.
Quote: "This is a class action brought by plaintiffs Joseph Cacciapalle, Michelle M. Miller,
Timothy J. Cassell, and Barry P. Borodkin on behalf of the common and preferred shareholders
of the Federal Home Loan Mortgage Corporation, normally called Freddie Mac, and the
common shareholders of the Federal National Mortgage Association, normally called Fannie
Mae. I will explain in more detail later what a class action is." End of Quote.
INSTRUCTION NO. 3
Statement of the Case. First Paragraph
MIA, I appreciate your response. And I do know we can prove we own shares.
What I was thinking, how will the Treasury get out of this situation without the public knowing? That is, if counterfeit shares exist outstanding. My suggestion, buyout the shareholders and sell the companies in the open market.
No disrespect to the Director, but I think she is a front-end spokesperson controlled from behind the scenes. She is not running the show. It is obvious that an IPO has been in discussion.
Guido2, I appreciate your reply. Maybe not all brokers responded for shareholder information, hopefully this is the case. If there are counterfeit shares outstanding the Treasury could clean this up behind the scenes either by receivership or by buying the existing shareholders out and selling the companies in an IPO.
The FHFA Director did not use the wording Secondary IPO, she said, IPO...
This is an indication either the existing shareholders will be wiped out in a receivership afterwards the Treasury sells the companies in the open market, OR the Treasury buys the existing shareholders out and sells the companies in the open market.
At the time as FHFA Acting Director now FHFA Director Sandra L. Thompson said,
Quote: “If the enterprises ever get out of conservatorship everybody knows it's going to be the largest IPO ever. But there are questions investors will want to know”... time 30:29 End of Quote.
Again, a reminder of a possibility of a problem before Fannie and Freddie can come out of conservatorship.
I did not receive any correspondence of information from the Class Action Plaintiffs concerning my stock holdings in both Fannie Mae and Freddie Mac. How many other holders did not receive any type of communication? How do we know our shares are in the count? And who is responsible if shareholders hold counterfeit shares? Maybe, this is one reason the conservatorship is 15 years into the making. In the court case before Judge Lamberth if the junior preferred holders of Fannie and Freddie, and the common holders of Freddie receive a settlement the holders of the shares will have to be in the count. What happens when the shareholders find out their shares possibly do not exist?
The counterfeiting of shares of Fannie and Freddie. The primary market makers in these two GSEs are Goldman Sachs (Fannie Mae) and LaBranche & Co. (Freddie Mac). Page 19 recorded in link below.
The U.S. Securities and Exchange Commission knew about this, it's reported on their website.
Several years ago, I attempted to obtain the list of common and preferred stockholders of record by contacting the transfer agent at Computershare Trust. Fannie Mae governed by the Security and Exchange Commission is required to report this information to the shareholders. I was given the run around and did not press the issue.
Computershare Trust Company, N.A., address P.O. Box 505005 Louisville, KY 40233-5005.
COUNTERFEITING
INFORMATION FROM: U.S. Securities and Exchange Commission web site.
The counterfeiting of U.S. assets. Theft from pension funds, State employee retirement accounts, and U.S. Citizens. The counterfeiting of shares of Fannie Mae and Freddie Mac. Where are our regulators and who are they protecting?
https://www.sec.gov/comments/s7-08-09/s70809-407a.pdf#:~:text=Fannie%20Mae%20and%20Freddie%20Mac%20are%20publicly%20traded,was%20occurring%20in%20the%20trading%20of%20the%20GSEs.
It's simple, so simple a caveman can understand it.
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.
And my calculation is only a 14-year period of time. That lets the Treasury off cheap. Price to Earnings Ratio of 14
The Plaintiffs should explain this to the Jury in the simplest of terms.
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.
The lost value calculation should start with the number $436.1 billion. This is the Intrinsic Value of both companies businesses including the JPS, the estimated value of Fannie and Freddie. The question, what percent amount of the $436.1 billion should each equity holder receive?
$402.9 billion earnings power plus $33.2 billion JPS = $436.1 billion.
Fannie Mae
EARNINGS POWER OF THE BUSINESS
$263 Billion Intrinsic Value
Freddie Mac
EARNINGS POWER OF THE BUSINESS
$139.9 Billion Intrinsic Value
Fannie Mae JPS $19.1 billion par value
Freddie Mac JPS $14.1 billion par value
The amount of $402.9 billion is the calculated Intrinsic Value of the Earnings Power of both businesses combined using a Price to Earnings Ratio of 14.
I was answering the man’s question. LP gone
Quote: “What if:
Sp deemed paid. And overage amount of $27+B(est) is used as payment for warrants. So no money changes hands.
Lp gone because got was paid principal plus 10%.
Warrants gone because purchased with $27+B overpayment.
Then at end of this year FnF $100B (est) retained.
This time it will actually be in the green.
???????
Thoughts appreciated
Thanks”
$227.22 per share
Fannie Mae
07/29/2022
Reports $4.7 Billion for Second Quarter 2022
EARNINGS POWER OF THE BUSINESS
Fannie Mae’s common stock outstanding 1,158,087,567
Fannie Mae’s net earnings $4.7 billion per quarter, a projection of $18.8 billion net per year.
$18.8 billion net / 1,158,087,567 = $16.23 per share of earnings,
PE Ratio of 14 x $16.23 = $227.22 per share intrinsic value,
So, you are saying we buy the warrants for $25 million?
America International Group, Inc. Terms of warrant settlement: AIG paid back $182 Billion every cent plus a profit of $22.7 Billion and AIG bought back the Treasury owned warrants for $25 million; The Treasury owned more than 90% of the company. Insurer American International Group Inc eliminated the U.S. government’s last financial interest in the company, buying back warrants the Treasury held, AIG said it had repurchased all of them.
“The U.S. Treasury does not have any residual interest in AIG after AIG’s repurchase of these warrants,” the company said in a statement.
The government rescued AIG at the depths of the financial crisis as the insurer teetered on the brink of bankruptcy. The bailout ultimately totaled $182 billion, and when all was said and done the Treasury owned more than 90 percent of the company.
AIG REPURCHASES WARRANTS FROM U.S. TREASURY
NEW YORK, March 1, 2013 – American International Group, Inc. (NYSE: AIG) announced today that it completed the repurchase of warrants issued to the United States Department of the Treasury (U.S. Treasury) in 2008 and 2009. The warrant issued in 2008 provided the right to purchase approximately 2.7 million shares of AIG common stock at $50.00 per share, and the warrant issued in 2009 provided the right to purchase up to 150 shares of AIG common stock at $0.00002 per share. AIG and the U.S. Treasury agreed upon a repurchase price of approximately $25 million for the warrants. The U.S. Treasury does not have any residual interest in AIG after AIG’s repurchase of these warrants.
“With AIG repurchasing all outstanding warrants issued to the U.S. Treasury, we are turning the final page on America’s assistance to AIG,” said Robert H. Benmosche, AIG President and Chief Executive Officer. “We appreciate the opportunities this support allowed and are proud to have returned to America every cent plus a profit of $22.7 billion.”
Link: https://www.sec.gov/Archives/edgar/data/5272/000119312513086875/d495224dex991.htm