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This new lawsuit is another shot at an injunction.
Wouldn't it be nice if a rare breed judge imposes a temporary injunction until matters are resolved, opens an escrow account for the court and orders all funds to remain at the court for the length of the proceedings?
Just like a court would hold passports of children when there is a dispute in a divorce case.
I just noticed Fine's press release is dated May 12nd.
Mark up happened on May 21st. Unless he had access/negotiated behind the scenes he may not have known anything about Sherrod Brown's alternative bill. On the other hand, he may have preferred to back a bill that has better chances to get passed with some fixes.
What is surprising about that article is that it reveals a close association between Fine and Warren, perhaps lasting to this day. A working relationship. Yet, Fine's push for restoring the Jrs. and more recently recapping FF went nowhere. And in this regard, Warren doesn't seem to share the same interest as ICBA.
Still, I would have never thought Fine had so much influence.
See if you can download it here
http://brown.senate.gov/download/?id=CC739E75-7C90-459C-B64E-598F8316115E
It is possible.
The alternative version would also amend the Consumer Financial Protection Act to add various provisions of the Servicemembers Civil Relief Act to the “enumerated consumer laws” that can be enforced by the CFPB. In addition, it would amend the TILA ability to repay provision by creating a safe harbor for mortgage loans that meet certain conditions and are held in portfolio by banks and credit unions with less than $10 billion in assets. This safe harbor is substantially narrower than the safe harbor that Senator Shelby’s bill would create.
Agree on both.
His ruling will impact future bailouts to a great extent.
As for HERA language, I am adding... the language in question is the specific mention to "preserve and conserve" and "safe and sound (or solvent) condition". I am hoping judges also find that HERA language wasn't meant to allow for stripping the companies of all their earnings.
The judges didn’t address whether the NSA program violates constitutional privacy rights, as some groups allege, but found the Patriot Act language used by the Bush and Obama administrations to justify the program wasn’t meant to allow such mass data gathering.
Government loses appeal on massive sweep of phone records.
http://www.businessinsider.com/afp-us-appeals-court-rules-nsa-bulk-data-sweep-illegal-2015-5
In a 97 page ruling 3 appellate judges eviscerated government's arguments (Bush and Obama) to massively sweep phone records from US citizens.
Perhaps one day this headline will read "Government loses appeal on massive sweep of FF record profits".
I don't know.
Check the 10Y at 2.18 today. Maybe these derivative loses are over and just gains from here on.
Government lost a takings case yesterday. Judge chastised DOJ attorneys.
Unrelated to us, but there is a mention of reasonable-investment backed expectations in the flooding/Katrina case.
http://takingslitigation.com/2015/05/02/ruling-in-mr-go-takings-lawsuit/
"I am probably jumping the gun."
haha. I think you are.
Thanks!
There are real reasons to be hopeful.
As long as the Conservatorship exists Congress cannot do anything unless somehow legislators are able to come up with legislation that won't be vetoed. A miracle to say the least.
Republicans understand this. They are also aware that they are at the mercy of the conservator. Conservatorship has been set up in a way that it has become a fortress-like institution and a real shield against Congress. For the duration of Mel Watt's tenure, Congress has -or better yet Republicans have- no power. Or they wait until they could replace Mel Watt with someone of their own.
So Republicans best bet to undo the Conservatorship and stop Mel Watt in his tracks is to nullify the 3rd amendment in a way that may lead to a recapitalization which, in turn, may lead to ending Mel Watt's dominance in housing policy. A simple regulator is not the same as a conservator.
It is possible that one of these guys/gals is the rogue ex-Treasury official that timhoward717 is claiming is now "candidly" talking.
I quoted this myself as I got the CD of that hearing and I even uploaded it as an mp3. Can't remember but I think I posted that link in the google group forum. It's pretty much accurate.
Questions for Jack Lew.
http://www.housingwire.com/ext/resources/files/Editorial/Files/GrassleylettertoTreas.pdf
These are trickier. We know most of the answers...
Lew will say the 3rd does not interfere with the regulatory mission of FHFA completely dodging the real question which is the companies' undercapitalization and financially unsound operation and then he will expand on #4 by saying there is no need for internal controls and maintenance of adequate capital levels as both companies have an open credit line of 200 billion and these requirements have been frozen (without explaining where that comes from). On #3, he will give the usual response of "the sweep prevented the circular arrangement" and on #5 he will probably give the correct answer that the PSPAs prevent the repayment and that the commitment was not a loan and it is still outstanding which will kill all the effort done by the media to paint it as a loan that has been repaid.
I hope Senator Grassley picks up on the fallacy of #3 and on the illegality of #2 and #4. And on the completely fckd up arrangement of #5. Or better yet, he may come to the -correct- conclusion that Treasury and the WH have been on the driver's seat all along, violating HERA 08'.
Otherwise, it will be business as usual.
The danger here is that these questions are not deep enough. The central question should have been why there was a need to close the circular arrangement in light of the companies being profitable and with financial analysis calling for very large profits (DTAs) in the very near term that would have allowed the companies to build capital or reduce their Treasury commitment.
That David Stevens interview was a bummer.
He basically said WH will stay put. Wind down is out of the picture and since the GSEs have been determined to be essential they will continue to be part of the government. Never to return to private hands, implied by a modification of the sweep.
This fits Obama left agenda much more than the alleged wind down. And fits perfectly with their pseudo nationalization.
Interesting...
Thank you!
Thank you, 44.
This isn't the same as was published at th717. This version seems more precise. Is it a word for word transcript?
Well.. Alexander Hamilton was a white man defending and professing white people's beliefs. He fought the Revolutionary War in his 20's. When the french stormed Bastille he was in his mid 30s, amid a total bloodbath and a sea of decapitated heads. A different world.
Although memories of such events have faded, history books and old laws have been able to preserve many of what was achieved. But today's world is so different that perhaps we took decisions under the wrong assessments back in 2010. And using Alexander Hamilton as some kind of role model may have been a mistake...
We were idealist back then. Without ever realizing that just very few politicians are idealists these days.
Problem is administrations have learned from the past.
They have learned that the Nixons of the world made a mistake. He and similar presidents made the critical mistake of buckling under pressure. All over the world you now have administration after administration (read executive branch) never backing down but doubling down, operating above the law and disregarding accusations of violations to the point of completely ignoring issues and never responding to anything.
Whether it is Venezuela, Argentina or as it now looks to be Brazil, the executive branch interprets it as a sign of weakness deferring to the rule of law. So violations that could have lead to replacements of officials, impeachments, acknowledgments of mistakes, perhaps suicides or simply opportunities to compromise and negotiate have now become actions free from punishment.
These administrations -when in democratic systems- bully the other powers to conform either by publicly stating their positions or by suggesting courses of actions that they deemed preferable. Or they go to greater lengths to put their own people and base to force and impose their vision either overtly or not so overtly.
I am of the opinion that this new forceful behavior by administrations has taken the judiciary system and the legislative body by surprise and has segmented their participants. With some conforming and adapting to the new ways while leaving the rest confused, not knowing how to respond.
Bowen in the interview is a perfect example of someone who is at a loss, in spite of having a boat load of damning evidence. And the reporters are a perfect example of citizens being confused, just like some politicians.
I am sorry, but there is no room for any FannieGate of any kind. This administration will ridicule the effort. Just to follow their own precepts of never backing down. Someone within the judiciary universe needs to wake up to this and correct the course.
What you don't say is how we get there.
Lose appeal?
Lose Sweeney?
Win both and US appeals?
Stegman's speech is not entirely bad.
For one, he provided an inventory list of reforms. He also suggested this is a new path, that reforms should continue and that while not the desire path it is an alternative to legislation. He also said that by legislative reform he expects that these reforms become part of the new law. So he may be simply asking congress to produce a bill that has the reforms in black and white.
The only risk I see in his speech is him questioning the charters and pointing at Congress. Charters oppose the government's desire of a total wind down. In any receivership, Congress must reconstitute charters in new companies. Stegman asking Congress to look at charters may be direct focus on just that: removing the impediment by which the companies will completely dissolve out of existence.
But he never said this. It is just one hypothesis.
I also consider an improvement from the past that he used the word capitalization directly. The more this is discussed by the administration, the more they may get used to the idea and switch to the other side.
I also wonder about the legal ramifications of his speech. This is Treasury running the conservatorship in no uncertain terms.
Freddie's draws and dividends.
DRAWS
2008 = 44.6 bill
2009 = 6.1 bill
2010 = 13 bill
2011 = 7.6 bill
2012 = 0.02 bill
Divs
2008 = 0.2 bil
2009 = 4.1 bill
2010 = 5.7 bill
2011 = 6.5 bill
2012 = 7.2 bill
2013 = 47.6 bill
2014 = 19.6 bill
I do not think balances carry over to the next loan. It looks like all draws are treated as independent loans that need to be repaid. And they get paid back first come. So second, third, fourth and fifth loan cannot be canceled until the first gets fully paid.
A quick back of the envelope would be the 08' loan being repaid in full in 2013 leaving a positive balance of 14.35 bill in dividends after having used all dividends from 2008 through 2012 and partially 2013. The second loan of 2009 would have accrued interests to 7.4 bill and be also paid in full with the remaining balance of dividends, leaving 6.95 bill for the third loan from 2010. This 3rd loan would have accrued interests to 15 bill and could not be paid in full. Its balance, 8.1 bill moves to the next year's dividend (2014) and its balance grows to 8.49 bill and gets fully paid with the dividends of 2014. The balance of dividends for 2014 then remains positive at 11.1 bill. The fourth loan accrued interest to 8.379 bill and gets paid in full with the remaining dividends. The remaining balance of dividends becomes 2.72 bill and can cover the last loan (fifth) of .02 bill.
By the time Freddie pays all its loans and interests with all dividends generated, it can keep a positive balance of 2.7 billion assigned to its capital account.
I imagine that Fannie too can pay all what was borrowed and keep a tiny amount of capital for itself.
So Capuano's bill should put us in the black AND with a different capital structure. No more Sr. preferred shares.
NOTE: all numbers are approx.
New Capuano bill.
It converts the Sr. preferred shares commitment into a series of loans with originations dated when each borrowing occurred. This is similar to the original bill, if not the same. Then, applies dividends paid to principal and interest of each of the loans until repaid. The deferred tax assets would cancel the majority of the loans from the first few years so the balances left will be small and will spread over 30 years at a 5%.
In an extreme scenario, had the 187 bill been loaned once at the beginning in 2008 the final amount to be paid over 30 y at 5% would have been around 360 bill. However, his bill just like the original, allows for repayment in full of any of the loans as per the amount of dividends already paid. So cancellations of loans accelerate after the first DTA activation. Given this scenario, huge cancellations in 2013 and 2014, we are only seeing very few years of 5% interest on large loan balances. While the remaining balance will be fairly small and allow the companies to rebuild their own capital each and every quarter as there may be enough of an excess capital.
The good thing is that the new bill does not discriminate dividends. So DTAs and settlements all fall within the same pool.
Gasparino
He was actually all common sense today. Whether we like it or not.
It is hard to see how Obama will make an about face and allow shareholders participate in earnings. Obama doubles down and in that respect he follows Alinsky's screenplay. Gasparino suggested reform is possible but even in that case the administration will look for ways to block us out.
So Gasparino was correct in asking Bove why buy the stock. We all have good reasons for this trade and understand the gamble side of it. But in a corner of my mind I also accept the fact that while Obama can talk himself out of many situations this one doesn't seem to be one. Specially, in light of Stegman's recent assertions.
I want Capuano's tie!
bully board
lol
I wouldn't get excited for all the "independence" that Fannie and Freddie have been showing in the last few quarters (CEOs stating they will compete for market share, conference calls, etc.). Some may mistakenly think that this is a sign that they are alive as private, corporate entities.
In light of what is going on in the lawsuits it is also possible that the government has requested them "to act as if they were" just to imprint in the courts' mind (Sweeney) the impression that the government is not directing the companies. Remember, number one for the government now is to obtain a dismissal based on the fact that Judge Sweeney's court has no jurisdiction. Which requires that FF are not the government.
Until the government releases its hold on them or is forced to there is no reason to get excited.
Somewhat important.
http://www.natlawreview.com/article/fraud-verdict-against-countrywide-bank-america-upheld
Although this will not help with the 3rd amendment cases, it may help in changing the narrative that the GSEs were guilty in the 2008 housing debacle. So, it may help on the side of the politics and the general argument that states that Fannie and Freddie must disappear.
5 *****
Profit grab
Now, that the companies are making less net income and settlements are almost done with I wonder if Treasury is ready to let the companies go. If this has been a true profit grab and all about their massive earnings, then, this is what should happen. No more reasons to continue to keep them.
Freddie's derivative losses from 4Q is an alert big time and an issue. Volatility in interest rates can be expected well into the future, both up and down. In today's case, down (abruptly) meant huge losses. And the government has a real interest in killing any spikes quick. Anyway they can.
But, to the extent that there are enough retained earnings to pay Jrs. dividends (some day), good earnings or bad earnings will not matter to us. This is where preferred shareholders have an advantage. We do not directly participate in earnings. Berkowitz 1 - Ackman 0.
"So that the taxpayers get full value"
Those were the last words in today's conference call. WTF? Treasury has not exercised the warrants. Taxpayers do not own the company, simply have the rights of a creditor via the Sr. preferred shares. This is how fucked up things have become.
Don't pay attention. In the T+S sheet FREJO shows a bid/ask $3.50/$50 at 7.30 on Friday. On FMCCP the last trade shows at $6.40 on Friday 14:40. That is also from the T+S sheet.
I am in favor of net neutrality. And yes, they might be attacking Obama for reasons other than what is said. But my point is that what is being said, overreach, could indirectly help us. Just as in "mounting evidence".
"The White House needs to get its hands off the FCC," House Energy and Commerce Committee Chairman Fred Upton, a Michigan Republican, said Thursday.
On following HERA,
the law states FHFA's Director can request courts to get involved if there are issues. That is the exception to the judicial review impediment. So if he were truly independent and if he truly believes the agreements should not trump HERA he could call in the courts. True, he can't unilaterally rewrite the contracts but he can unilaterally ask any court to review them.
(Or maybe this is part of the SPSPAs, I have to go back and look at both).
Thank you, 44.
Nice article by GM. Not sure about its impact. So far, nothing made a dent.
I think it is almost impossible to determine in advance how any of the SCOTUS judges may interpret aspects of the PSPAs or the 3rd amendment. You could easily go Lamberth's way and be able to support it or go the opposite way. And be able to support that too. Hopefully, Ted Olson has done his homework.