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Judge Lamberth's courtroom deputy made a notation on the docket this afternoon reflecting:
(a) Bala Dharan and Anjan Thakor provided rebuttal testimony today and shareholders rested their rebuttal case;
(b) Judge Lamberth denied the shareholders' motion about Mr. DeMarco's statement concerning pending legislation while he served as acting directors;
(c) Judge Lamberth denied FHFA, Fannie and Freddie's request to restrict shareholders' discussion in closing argument about damages;
(d) FHFA, Fannie and Freddie's renewed their motion for judgment as a matter of law and Judge Lamberth denied the request; and
(e) closing arguments commenced and will continue at 10:00 a.m. tomorrow.
Shareholders proposed a jury instruction this morning to address pending GSE legislation during Acting Director DeMarco's tenure at FHFA.
Additionally, FHFA, Fannie and Freddie filed a fresh motion under seal this morning.
FHFA, Fannie and Freddlie filed three late-night documents too:
-- Doc. 244, supplying a new jury instruction about prejudgment interest and an updated verdict form;
-- Doc. 245, a filing under seal; and
-- Doc. 246, telling Judge Lamberth it will be improper to leave the jury with the impression damages may be greater than $1.6 billion;
and copies of the two unsealed filings
JOINT SUBMISSION OF DEPOSITION DESIGNATIONS AS PLAYED DURING TRIAL
The parties hereby submit the transcripts of the testimony presented to the jury by deposition videos at trial. The transcripts attached are the following:
1. Mukarram Attari, Ph.D (Exhibit A)
2. David Benson (Exhibit B)
3. Joseph Cacciapalle (Exhibit C)
4. Donald Layton (Exhibit D)
5. James Lockhart (Exhibit E)
6. Timothy Mayopoulos (Exhibit F)
7. Mario Ugoletti (Exhibit G)
8. Naa Awaa Tagoe (Exhibit H)
The parties filed three documents this evening:
-- Doc. 240, in which FHFA, Fannie and Freddie oppose correcting Mr. DeMarco's misstatement about pending legislation;
-- Doc. 241, where shareholders say they have no intention of asking the jury for an award of more than $1.6 billion in closing arguments; and
-- Doc. 242, where shareholders submit proposed jury instructions about deposition excerpts and analyst reports;
That kinda math makes me believe they will meet half way and settle with shareholders before jury comes out of that room, on much better terms.
Busy weekend in DC?
When those 8 ladies go into jury deliberation room most likely on Mon they will summarize 9 days of testimony like…….
Govt paid $191B
FnF paid back $301B
And now Gov dont want us to pay shareholders more than $1.6B?
Is this good faith & fair dealing to those shareholders ( & their stock certificates) who came in front of us on the very first day to testify?
Again Lamberth from 2018…..
The pleaded facts not only show that the GSEs would not need to draw on Treasury’s funds to pay dividend, but also that the GSEs could repay Treasury for its investment under pre Third Amendment dividend structure. Such facts could support a finding that the Defendants exercised their discretion arbitrarily or unreasonably.
The court finds nothing in the Plaintiff’s stock certificates suggesting they could have reasonably expected the Net Worth Sweep.
This is the judge Lamberth we know….
Lamberth “believes every person—whether it’s the president of the United States or an administrative clerk—has a duty to serve the American people and do their duty as required under the law.”
Even though Lamberth’s scolding of government lawyers who show a lack of diligence or candor “may feel extremely cutting, and even derisive at times if you’re the recipient of his critique,” Leonnig observes, “if you’re the taxpayer or the employee or the everyday Joe whose life is affected by government policy or decision making, it would seem like the right standard.” For instance, for a decade, Lamberth prodded along the massive, lumbering Indian trust fund case, cementing his reputation as something of a maverick who demanded that government agencies live up to the standards of good faith and fair dealing that the public deserves.
A Federal judge said today that the White House and the Justice Department had participated in a ''reprehensible'' effort to cover up false statements by Ira C. Magaziner, the chief architect of President Clinton's ill-fated health plan, and the judge ordered the Government to pay a penalty of more than $285,000.
The judge said Mr. Magaziner and the Clinton Administration had been ''dishonest'' in describing the secret procedures used to develop the President's health care proposals in 1993. Mr. Magaziner said at the time that the proposals were devised entirely by a group of Federal employees, who were not subject to laws requiring open meetings or public disclosure of their working papers.
In the ruling today, the climax of five years of litigation between doctors and the Clinton Administration, Judge Royce C. Lamberth of Federal District Court said: ''It is clear that the decisions here were made at the highest levels of Government, and the Government itself is -- and should be -- accountable when its officials run amok. There were no rogue lawyers here misleading this court.''
Rather, Judge Lamberth said, ''the executive branch of the Government, working in tandem, was dishonest with this court, and the Government must now face the consequences of its misconduct.''
The Administration's efforts to correct the misstatements were feeble and belated, the judge said.
Joe Lockhart, a White House spokesman, said the Administration had no comment on the ruling. Hillary Rodham Clinton supervised work on the President's health plan, but Judge Lamberth did not say whether either of them was in any way responsible for the Government's misconduct.
Mr. Magaziner, who still works at the White House, also refused to comment on the ruling. But in an interview tonight, Mr. Magaziner said, ''My statements were honest, and I did not attempt to mislead anybody.''
FannieGate is much bigger than $1.6B, game has just begun, will have to wait till 9th innings. First time evidence has come to light so pressure is on those who did anything wrong. Smart people would settle before its too late. In settlement here UST makes more money than other 20% of shareholders so thats a real possibility. I cant wait to see closing arguments by Hamish. Mr Integrity needs to favor justice for little guys who fought for so many yrs to get their fair share in this biggest financial theft of private property.
Lets see how plaintiffs and/or judge respond, seems to me they are nervous right now after jury heard it all from Ugoletti lied & DeMarco not asking anybody else & saw their abuse of power. Susan Hartman showed govt has been paid off by over 130B & Susan McFarland said nws was designed to get DTAs so they cant recap & release on their own. Wind down was the real intention behind nws.
Entire picture should be clear cut now for both judge & jury. So interesting couple of days ahead of us.
FHFA, Fannie and Freddie filed a motion in limine this evening asking Judge Lamberth to restrict shareholders from making reference in closing arguments next week to any damage model suggesting shareholders were harmed by more than $1.6 billion.
Totally agree. Reasonable expectation on shares when bought is to earn some return eventually and should be rewarded fairly when Cos start paying dividend to one shareholder and not others like in FnF case.
Judge Lamberth's courtroom deputy made a notation on the docket this afternoon reflecting the jury heard more testimony today from Mukarram Attari and testimony from Nicholas Satriano. FHFA, Fannie and Freddie rested their case, and shareholders began their rebuttal case. Trial proceedings continue at 9:30 a.m. Monday.
Judge Lamberth's courtroom deputy made a notation on the docket yesterday indicating the jury heard testimony from Mukarram Attari. Additionally, Judge Lamberth released one juror so eight jurors remain. Trial proceedings continue at 10:00 a.m. today.
Early this morning, shareholders submitted a request asking Judge Lamberth to tell the jury Mr. DeMarco was mistaken when he said legislation to wind down the GSEs passed the Senate Banking Committee in 2012.
REQUEST FOR JUDICIAL NOTICE PURSUANT TO FED. R. EVID. 201(b)
Pursuant to Fed. R. Civ. P. 201, Plaintiffs ask the Court to take judicial notice of the following:
There was no legislation introduced or pending in 2011 or 2012 addressing the wind down of the GSEs that passed the Senate Banking Committee. The legislation referenced in Acting Director DeMarco’s testimony passed the Senate Banking Committee in 2014, never received a floor vote, and never became law.
As shown below, these facts are appropriately judicially noticed because they “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned”— including among others, the congress.gov web-site which contains links below with indisputably accurate bill histories.
The facts are relevant and necessary to correct an inaccurate assertion in Acting Director DeMarco’s October 21, 2022, testimony as follows:
Q. Right. But you've said several times in your testimony with Mr. Stern, you said that part of your thinking was informed by the fact that there were numerous bills, I think you said three bills on Congress and a proposal from the Treasury Department, all of which -- they were different, but they had one thing in common: Shrinking the GSEs; correct?
A. Yes.
Q. But it required legislation; correct? Let me rephrase that. Excuse me. You talked about three proposed bills and a Treasury proposal; correct?
A. We talked about multiple bills in Congress, and we talked about the Treasury plan, all of which talked about wind-down. It was the FHFA strategic plan that talked about gradually shrinking the footprint, and that was something that I could do
without legislation.
Q. There were some things you could do without, some things you couldn't; correct?
A. Correct.
Q. Okay. At that time, summer of 2012, President Obama is in the White House; correct?
A. Yes.
Q. And the Republicans control the House; correct?
A. I believe so. Yeah, that's right.
Q. Did it strike you as a time of particularly productive bipartisan unity where they were going to get together and pass legislation together?
A. Actually, the Senate bill was a bipartisan bill that was supported by both the leader –
Q. Did it pass?
A. It did. It actually passed through the Senate Banking Committee and went to the Senate floor.
Q. Did it pass into law?
A. No, it did not.
See Trial Transcript 1003-04 (October 21, 2012).
This testimony inaccurately stated (or at a minimum left the distinct misimpression) that
a bill addressing shrinking the GSEs proceeded through the Senate Banking Committee to the Senate floor in 2012. That assertion is incorrect. The bills addressing wind down that were proposed in that period did not proceed through Committee.
For example, one bill (S. 1963), introduced by Senator Isaakson, received only four cosponsors and never was taken up by any Committee. See S.1963 - 112th Congress (2011- 2012): Mortgage Finance Act of 2011 | Congress.gov | Library of Congress.
The other (S. 693), introduced by Senator McCain on March 31, 2011, received five Republican cosponsors and had not been acted upon by any committee as of the Net Worth Sweep. See S.693 - 112th Congress (2011-2012): GSE Bailout Elimination and Taxpayer Protection Act | Congress.gov | Library of Congress. The House companion (H.R. 1182) was referred to committee and subcommittee, and no further action was taken. Actions - H.R.1182 - 112th Congress (2011-2012): GSE Bailout Elimination and Taxpayer Protection Act | Congress.gov | Library of Congress.
The parties have met and conferred about this issue, and Defendants say the referenced legislation was S.1217. That bill was introduced in June 2013 and reported by the Committee in September 2014. It never received a floor vote and did not become law. Actions - S.1217 - 113th Congress (2013-2014): Housing Finance Reform and Taxpayer Protection Act of 2014 | Congress.gov | Library of Congress.
Plaintiffs request that the first sentence be read to the jury to correct the inaccurate impression left by Acting Director DeMarco’s testimony. It has proposed the second sentence in fairness to avoid inadvertently leaving a misimpression in the other direction that no such legislation ever passed the Senate Banking Committee.
Plaintiffs thus respectfully request that ether the first or both sentences be judicially noticed by the Court.
Dated: October 28, 2022
/s/ Charles J. Cooper
Charles J. Cooper (Bar No. 24870) David H. Thompson (Bar No. 450503) Vincent J. Colatriano (Bar No. 429562) Peter A. Patterson (Bar No. 998668) Brian W. Barnes (Pro Hac Vice)
Respectfully submitted,
/s/ Hamish P.M. Hume
Hamish P.M. Hume (Bar No. 449914) Samuel C. Kaplan (Bar No. 463350) BOIES SCHILLER FLEXNER LLP 1401 New York Ave. NW
Consequently, from 2013 through to the second quarter of 2022, Treasury has received over $245.9 billion in Net Worth Sweep cash dividends, and over $84.3 billion in increased liquidation preference corresponding to GSE net worth increases – for a total of over $330 billion since the Net Worth Sweep became effective on January 1, 2013. That is over $150 billion more than the most Treasury would have received under the original 10% dividend. In fact, it is an even larger excess than that, because if there had been no Net Worth Sweep, the GSEs could have started in 2013 to repay the amounts borrowed from Treasury, which in turn would have reduced their 10% dividend, which in turn would have allowed them to use more cash to repay Treasury. Had that occurred, the GSEs would have fully repaid Treasury, with interest, many years ago.
While FHFA has asserted that the Net Worth Sweep was not intended to enrich Treasury or to provide more in dividend payments than would have been owed under the 10% dividend, no documents produced by FHFA or Treasury indicate any negative reaction or surprise in response to the massive windfall Treasury received, which suggests that a massive transfer of wealth from the Companies’ shareholders to Treasury was the expected and intended outcome of the Third Amendment.
Plaintiffs allege that Defendants violated the implied covenant of good faith and fair dealing inherent in the certificates of designation of Fannie Mae and Freddie Mac junior preferred stock and Freddie Mac common stock. Plaintiffs allege that Defendants did so by entering into the Third Amendment and agreeing to replace the fixed 10% dividend with the Net Worth Sweep at a time when Defendants knew that Fannie Mae and Freddie Mac were on the cusp of achieving profitability and would no longer need to draw on Treasury’s funding commitment to pay the 10% dividend.
Prof. Anjan Thakor* (Washington University in St. Louis, Olin Business School, Campus Box 1133, One Brookings Drive, St. Louis, MO 63130)
was it this guy? Another Indian guy.
The big question imo jury will deliberate is….is it good faith n fair dealing if UST take away $130B from both Cos without using their 80% warrants and still liq pref plus loan balance remains as is?
Under seal, FHFA, Fannie and Freddie responded to yesterday's sealed filings and shareholders filed a rapid reply earlier today.
Does it sound like settlement offer? You never know, the way the coverup is being exposed in front of jury & judge, it would be better for all stakeholders to share the pie then let jury decide who gets what.
Jury Verdict is coming this Fri? Can they afford the risk of letting RL and jury decide what’s fair compensation to shareholders, being legal owners in both Cos. at the time of nws. You can’t take it all and not share. This is not Cuba or Venezuela.
They should have loaned $200B on a secured basis of FnF assets just like AIG, there was no need to design new bailout plan just for FnF.
Who charges you 10% interest if there goal is conserve & preserve your assets & bring you back to sound & solvent condition & save the big banks who issued 93% of bad loans but never got punished by 10% interest rate & their lawsuits were settled for $20B on a claim of $200B?
In other words “bad faith & unfair dealing” at the highest level of Govt imo. We wouldn’t even know anything if there was no discovery & if it was not unsealed for us by Sweeney.
Their goal with FnF was to wind them down basically to salt the earth so it never grows back, give their business to others, on the eve of next 8 golden yrs of profits, we know it all, time for jury & RL to know the facts & evidence collected thru multi year discovery allowed by RL & Sweeney. I never felt this optimist in last 10 yrs as I feel these days. But maybe it’s just me & few others out there who feel the same way :)
I truly believe that if we prevail in proving Govt violated covenant good faith & fair dealing embedded in our stock certificates and breach of contract rights, then sky is the limit as to how we get rewarded for that IMO.
All these unbelievable stuff will help us prove our Takings claim in scotus. Keep it coming……
Was it Prof Bala Dharan from Berkeley Reasearch Group in Boston? Indian guy
The court docket shows shareholders filed two fresh motions and a variety of under seal shortly after 1:00 a.m. this morning.
Doesn’t sound anything close to good faith & fair dealing to me. He & his friend MU are one of those misguided guys involved in Fanniegate.
Thanks Robert for all the updates, are you going to the court next week too?
Calendar: 10/21/2022-10/31/2022
Case Number and Title Judge Time Courtroom Purpose
13-cv-1053: FAIRHOLME FUNDS, INC. et al v. FEDERAL HOUSING FINANCE AGENCY, et al Judge Royce C. Lamberth 10/21/2022 10:00AM Courtroom 15- In Person Jury Trial
13-mc-1288: IN RE: FANNIE MAE/FREDDIE MAC SENIOR PREFERRED STOCK PURCHASE AGREEMENT CLASS ACTION LITIGATIONS Judge Royce C. Lamberth 10/21/2022 10:00AM Courtroom 15- In Person Jury Trial
21-cr-0179: USA v. POWELL Judge Royce C. Lamberth 10/21/2022 12:30PM Telephonic/VTC Status Conference
00-cr-0270: USA v. CASSELL Judge Royce C. Lamberth 10/24/2022 12:30PM Telephonic/VTC Revocation Superv Rls-FinalHrg
21-cr-0735: USA v. ELLIOTT Judge Royce C. Lamberth 10/25/2022 12:30PM Telephonic/VTC Status Conference
22-cr-0148: USA v. KASPER Judge Royce C. Lamberth 10/26/2022 12:30PM Telephonic/VTC Status Conference
Nothing about our trial so far on Lamberth’s calendar for next week, are they gonna end the trial today and let jury give verdict next week probably before 12;30 Mon?
Other case scheduled for today before our trial started was removed and replaced with our trial.
Judge Lamberth's courtroom deputy made a notation on the docket this evening indicating the jury heard testimony today from Susan Hartman, Michelle Miller, Timothy Cassell, Joseph Cacciapalle (via video deposition), Edward Linekin and James Lockhart (via video deposition), and trial proceeds continue at 10:00 a.m. tomorrow.
PLAINTIFFS’ ITEMIZATION OF DAMAGES
Plaintiffs claims total damages in the amounts as set forth below:
1. Plaintiffs seek expectancy damages arising from Defendants’ breaches as a result of the Net Worth Sweep based on Fannie Mae’s and Freddie Mac’s realized performance up to the second quarter of 2021 and projected performance thereafter. This method seeks to measure the net present value of future dividends that Fannie Mae and Freddie Mac shareholders would have earned but for the Net Worth Sweep based on Prof. Mason’s conservative assumptions. Under this method of expectancy damages, assuming no periodic commitment fee, damages are $10.321 billion for owners of the Fannie Mae Preferred, $5.887 billion for owners of the Freddie Mac Preferred, and $11.002 billion for owners of the Freddie Mac Common. In a scenario where the Court determines that a periodic commitment fee would have been imposed, damages are $9.357 billion for owners of the Fannie Mae Preferred, $5.337 billion for owners of the Freddie Preferred, and $9.288 billion for owners of the Freddie Mac Common.
2. As an alternative measure, Plaintiffs also asked Prof. Mason to evaluate damages for the junior preferred stock holders based on a restitution theory under which Defendants would disgorge the net benefits they have received under the shareholder contracts, which would be unwound in their entirety. Plaintiffs would receive the present value as of August 2012 (the date of the Net Worth Sweep) of the sums initially paid for shares (“issuer-received cash flows”), and Fannie Mae and Freddie Mac would receive the present value as of the same date of dividends it paid since issuance (“purchaser-received cash flows”). Damages are equal to the issuer-received cash flows minus the purchaser-received cash flows, which amounts to $16.337 billion for owners of the Fannie Preferred prior to the application of prejudgment interest and $26.939 billion after the application of prejudgment interest, and $11.809 billion for owners of the Freddie Preferred prior to the application of prejudgment interest and $20.989 billion after the application of prejudgment interest.
3. Plaintiffs also seek reimbursement of attorneys’ fees and expenses. Counsel will
present the Court with an application for attorneys’ fees and costs after trial.
Hamish in 2016…….not hard for him to explain & show the big picture of what has happened to shareholders expectation…
I am saying, you cannot retrade the deal after the fact. You have to stick with the deal you originally made and you don't get to nullify people's rights by retrading it later
Had they complied with the terms of the original deal with Treasury, and had they wanted more than their 10 percent dividend, then the only way for any of that $130 billion to have been paid out to the government was by the government exercising its right to acquire 80 percent of the common. Basically, for $10,000 or $15,000, the government could have bought 80 percent of the common—which was then worth at least $100 billion, because the $130 billion, you first have to pay a preferred dividend to the junior preferred shareholders, which would have been somewhere between $7 and $8 billion, or at the most, $9 billion. The remaining $122 billion would have been split 80 percent/20 percent between the government and common shareholders who are the private common shareholders. The government still would have gotten roughly $100 billion out of the $130 billion, but they wanted everything, so they put in effect the Net Worth Sweep. That's what we're complaining about, in a nutshell.
-Hamish Hume
Glad to hear Robert. Thanks so much. The more updates the better for all of us who cant attend this historic multi billion dollars trial.
Judge Lamberth entered a paperless order this afternoon saying, "The Court having impaneled the jury in this action, it is hereby ORDERED that during trial and deliberations, all meals for said jury shall be paid by the Clerk of the Court for the U.S. District Court for the District of Columbia."
Is this really true? Or just your guess? ;)
But to survive against highest level of govt & reach trial level in a class action suit & that also jury trial where only facts & evidence matters nothing else is Big thing imo, kudos to our legal team & all plaintiffs.