Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Kudos to your little birdie. The worse case outcome would be for SCOTUS somehow to parse out an Appropriations Clause violation for the CFPB and not say that the FHFA structure violates the Appropriations Clause. Lets see what happens - perhaps your little birdie is in the Jury Room right now whistling sweet nothings to the ladies deliberating our fate.
$1.6 bn is all we need because it is going to be appealed - more important is we need is a small victory and admissions of fact under oath that could be deemed relevant in other trials. We have evidence of arbitrary and unreasonable actions by an unappointed Director of an unconstitutionally structured agency. We need a judgement in our favor and the amount really does not matter much at this point because it will be appealed. Dont you expect an appeal? Dont you think the best case to win on appeal is a smaller judgement and $ 1.6 bn seems more than reasonable under these facts and circumstances?
Hamish Hume is a patriot and scholar! Whatever happens he came up with a legal strategy to get us a day in court despite all of the naysaying from skeptics and swamp creatures.
$1.6 bn plus interest plus an En Banc appeal for Rop with DeMarco's testimony to show that violations of Appointment Clause was proximate cause of an unreasonable and arbitrary act by an unappointed Director.
Hume's father must have been a brick layer or stone artisan because he is building a solid cornerstone to determine Constitutional damages and future implied covenant and derivative suits.
Guess who was the General Counsel for the Mortgage Group at DB during all of this?
https://en.wikipedia.org/wiki/Robert_Khuzami
The same guy goes to the SEC and prosecutes Dan Mudd and Dick Syron and basically ruins their lives and professions. They finally settled for nothing with Mudd who stuck to his guns until the end like the good marine he was.
Collins Hearing For Summary Judgement is Scheduled on Nov 8th
https://www.glenbradford.com/2022/10/fnma-fanniegate-1202/
Bhatti Judge is following this case.
Probably the most significant near term impact is that Judge Ellison in the Collins case will not dismiss the case on Remand on a motion for summary judgement. This is the standing precedent in the 5th along with the All American Check Cashing En Banc Opinion.
Community Financial Services Association of America v CFPB
See Analysis :
https://www.ballardspahr.com/Insights/Events/2022/10/Fifth-Circuit-Rules-that-the-Consumer-Financial-Protection-Bureau-is-Unconstitutionally-Funded
Here is the link to the Opinion:
https://www.ca5.uscourts.gov/opinions/pub/21/21-50826-CV0
“An elective despotism was not the government we fought for; but one which should not only be founded on free principles, but in which the powers of government should be so divided and balanced . . . , as that no one could transcend their legal limits, without being effectually checked and restrained by the others.” The Federalist No. 48 (J. Madison) (quoting Thomas Jefferson’s Notes on the State of Virginia (1781)). In particular, as George Mason put it in Philadelphia in 1787, “[t]he purse & the United States Court of Appeals Fifth Circuit FILED October 19, 2022 Lyle W. Cayce Clerk Case: 21-50826 Document: 00516514748 Page: 1 Date Filed: 10/19/2022 No. 21-50826 2 sword ought never to get into the same hands.” 1 The Records of the Federal Convention of 1787, at 139–40 (M. Farrand ed. 1937). These foundational precepts of the American system of government animate the Plaintiffs’ claims in this action. They also compel our decision today.
Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers.
Dont think Fith En Banc will overturn this especially after the All American En Banc Decision.
Collins will have to be bound by Community Financial Services of America V CFPB
Next up will probably be the Collins Motion for Summary Judgement Decision by Judge Ellison. Does this affect Bhatti?
Gigantic News Robert! US Chamber of Commerce and Money Center Banks will write Amicus on SCOTUS Cert to reign in CFPB and by implication the FHFA will have to be restructured. Significant upside 3 years out for Common because SPS likely unconstitutional and cramdown is likely dead from DeMarco's comments since it was it was an arbitrary decison.
Hi Kthomp - What do you think of the Kelly Case ?
IN THE UNITED STATES COURT OF FEDERAL CLAIMS MICHAEL E. KELLY, et al., Plaintiffs, v. THE UNITED STATES, Defendant. No. 21-1949C (Judge Kathryn C. Davis) MOTION OF PLAINTIFFS TO MODIFY BRIEFING SCHEDULE ON MOTION TO DISMISS (UNOPPOSED) Before litigation on the Government’s motion to dismiss, Plaintiffs anticipate a substitution of counsel. See RCFC 83.1(c)(4)(A). To accommodate this recent development, Plaintiffs seek modification of the briefing schedule. See RCFC 16(b)(4). Currently, the Government’s motion to dismiss is due by September 2, 2022. See ECF No. 11 (docket text entry). Information on new counsel is not yet available, but this request is made at the earliest opportunity to protect the clients and to clarify the due date for the Government’s motion to dismiss. Plaintiffs propose the following modification to the briefing schedule: ACTION DATE United States Files Motion to Dismiss November 1, 2022 Plaintiffs File Response December 13, 2022 United States Files Reply January 20, 2022 The Government has advised that this modification is unopposed.1 1 By email with Anthony F. Schiavetti, counsel for the United States. Case 1:21-cv-01949-KCD Document 12 Filed 08/02/22 Page 1 of 2 2 For the reasons stated constituting good cause, Plaintiffs respectfully ask the Court to modify the briefing schedule as set forth above. Respectfully submitted, HAGENS BERMAN SOBOL SHAPIRO LLP By: /s/ Steve W. Berman Steve W. Berman 1301 Second Avenue, Suite 2000 Seattle, WA 98101 (206) 623-7292 (telephone) (206) 623-0594 (facsimile) steve@hbsslaw.com Counsel for Plaintiffs Dated: August 2, 2022
Isnt the Common Cramdown idea dead?
How can the cramdown without damages to common if the SPS was agreed upon based on arbitrary uninformed assumptions?
Future dilution seems to be the issue - public has rights to 20% of retained earnings going forward and will be diluted equally with UST?
JPS big payoff seems off the table but could negotiate for a conversion premium or will just stay in place ex Conservatorship if interest rates stay high?
Thoughts?
Totally Agree - Thank you for your service Commander!!
Mike Kelly lost $ 1 billion - maybe that is why he is suing. To bad that he did not get the Memo also. Just the guy who worked with Hank and made millions from taking over Wachovia.
YES!! Bought FNMAT in May 2008 on the IPO at $ 25 on the IPO also.
I just didnt get the For Your Eyes Only Memo nor did the public investors who bought billions after the planted Barron's story. Nor did all the Bear Stearns investors and employees that lost everything the following Friday....
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
Hi Glen, Ackman is no one's fool. You are probably right regarding the risk v return at this point but for those of us who purchased stock prior to 2008 we were not foolish believing in the GSEs and their missions but we were foolish believing that UST officials were honest and that the USG would want to treat public investors fairly.
Just to be clear - have you backed off on you 10 cents prediction?
Isnt this a big deal? Would Lamberth dismiss the case if he actually scheduled the courtroom? Doesn't this mean we are going to trial?
Thanks to Hvp123:
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=169955047
Hi Donot,
Just checking in if you followed up on your opinion on 7/15/20 when the stock was around $ 2.10. You thought DJT was bad for FNMA. Did you buy more around the JB inauguration - stock was around $ 1.95. Down about 75% or so with JB?
Gorsuch or Thomas?
Gorsuch made a lot of sense in his Collins Opinion - didn't he?:
"The only lesson I can divine is that the Court’s opinion today is a product of its unique context—a retreat prompted by the prospect that affording a more traditional remedy here could mean unwinding or disgorging hundreds of millions of dollars that have already changed hands. Ante, at 32–33. The Court may blanch at authorizing such relief today, but nothing it says undoes our prior guidance authorizing more meaningful relief in other situations."
There are several Cert cases, Rop, Collins and Bhatti which could be one of the other situations "authorizing more meaningful relief"?
Got to believe that risk of Summary Judgement dismissal for Lamberth decreases with every filing.
Looking forward to Judge Thapur's take on Rop. I am expecting to be disappointed but thinking it could be the first legal grenade to go off.
Kind of thinking that Admin Action is not dead especially since they passed the Green New Deal and took executive action on Student Debt. The Calhoun Plan would seem fit right in and could be spun as a political win for housing policy.
Seems that the Fairholme Plaintiffs were very strategic in the multiple Cert Petitions - cant understand how SCOTUS could allow an unresolved takings issue to stand.
Probably will be disappointed but we should expect a lot to happen on the legal front in September and through the end of the year. Also getting closer to Nov 2024 with every passing day while the GSEs build capital.
Not Urgent - but Kelly Update - Filed August 2nd.
It will be interesting who will be the new counsel for Kelly:
Nothing will happen until November 1. Low probability but rich fact pattern regarding the activities of UST and NEC prior to Conservatorship.
IN THE UNITED STATES COURT OF FEDERAL CLAIMS MICHAEL E. KELLY, et al., Plaintiffs, v. THE UNITED STATES, Defendant. No. 21-1949C (Judge Kathryn C. Davis) MOTION OF PLAINTIFFS TO MODIFY BRIEFING SCHEDULE ON MOTION TO DISMISS (UNOPPOSED) Before litigation on the Government’s motion to dismiss, Plaintiffs anticipate a substitution of counsel. See RCFC 83.1(c)(4)(A). To accommodate this recent development, Plaintiffs seek modification of the briefing schedule. See RCFC 16(b)(4). Currently, the Government’s motion to dismiss is due by September 2, 2022. See ECF No. 11 (docket text entry). Information on new counsel is not yet available, but this request is made at the earliest opportunity to protect the clients and to clarify the due date for the Government’s motion to dismiss. Plaintiffs propose the following modification to the briefing schedule: ACTION DATE United States Files Motion to Dismiss November 1, 2022 Plaintiffs File Response December 13, 2022 United States Files Reply January 20, 2022 The Government has advised that this modification is unopposed.1 1 By email with Anthony F. Schiavetti, counsel for the United States. Case 1:21-cv-01949-KCD Document 12 Filed 08/02/22 Page 1 of 2 2 For the reasons stated constituting good cause, Plaintiffs respectfully ask the Court to modify the briefing schedule as set forth above. Respectfully submitted, HAGENS BERMAN SOBOL SHAPIRO LLP By: /s/ Steve W. Berman Steve W. Berman 1301 Second Avenue, Suite 2000 Seattle, WA 98101 (206) 623-7292 (telephone) (206) 623-0594 (facsimile) steve@hbsslaw.com Counsel for Plaintiffs Dated: August 2, 2022
Really interesting interview by Tim Rood of Sheila Bair. She is clearly for the exit from Conservatorship and for less USG involvement. Really surreal interview because she did nothing for exit and reform for so long. She must have been banking on the exit while she was Chairperson of FNMA and now wants to speak her mind. Really good listen - probably will make you optimistic and angry at the same time.
https://www.situsamc.com/resources-insights/podcasts/hill-episode-16-sheila-bair-former-fdic-chair
Does Tim Howard know something? They kept the Climate Change funding confidential - maybe Admin action still alive?
Latest Tim Howard Posts thanks to Guido:
"Fannie Mae and Freddie Mac have been in conservatorship for nearly fourteen years. They have been “conserved,” but remain constrained and captive by the misguided policies of previous administrations. Freeing them by revising their capital standards, canceling their (fully repaid) senior preferred stock, and returning them to private ownership will not be difficult for the Biden administration to do, and would be an unmistakable affirmation of its commitment to affordable housing. It must not allow that opportunity to go to waste."
Still waiting for UST plan -
Did the DC Circuit Leave and Opening for a Cert Petition From Bryndon Fisher and Mike Kelley challenging the Conservatorship itself once their cases are adjudicated at the DC Circuit?
From the Owl Creek Cert Petition:
"Next, the court accepted the Court of Federal
Claims’ recharacterization of the private shareholders’
direct claims as derivative. Pet.App.22a. The Federal
Circuit agreed that the shareholders’ claims were actually for overpayment, supposedly essentially asserting that “in exchange for [the Agency’s] conservatorship, both the [Companies] and shareholders were
forced to pay Treasury at a loss.” Id. (This statement,
although seemingly central for the court, appeared to
conflate the events of 2008, in which the conservatorship began, with the Net Worth Sweep, imposed in
2012. Petitioners here challenged only the latter.) The
court dismissed the shareholders’ arguments based on
Collins simply by distinguishing Article III standing
considerations as irrelevant to the existence of a direct
claim. Pet.App.27a–28a. The Federal Circuit similarly
rejected Petitioners’ reliance on such authority as Alleghany, 353 U.S. 151, without much discussion.
Pet.App.26a–27a."
Senator Toomey keeps on talking GSE Reform and how the US Treasury is late on its report. Do you have thoughts on some lame duck session legislation or the US Treasury pushing forward with Admin Action after the reconciliation bill passes?
I just finished the last US Senate Banking Hearing - Warner of VA is pushing for a 15 to 20bps surcharge to fund expansion of the Housing Trust. Yentel kept on talking for the need for more public funding.
No explicit discussion of the Calhoun plan.
Ackman always strikes me and being very thoughtful. I imagine he is as frustrated as all of us but we all will be right in the end which is usually the case with Ackman's investment.
Regarding the class action litigation, I am still sweating out the risk of dismissal on summary judgement since we have been screwed so many times by Washington DC Swamp types. Hope Judge Lamberth is as honorable as his bio.
Also -do you think the Cert petitions could be an excuse for him to delay once again?
Senate Banking Committee held another Hearing on August 2nd.
https://www.banking.senate.gov/hearings/the-rent-eats-first-how-renters-and-communities-are-impacted-by-todays-housing-market
Last Paragraphs of Senator Toomey's Written Statement:
"We should get the GSEs out of the business of subsidizing single-family
home investors. And we should keep the GSEs focused on their
affordability missions by keeping them out of social policy.
Meanwhile, I hope the administration will finally engage on reform.
Treasury has still not met its obligation to deliver a housing reform plan to
Congress—it’s now 10 months overdue.
Instead of pushing a reckless tax-and-spending bill, the administration
should look to opportunities for bipartisan legislation—like housing finance
reform—that relies on free enterprise—not government—to make housing
affordable for all Americans, whether they own or rent"
Diane Yentel of the National Low Income Housing Coalition was a witness. She is an Admin Action player. Have not listened to hearing yet but wanted to share.
Yes - it is unfortunate that Toomey was not the Chair of the Senate Banking Committee. Listened to the whole hearing which was on the short side - it is clear the Republicans smell woke Admin Action potential and are pushing back against the work moves the FHFA have already made. Douglas Holtz - Eakin made some good points about how the Fed's decision to buy MBS just aggravated housing affordability issues. The Fed was buying $ 30 bn per month - now the Fed is selling $ 30 bn per month or a $60 swing widening out mortgage spreads. Lawrence Yun from the National Association of Realtors said mortgage payments are up 50 to 60 pct since the bottom due to interest rate moves and mortgage spread widening.
Yes - my thanks also to everyone for hanging in there - I tell my wife that one day we will make our losses back from her IRA investment in FNMAT on the new issue in May of 2008. Too bad American Funds sold their common - two of my kids graduated from College so they will never see the return from a fair outcome from this fiasco. Maybe my last kid will benefit - 6 years to go!
Prepared Statement Excerpt from Ranking Member Senator Toomey at today's US Senate Banking Committee Hearing
The White House plan also proposed pushing Fannie and Freddie into activities that prior administrations understood created too much risk for taxpayers. In a break from decades of bipartisan efforts to reform the GSEs, the White House has embraced the GSE conservatorships as a means to socially engineer its housing and racial equity policies.
Senator Toomey called for the end of Conservatorship.
Obviously not much is going to get done. Seems like Admin action also dead?
Video Link: https://www.banking.senate.gov/hearings/priced-out-the-state-of-housing-in-america
Fairholme DC Circuit Cert Petition tomorrow.
News Release link:https://www.banking.senate.gov/newsroom/minority/toomey-bad-policies-and-reckless-spending-have-fueled-soaring-housing-costs
Thanks for the reply clarencebeaks21.
I did not know about the choice of law issues with the implied covenant that you highlighted. Thanks for sharing. You are probably right regarding the summary judgement - I have always thought of this as being related to the implicit fair dealing for the public securities markets but I dont think that was in the pleadings right? Sounds like Judge Lamberth will have to decide to impute Delaware law or not?
There has to be some reason why they sold all of the FNMA and kept FMCC and we will probably get a better understanding this quarter. It is my understanding that all the tax loss selling has to be done by Oct 31 so we should know by the end of the year. Perhaps it is the potential outcome of the Lamberth case but when will we know that outcome? Will will probably know soon if summary judgement is granted?
Do you think Judge Lamberth may just stay his case once the Cert petition is filed until SCOTUS decides to take up the appeal or not?
Interesting that Growth Fund of America had sold all of its FNMA common but had FMCC as of 6/30. Why keep FMCC and why not sell down both proportionally?
Wash sale rule would only apply to FNMA and FMCC common separately? 61 day period - sell FNMA then sell FMCC and buy FNMA back if want to keep overall exposure? Probably not but something to think about?
https://www.investopedia.com/terms/w/washsalerule.asp
Regarding the Cert Petition it will be interested who files Amicus Briefs. The Chamber of Commerce has been active in CFPB litigation - it will be interesting how much of the 5th Circuit Separation of Powers issues will be referenced in Cert Petition. Perhaps we will have a wide swath of Amicus this type for the Fairholme Cert Petition?
Next up is the FHFA Response for Collins at the Southern District of Texas on Monday - the 18th
https://www.glenbradford.com/2022/06/fnma-fanniegate-1150/
You are right from a trading perspective but since these are less than 0.1% positions they probably have more incentive to move on and take the tax losses. It is my understanding that they held the common positions from pre Conservatorship and have never purchased any additional common since then. They probably got scared out of their common by those who said that the stock is going to 10 cents. Just thoughts but I thought you may be interested in the work that Kthomp19 has done - thanks Kthomp!
Yes - definitely tax efficient. Dont you think they will sell all of their commons for FNMA and FMCC?
Have you seen this spreadsheet by Kthomp19 regarding GFA holdings?
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=169315330
Interesting that no common was sold in Q1 We will see updates in the next week or so.
US Chamber of Commerce is focusing on structure of CFPB
https://www.foxbusiness.com/politics/consumer-finance-bureau-out-control-under-bidens-director-critics-say
FHFA and CFPB have many of the same Constitutional problems
Thanks 955. The new Director at the CFPB - Chopra is getting a lot of attention for being an activist and the US Chamber is actively involved in raising administrative law and Constitutional issues. They have filed Amicus briefs in two separation of powers cases for next term. I am wondering if they will file an Amicus for the Fairholme Cert? Maybe Kelly also? As noted in the 5th Circuit by Judge Edith Jones a lot of the CFPB Constitutional separation of powers issues are the same for the FHFA and we will see this in the interplay between Collins an All American on Remand in the 5th Circuit.
Thanks for the quick reply. I got to think you have made a good trade and if it turns out you never are able to get a full position at lower prices that is a good thing!
Regarding the GFA Holdings it is my understanding that they should be disclosed within 2 to 3 weeks after quarter end so we should have an update what's left to go. Kthomp seems to monitor this closely and perhaps he could confirm.
Regarding news events - I am waiting for the Govt filings in Collins as the likely next event. I believe they are due a couple of days before the DC Ct of Appeals Cert Petition which I believe will be important to see how they incorporate the 5th Circuit cases regarding the separation of powers issues. I would not expect that the 6th Circuit will NOT rule in the Rop case until after the DC Cert Petition is filed. Although it is a low probability I am hopeful for a big ruling invalidating the 3rd Amendment on the Appointments Clause separation of powers from the Rop 6th Circuit because I think Judge Thapar understands the issues and could share in the positions taken by Judge Edith Jones in the 5th. Basically I am looking for the 6th to look to the 5th for separation of powers guidances. Bhatti in the 8th needs to get back the Ct. of Appeals to be impactful unless we get a surprise favorable ruling at the District Ct. level. I dont know if you have read my thoughts on the DC Cert Petition that I have previously posted here but I think the DC Circuit wrongly relied on the 5th's position regarding retroactive damages in Collins and would expect the Cert Petition to highlight that.
I am not so hopeful with Bhatti since the Judge at the District Ct has already dismissed once but we probably wont see the transcript for 90 days since it is being redacted and it is my understanding that it is sealed for 90 days but I could be wrong.
Thanks Ace Trader. Selling could continue until Oct 31 end of fiscal year. Although they are small positions in USD amount still a lot of shares to go as of March 31. I see 38 million FNMA and 48 million FMCC? Is that correct.
The question I have is why some continue to want to see the common stock price go down ? I used to think it was that they thought a conversion period would be imminent but that was a couple years ago. Some one is buying these shares and it would seem that it is not just retail because retail probably has been stuffed with GSE common for years and have had a miserable time holding.
Looking forward to June 30th holdings release.