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There's no delay in Lamberth's Court. August 2nd is the date we were waiting for. The Treasury pledged to hand over all documents required in the recent subpoena.
One of the questions that Fairholme asked, was about the existence of The Secret Plan. Link.
Everybody buy common shares like mad!
Switch the obligations Preferred Stocks for common stocks (the real thing)!
You should read Yahoo's message board. Very smart people there.
Wasn't August 2nd the deadline for the Treasury to comply with the subpoena of Judge Lamberth? What's the 4 month extension that people are talking about but don't show the court filing?
The theme is quite simple. Did the BOD amend the bylaws with regard to an important issue, without two-thirds shareholder approval, one day before the Conservatorship started? Yes or not. Because the only answer is yes, then, it's a felony.
The Control Share Aquisitions statute in the Bylaws per Virginia Code, is an important anti-takeover measure that would have prohibited the issuance of the warrant, no matter that during conservatorship, the control of Freddie Mac is held by the conservator. In regulation, the shares of a warrant are deemed as having been purchased already.
A Board of Directors is not empowered to trample the shareholders' rights in the bylaws of a company. That's not an action neither proper nor admirable.
The Treasury backstop is written in the Charter, not in the SPSPA, because the Treasury backstop is a funding commitment where it gets SPS in exchange for the cash, and the section that authorizes the Treasury to buy those SPS is written in the Charters, incorporated by HERA. SECTION: AUTHORIZATION OF TREASURY TO PURCHASE OBLIGATIONS. CONDITIONS. It turns out that Congress neither specified the amount of funding nor the yield, because it says unlimited yield obligations. The fact that it was the SPSPA the one that established the specifications such as the amount of the funding commitment and the yield, doesn't mean that the bailout falls under the PA. It's the Charter the one that authorizes the bailout. And always remember that that section was incorporated by HERA in their Charters just below another section with the name: AUTHORIZATION OF TREASURY TO PURCHASE OBLIGATIONS. CONDITIONS. What? So, two sections with the same name? It means that the bailout was already written in the Charter since its inception, in exchange for their Public Mission. The only difference is that the old bailout specifies that the obligations must have "an appropriate rate" similar to the Treasury yields and it was limited to $2.25 billion. Therefore, Congress just had to update the obsolete $2.25 billion, set 40 years ago.
Because I only have 3 posts daily, I use this last post to reply to Bradford. Mnuchin was referring to a Housing Finance System revamp to "don't put the taxpayer at risk". He used the word restructuring wrong to mislead us, primarily because a restructuring isn't meant to don't put the taxpayer at risk. A restructuring of companies is related to debt restructuring (or preferred stock restructuring) and it occurs only when they are in financial difficulties, which isn't the case in FnF.
FnF are not a restructuring story. Thus, any reference to a swap Preferreds for Commons is pointless. Their insolvency issue back in 2008 was solved under their Charters' Treasury backstop, not the SPSPA. Now they are hugely profitable companies that are building capital under a secret plan that was already carried out by the FHFA with the FHLBanks, but it turns out that the FHLBanks aren't publicly traded companies, so no one cares about secret plans with the FHLBanks.
In the case of FnF, it's a felony of stock price manipulation and breach of the Constitution's Takings Clause: they are using FnF for public use (MHA program, Communtiy Impact Pool, Neighborhood Stabilization Program, the 2017 loan reclassification from HFI to HFS was a backdoor debt forgiveness plan, etc) without a just compensation to their owners.
Please, just don't say that you didn't see it coming.
The amendment to the Bylaws on September 4,2008 is located in a 8-K SEC filing in Freddie Mac's website published at the time. Big news!
I'm glad that you have finally read the regulations governing FnF. It's been several years since I found it. I cite the 12 CFR 1237.12, which includes a) and b).
The four exceptions to the restriction on Capital Distributions is more of the same: recapitalization and reduce the obligations with the Treasury. Exceptions 2,3 and 4, as well. The public interest is not steal from private enterprises, but to have a FnF adequately capitalized.
And regarding your first post: You dodge the heart of the matter. Strike the anti-takeover statute in FMCC's bylaws. Does it fall into the FHFA's Powers? Yes or not? No, neither in its Powers nor in its Incidental Powers. So, it can't strike that staute in the bylaws. The FHFA doesn't have the duty in Conservatorship to protect the taxpayer, so it can't justify the warrant arguing that it's a collateral.
Anyway, the reality is that it was struck by the Board of Directors of FMCC one day before the Conservatorship and that's an unlawful act.
Good news that someone filed a complaint in the S.E.C., which can be used in Court if that is the case.
None of you have posted Judge Willett's best quotes in his dissenting opinion one year ago:
The FHFA couldn't have done the same 24hours later (strike an anti-takeover measure in FMCC's bylaws, the Control Share Acquisitions statute)
Nowhere is written that the Washington Federal's lawsuit challenges the warrant. Have you read all the post including the last phrase that says: "More info here"?
It's explained that what appears in the suit occurred the same day (one day before the Conservatorship) the BOD of Freddie Mac amended the bylaws without two-thirds shareholders' approval, opting out of an anti-takeover measure: Control Share Acquisitions, that would have banned the issuance of the warrant representing 79.9% of the common stock (it limits the power to 20%).
The part of the CSA statute, was denounced by Carlos in a complaint with the S.E.C.
It will help in the complaint if it's demonstrated that the BOD was coerced into approving the Conservatorship and into illegally amend the bylaws.
Do we agree that what the BOD did was illegal? Then the warrant can't be exercised pursuant to a restored CSA statute in the bylaws.
We want the CSA statute back. If the warrant can't be exercised, it's good news for the common stocks. NO DILUTION.
The Warrant will NEVER be exercised.
The redacted version of a Washington Mutual's 8-month-old brief was filed yesterday highlighting that the Board of Directors of Freddie Mac was coerced into accepting the Conservatorship one day before the start.
It coincides with the day the BOD approved a section in the bylaws opting out of an anti-takeover measure than would have banned the Warrant, without two-thirds shareholders' consent.
The common stocks will open sharply higher today. More info here.
Cast your vote in order to receive a monetary compensation for moral damages, here.
Take into account that every share price discounts the future earnings. At least a 10-year period. Any analyst would have stripped out the one-off effects in their earnings, after knowing that their losses were driven by the provision set aside for loan modifications, the Deferred Tax Asset valuation allowance and the dividend to Treasury. The first two are non-cash charges or accounting losses (the money doesn't exit their balance-sheets). The credit-losses were minimal back then. The dividend to Treasury would be adjusted in their earnings knowing that it's meant to pay off the obligations with the Treasury and recapitalization (another non-cash charge). So a one-off effect and a measure good for the enterprises. Also take into account that the United States officially exited recession in June 2009. So, a phony recession. With all of that, the PER valuation states that they must trade at a PER of 13 times and earnings are adjusted, which translates into a fair value of $100ps, $150ps, $170 in 2017.... $220 in December 2019. Notice that they have doubled their guarantee-fees since 2008 (from 28bp to 57bp). I've adjusted their earnings with the TCCA fees now funneled to the Treasury (10bp, they account for a whopping 11% of their net interest income) and the new company CSS.
And never forget that FnF weren't bailed out by the Government, but the Government simply complied with the bailout scheme written in their charters. So, there aren't terms of the bailout written in the SPSPA but in their Charters. And the bailout was a cheap bailout in exchange for their Public Mission. So, very different to the bailouts of the banks.
Cast your vote for a compensation for moral damages here.
In #Fanniegate you can submit your request of compensation for moral damages either if you are a common shareholder or holder of Junior Preferred Stocks. Had the Secret Plan been made public (the dividend is applied to the repayment of the obligations with the Treasury + recapitalization), they would have been trading at their fair value all along: PER 13 times for the common stocks, and discount notes at a 5% rate in the case of the JPS, discounting the time period to resume the dividend payments.
This is a very important poll.
The reason of the pop was the publication in #Fanniegate of an excerpt from the subpoena to the Treasury Department, seeking documents as of July 2008 and one of the questions submitted to Treasury asks about the existence of The Secret Plan. Response due on August 2nd.
The SPS were paid off in 2013, in the case of FMCC, and 2014, in the case of FNMA, pursuant to the exception to the restriction on capital distributions in HERA. It signals that dividends are allowed only if they are applied to the purchase of shares or ownership interest and reduce the obligations. That is, the purchase of SPS.
At the time is when the warrant should have been cancelled, as it was issued to protect the taxpayer and after the repayment of the SPS, there wasn't other exposure of the government to FnF.
The CSS is the Common Securitization Solutions, a company 50%/50% -owned by FnF, that developed the CSP. The new Housing Finance System is based on the CSP and the UMBS. Thus, huge earnings expectations.
$200ps valuation implies a 2019 PER <13 times. I have adjusted their estimated 2019 earnings with the TCCA fees nowadays funneled to the Treasury and the estimated earnings of the new company CSS, 50%/50% owned by FnF.
This is the outcome once the government announces The Secret Plan, that is, the dividend payments have been applied to the repayment of the SPS and recapitalization, pursuant to HERA and the Code of Federal Regulations.
A stock split 1 x 20 would reduce the price to $10ps. The up-listing to the NYSE is the perfect time to do the stock split when they change their ISIN code. Then, all the lawsuits are instantly meritless.
You see. I haven't used any secret sauce.
THE PLAN IS AN ULTIMATE PLAN,NOT A FRAMEWORK
We must remain 100% invested in the common stocks and sell the Preferred Stocks, because the plan is imminent as required by the 5th Circuit Court.
If you are not fully invested when it's announced, you are OUT.
How on earth thought that a judge would rule against the government in this case? The White House will unveil the Secret Plan that is the only one that upholds the law and thus, it makes all the lawsuits meritless, as the dividend was impeccably suspended.
The plan will be unveiled along with their first half earnings report, so that more billions are accounted for in the Capital ratio. It will be a final resolution and the stocks will reflect the new scenario once they trade in the NYSE right away. The initial price doesn't have to be referenced to the previous price in the OTC. New stock exchange, new ISIN code, like when we switched NYSE for OTC market. For NYSE, it's like new companies that start trading. So, FnF will announce a split 1x20 to trade around $10ps ($200 of today)
That's correct, DIVIDENDS AREN'T ALLOWED BY HERA in the section: Restriction on Capital Distributions, and there's only one exception: a dividend for the "purchase of shares or ownership interest (the SPS are Equity) that will reduce the obligations (the SPS are obligations)"
See my article here.
Later, in July 2011, the FHFA approved 4 exceptions that allow paying dividends. None of them are met with the Treasury's credit line because it increases FnF's obligations (debentures). Not even the 4th one: "in the public interest". The interest of the public is to recapitalize FnF in order to protect the taxpayer, not steal money from private companies.
Furthermore, a dividend doesn't comply with the Conservator's Power "put FnF in a sound and solvent condition" because it depletes capital.
But the first exception in the CFR, signals "to meet their risk-based capital levels", which means a dividend for their recapitalization.
By the way, the Conservator's Incidental Power: "take any action in the best interests of the enterprises and the FHFA", the White House, Kavanaugh, etc, have already said that the FHFA, as Conservator, is a private entity and not a U.S. Agency.
THE CASE OF A SWITCH JPS FOR COMMON STOCKS NOW
JPS outstanding are worth $33 billion while the Common Stocks are worth $400 billion (their estimated Market Capitalization based on a 2019 PER of 13 times)
These are fixed numbers that won't change with multiple stock offerings, as the market cap is calculated multiplying their earnings by 13 times.
How many common stocks do you want per JPS? Now you get 4 common stocks, but theoretically you should get 0.06 common stocks.
The reversal came when Black posted in Yahoo:
The escrow account is the Treasury's General Account at the Federal Reserve. $206 billion available.
I like it!
Don't you get that FnF are retaining earnings from day one? So, the day that the JPS resume the dividend payments is because FnF are Adequately Capitalized, which means that the common stocks would trade at a PER of 13 times.
But if this plan is made public, the common stocks trade at PER 13 times TODAY, while the JPS would trade as a discount note awaiting the dividends to be restored.
Reuters says "August or September". Calabria "expected it to be published in August or September."
So, August 1st.
Calabria launches a last warning to the JPS holders. 5 more years of Conservatorship means that FnF need 5 more years retaining earnings, around $140 billion together. Along with the funds owed by the Treausry so far (between $99 billion of SPS overpayments and $147 billion if we add other amounts due, like the TCCA fees) it means that there will be enough capital in 5 years' time to redeem the $33 billion worth of JPS outstanding. Two important things: If this is made public, the common stocks surge to a valuation of PER 13 times, while the JPS would trade as a discount note. Just apply a 5 yr discount rate to their par-value + the stock overhang + hedge funds' playground (around 40% off their par-value on day one). Secondly, the 5-year Conservatorship can be switched for a 5-year Capital Restoration Plan, like the one approved by the FHFA for the FHLBanks, so that FnF are freed from the Conservatorship stigma. Read #Fanniegate hashtag for more detail.
FOURTH EVIDENCE OF THE EXISTENCE OF A SECRET PLAN
The only way to terminate the Conservatorship is if FnF become financially viable, as it's laid out in a Congress' document, and that occurs when they restore their capital levels to an adequate level.
But in the covenant 5.3 of the PA the FHFA and the Treasury agree to not uphold the law seeking the termination of the Conservatorship pursuant to the Section 1367 of the SPSPA, through a recapitalization (Conservator's duty: Put FnF in a sound & solvent condition)
If someone agrees to not uphold the law, it's a felony. So, they have told a phony story publicly, with the pomp of a contract but, in truth, they are carrying out other plan, otherwise they'd face up to 10 years in prison. That's called a Secret Plan. blog updated with this evidence.
The White House has no other option but to surrender.
I already denounced it in Twitter. The SPSPA is null and void because of that. Notice that it says that they agree to not seek termination of the Conservatorship, pursuant to the FHEFSSA SEC1367, because that section includes the Conservator's Power: "Put FnF in a sound and solvent condition", which means recapitalization and paying off the obligations SPS with the Treasury.
Today I will write more about it, because it's the moment when they agreed on The Secret Plan.
The Common Stocks are the real Equity stocks.Ownership of FnF, thanks to their Voting Rights.
The Preferred Stocks are obligations that simply receive a coupon payment. Their ownership interest on FnF surges only upon Liquidation of FnF, which will never happen with a Treasury backstop written in the Charter.
The Common Stocks trade at 13 times their EPS. 13 times!!!!!!!!!!!
The Secret Plan (see PlusOneCoin above) is the only one that upholds the law in force. That's why Calabria said that all the lawsuits will be meritless once they unveil the resolution. Never ignore the laws and regulations.
The FHFA won't be sat at the negotiation table with the Government and the 5th Circuit Court, due to the declaration of being unconstitutionally structured.
In this image you see when a judge for the USDC SDNY removed on year ago the agency CFPB from any Court action arguing lack of authority to bring cases before a U.S. Court, due to being unconstitutionally structured.
So, the FHFA doesn't exist in the U.S. Legal System.
This is very good news for the Common Shareholders, because the FHFA is a Moelis' branch.
A NEGOTIATION U.S. 5TH CIRCUIT COURT AND THE WHITE HOUSE IS UNDERWAY
Calabria's dramatic and low-profile move in the 5th Circuit Court yesterday, is meant at not being left aside from the negotiations Court-Government that it's obvious they are underway. An institution that is considered unconstitutional is not recognized by the Legal System. When a judge considered the CFPB unconstitutional a few weeks earlier than the FHFA's case, he didn't allow the CFPB to become Plaintiff in another case. The Court is expected to declare the NWS illegal, which would force to unwind the SPSPA. Fanniegate can't be resolved solely by a Court's ruling, this is why it will be resolved with a negotiation between both that would have the same outcome. The FHFA is a Moelis' branch and its interests are not aligned perfectly with the interests of the American economy.
The only plan based on the Law is The Secret Plan. You can read it in the article posted above, in the PlusOneCoins section.
All roads end up in the Rule of Law. The sooner you realize it, the better.
The Government has complied with the law so far, because the law allows what is happening: a 10% and NWS dividend. What they haven't told us is that there's other section in the same law that establishes what to do with the dividend.
That section was previoulsy in the section of the Conservatorship. But HERA moved it to the section of Capital Classifications, so that it goes unnoticed.
The law allows them to lie. But there's one catch, other felonies emerge, like stock price manipulation and taking case for using FnF for public use.
Now it's different because the current deceivership can't go on forever, and it's when they had to come up with a resolution, when they have no other option than uphold the law. Other thing is that they would love to implement the Moelis Plan, but they can't.
The Plan is what is set forth in the law and regulations, don't pretend that by ignoring them, the outcome will be different.
What the law states is that the dividends are restricted, unless they are applied toward the repayment of the obligations and their recapitalization. Period.
No one cares what the Government has done with the money. If it's been spent, it'd have to be replenished.
The Courts are unaware of this plan because they cannot interpret financial wording or they are pursuing Moelis' interests.
The funds are returned to the enterprises, not to the shareholders and holders of JPS. The shareholders have suffered the opportunity cost and moral damage, and we would get a monetary compensation for that, per U.S. Code.
The rights and claims of a shareholder travel with the stocks. In finance it doesn't exist prior 2009 owners of FnF and owners as of that date.
It's not a gift but a reimbursement of the funds that have been mistakenly appropriated by a gang of politicians and a restitution of the shareholders' rights and financial interest on their property.
Article:"Fannie Mae And Freddie Mac: There's No Secret Sauce But Secret Plan"
It explains their phony Conservatorship and prospects.
Yahoo Board explains why there aren't hit pieces today.