Thanks Rumple,

Perhaps we are talking about the degree of give and take. Tim P to my understanding owns both common and JPS and so does Ackman - I would expect him to advocate for his book which is probably mostly JPS. That being said I dont know where we would be without the Collins plaintiffs and all the other JPS focused plaintiffs including Kaoboy.

Tim P said he thought that the plaintiffs had spent over $ 100 million already which I think we are lucky to possibly benefit from. The SCOTUS case which we all are hanging our hat on is primarily because of the JPS centric plaintiffs - correct.

It is my understanding that Glenn switched from common to JPS but personally I think he should be thanked mostly. There have been some times when I thought he piled on the common but overall I think he is owed a big thank you.

We also owe a thank you to YOU and all the other common stock warriors.

Finally, I would also want to say I will probably sign off for a while and wish everyone on this Board the best of luck and health. I am probably to fixated on this and owe my other interests more attention. GLTA!!

Thanks Rumple,

First regarding whether or not a fund manager should advocate as a shareholder to get the best return for their investors - I would say absolutely Yes!!. This is still a country where it is good to do a job well and make money doing it.

Just think if the American Funds CIO would have been advocating all of these years we may be in a very different place. They manage a lot of 529 plans and there are a lot of kids who could pay for more college if they did advocate as a GSE shareholder.

Regarding Glenn - He has made a gigantic contribution to the cause and seems to be very transparent about his personal investment.

I am probably naive but fortunately or unfortunately I probably would not have held on to my GSE stock for so long if I was not. I think I understand your viewpoints but intuitively I think it is important to be fair and not unnecessarily malign co-investors with different perspectives but a common goal

Thanks for the reply Kthomp

Lets hope SCOTUS completely invalidates the SPS. If they dont - it goes against fundamental fairness that the UST could plant an internal memo that discusses nationalization and wiping out private shareholders in March of 2008 and then use the powers bestowed by a Conservatorship which may have been unnecessary if the UST officials acted ethically.

https://arc.fiscal.treasury.gov/files/pdf/Treasury-Ethics-Handbook.pdf

It seems clear that any sharing of internal UST analysis should not be disseminated outside of the UST and if there is a potential rational reason to do so they should have sought approval from internal ethics and legal departments. We do not know if this internal approval was obtained but if it wasnt then the UST emails disclosed in the FCIC documents show likely malfeasance and breach of ethics.

Under Delaware Law - Can controlling shareholders be enjoined from exercising contractual rights obtained by past unethical or illegal acts?

Doesn't the internal UST memo discussing Nationalization that was planted most likely unethically in the marketplace show the intent for a unconstitutional taking and the price of the stock at the time of the public offering the basis for determining the value of the property unconstitutionally confiscated by the taking?

Thanks for sharing your perspective Kthomp

You are right Glenn - Tim P has been one of the most important advocates for GSE shareholders - he does not deserve to be maligned. You dont deserve to be maligned either - you have done a great service by sharing information and advocating for shareholders. Thank You!

Great Point Guido - You are right. Why did he let any capital go to UST especially since he believes the purpose of the GSEs is to be a countercyclical balance for the housing market. Great point - something he should answer for if and when he is replaced.

Hi Guido,

Thanks for sharing the link. The big takeaway that I heard was that he sees the GSEs primary purpose as countercyclical which is to provide stability to the housing markets when depository institutions can not.
He actually mentioned Berkshire Hathaway as a good example of an institution that has accomplished this.

He seems to relish his role and track record as a prudent regulator which may mean that he would be and advocate for disciplined risk taking and an urgent need for proper capitalization of the GSEs. Perhaps he will be a stronger advocate for recap and release outside the FHFA than in it?

I wonder what he thinks about the actions of the US Treasury during March 2008 and during the NWS? I wonder how he could justify a cramdown of private shareholders now given his past statements at CATO if he is no longer restrained by his role at the FHFA?

Thanks LuLeVan,

Do you think the UST could be enjoined from implementing a cramdown if the SPS is still in place after SCOTUS?

Looking at UST ethics:

https://arc.fiscal.treasury.gov/files/pdf/Treasury-Ethics-Handbook.pdf

It looks like it was a clear violations of Ethics when they sent the confidential information to Barrons in March of 2008. The same UST official who the email was address to was actually chosen to be the new CEO of Wachovia before he resigned his position at UST. I am assuming the FDIC signed off on this. The the then head of the FDIC is now our Chairperson for our BOD.

How can they justify issuing shares at $ 27.50 underwritten by the UST officials old employer just 60 days after the Barrons planted article and now cram down public shareholders?

Hi Kthomp,

I dont understand why you dont think the GSE have been nationalized and that it was the intent of UST to nationalize them.

The Investopedia definition of Nationalization : Nationalization is the process of taking privately-controlled companies, industries or assets and putting them of the control of the government.

On March 8, 2008 - the UST Memo cover email said: "I send it only to help inform potential internal Treasury discussions about the potential costs and benefits of nationalization" It didnt say conservatorship or reorganization or restructuring or bail out but "nationalization"

On July 30, 2008 HERA was enacted based partly or wholy on market instability promoted by the rumors surrounding the Barrons article and its aftermath

On September 6, 2008 - the Conservatorship was imposed on the GSEs giving complete control over the entirety of their enterprises

In August 2012 the Net Worth Sweep was implemented giving all profits to the UST for perpetuity.

You still dont think this fits the definition of a Nationalization?

Perhaps the UST should be enjoined from exercising any rights with the SPS because the do not have "clean hands" under the general principals of Equity.

They definitely contributed to the crisis in the MBS market that was the pretext for Conservatorship by their conversations with MBS market participants and the plant of the Barrons article which was the pretext for nationalization and HERA on March 8, 2008.

It is a open question whether Bear Stearns or Wachovia would have had to be bailed out if it was not for the industry conversations and the Barron's plant the week before Bear failed.

Would the sale of the common and JPS been completed if the market knew UST was advocating a nationalization and had planted the Barron's article?

Would Sheila Bair allowed the UST official who was intimately involved in the nationalization efforts become Chairman of Wachovia if she knew about the Barrons plant and UST memo?

Hi Viking,

As you said, it seems like the claim would have to be derivative and most likely litigated in the Court of Federal Claims?

FNMA stock was sold at $ 27.50 per share on May 8, 2008 and the dividend policy at that time was $ 0.25 per quarter or $ 1.00 per year. The assumption for purchasing shareholders who thought they were part of a viable recapitalization of FNMA was a stock price of $27.50 or higher and income of $ 1 per share. Today that would be worth $ 40.50 in value plus reinvestment income. This would be approximately $47 bn in value which could be used to partially offset the required capital under the capital rule.

I would hope that Sheila Bair who was the head of the FDIC when the capital raise occurred and now is the Chairman of our BOD would concur that this is fair given the actions of the UST prior to the capital raise. If the investors knew that the UST was advocating a nationalization among MBS market participants, the stock offering and related JPS sales would not have been completed.

Hi Kthomp,

Check out this timeline in a March 31, 2008 Fortune article.

https://archive.fortune.com/2008/03/28/magazines/fortune/boyd_bear.fortune/index.htm

It was clear there were rumors swirling in the MBS marketplace before the March 8 Barrons plant. Why would UST add to the turmoil during this time period if they did not want to cause a nationalization?

Why not just agree to a massive LOC for some type of equity negotiated with the BODs of the GSE?

Hi Kthomp,

Here is the link to the " Good to see you this week." email from the CEO of Annaly Mortgage to UST suggesting several recap and restructure ideas for US Treasury.

http://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-06_Treasury_Email_from_Michael_AJ_Farrell_to_Robert_Steel.pdf

If the UST did not want to nationalize why plant the Barrons story just two days later and after discussing a recap idea with a major MBS participant?

Hi Kthomp,

Thanks for the reply. Try the link now.

What doesnt make sense is why UST would plant the article unless they wanted to cause a crisis that would lead to the nationalization of the GSEs.

The FCIC public record shows an email from the CEO of Annaly Mortgage on March 6, 2008 - two days before the Barrons plant. In this March 6 email the Annaly CEO thanks the UST for the meeting which happened that same week suggesting a way forward with a recap of the GSEs but rather than move forward with a recap they planted the Barrons article on March 8 and then Bear Stearns failed the next week.

It is crazy but why did the UST let the GSEs sell more common stock and JPS just 60 days after the Barrons plant. FNMA sold over two billion of common and two tranches of JPS. The common was sold at $27.50 per share whereas Treasury leaks a memo suggesting the common was going to get wiped out. Didnt Treasury have a fiduciary or ethical duty to disclose that they planted the story with Barrons before the public capital raise? Especially since the Secretary's old employer was one of the Underwriters?

What was the pretext for HERA? Didnt the Treasury Secretary have an ethical duty to disclose that they had planted a story which led to market instability with the GSE stock? Furthermore didnt the Treasury Secretary have an ethical duty to let Congress know that if they did pass HERA it would be easier to put the GSEs into Conservtorship? I am not sure what Statements were made by Treasury but dont you think the fact that the UST planted a story with Barron's leading to market instability is a material fact that should have been disclosed to Congress?

Hi Kthomp,

What do you think Mr. Thomas meant when he said "..inform potential internal Treasury discussions about the potential costs and benefits of nationalization>" if he did not mean that Treasury wanted to Nationalize the GSEs and that is the reason they planted to Barron's article a week before Bear Stearns failed?

Are you aware of this email?

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

Sorry the first email was March 6th

https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-06_Treasury_Email_from_Michael_AJ_Farrell_to_Robert_Steel.pdf

" Good to see you this week" Meaning the week of March 3, 2008 or the week before the failure of Bear Stearns.

The guy copied on the email followed his boss to Wachovia and a private equity firm before becoming the President of a private liberal arts college in Holland Michigan. This guy also was a co-author of an article blaming the collapse of the GSEs on bad management not mentioning the role of the UST in the fiasco.

Hi Trunk,

It is striking that the DOJ is taking this position after the UST clearly wanted to nationalize the GSEs and wipe out the public shareholders as early as March 2008. Not only did they force the Conservatorship of the GSEs they also destroyed much of the financial industry along the way.

Check out this time line in a Fortune Article from March 31, 2008 regarding the time line for Bear Stearns.

https://archive.fortune.com/2008/03/28/magazines/fortune/boyd_bear.fortune/index.htm

On March 7, 2008 the UST receives an email from one of the largest MBS investors thanking the UST official for discussing the fate of the GSEs with him. It is clear that the UST was discussing the fate of the GSEs prior to the March 8, 2008 email.
On March 8, 2008 the email is sent regarding the plant of the Barrons article to be published that weekend. The article discusses rumors spreading on the same day.
On May 8 - FNMA stock was sold to the public for $ 27.50 per share. There has to be people in the financial community who knew what the UST position was and also knew about the deliberate plan of the UST to nationalize the GSEs and wipe out shareholder value dont you think?

Wow! What arrogance! They could have said

Dear SCOTUS

We want to confirm that the US Government position has not materially changed in light of the most recent changes to the SPSA. We do not believe that the changes would make the current case before the case Moot thereby request that you render your opinion in due course.

Respectful and germane - in stead

We have ripped off shareholders - we think we are clever in how we rip of shareholders - we intend to rip off shareholders for a long, long time.

Your comrades at the DOJ.

Thank You Robert! Really interesting to read all of this again especially since we are in a new administration. On remand the 5th Circuit should award a judgement to the plaintiffs. It is really possible that the Conservatorship can survive with judgements against the UST outstanding?

You are right Chessmaster. As Trunk mentioned the important point is that FNMA issued $2.25 bn of common stock and another $ 4 bn plus of JPS in May which is 60 days after the UST Barrons article plant on March 8, 2008

Here is the Offering Circular which also details the par value issue you discussed.

https://www.fanniemae.com/media/26181/display

Stock was issued at $ 27.50 60 days after UST sent the basis for "nationalization". What is $ 27.50 plus loss dividends since 2008 worth per share?

Look at the Underwriting Syndicate - wonder if anyone at one of these firms knew that UST wanted to nationalize and wipe out the value of shareholders who were purchasing the shares issued on this Offering?

Interesting discussion by Sen Warner at Banking Committee regarding his proposal for new first generation buyer 20 year mortgage proposal. Since 20 year mortgage payments include more principal but are larger overall - Warner is suggesting the US Govt subsidizes the interest rate to make the overall payment equal to a 30 year payment which will allow significantly more equity to be accrued by the first generation buyer.

Prob a FHA program? Maybe a point to compromise for GSE reform?

Demarco agreed with Toomey that the time is now for reform to minimize systemic risk - probably a point which is consistent with public comments by Yellen and Powell

Rounds brought up the punitive treatment of CRT in new FHFA Cap rules - all seemed to agree they were to onerous as implemented.

Rumple - Thanks for the thoughtful response. Yes - I think you are right thinking about it - I remember I wanted to discount some of the WSJ reporting which turned out to be more right than wrong.

Wonder if Kudlow or Maria will take the banner up for the cause of the shareholder at some point. I would think POTUS45 could help to point out the greed of the swamp and it this case on part of the RINOs who traverse the halls of the UST.

Hi Louie,

Maybe Senator Toomey read Tim Howard's Amicus brief and thinks that some of the law clerks for the SCOTUS majority read the briefs and the emails also.

The only material item that Howard left out was how Hank allowed the Underwriters to sell FNMA common for $ 27.50 and get a AA- minus FNMAT which was issued at $25. This was 60 days after the Barrons plant by UST. Kind of hard to believe the underwriting syndicate would have gone forward with the Offerings or the rating agencies giving an AA- rating on the JPS if they knew UST was intentionally leaking docs justifying a nationalization of the GSE's.

Hank had a clear objective and that was to nationalize the GSEs. He also got rid of two Wall Street banks along the way which was not so bad of an outcome for his alma matter.

https://www.supremecourt.gov/DocketPDF/19/19-422/154595/20200922104336414_Amicus%20Brief%20of%20Timothy%20Howard%20for%20Filing.pdf

Hi Rumple,

Are you assuming that the alleged conversation between McNuchin and POTUS45 is not true?

The reason I ask is that maybe at some point POTUS45 might become interested in our cause?

Hank was and probably always was a RINO and the UST intentionally tried to nationalize the GSEs and brought down Bear and Lehman as collateral damage along with the GSEs by planting articles and making assumptions that turned out to be very wrong. Dont you think POTUS45 would be against this type of US Govt corruption especially since he no longer has to be responsible for UST policy?

Perhaps nothing happens until SCOTUS rules but at some point the UST has to be held accountable for the wrong acts or NOT. Since many in the UST are no fans of POTUS45 because they make money from the swamp - maybe this becomes an issue?

Just found it. It all seems to be legit documents and very concerning. I hope this stuff is not going on now regarding issues like Game Stop. We need to have fair dealing in our markets. The Barrons Memo should have been disclosed to the Underwriters and Rating Agencies before the public capital was raised.

Thanks Robert

While the statute of limitations may have ran regarding any investigations I would think FNMA could get restitution for all the shareholder money raised after the UST March 8, 2008 Memo. I think it was over $ 6bn -just for FNMA. Shareholders should get that back with interest!! Think of how that $ 6bn could have been returned to shareholders via dividends all these years.

There are a lot of interesting documents prior to Conservatorship that perhaps will lead to a fair resolution for shareholders. Basically GSE Management was negotiating the terms for a capital raise but UST just decided to go for a nationalization and planted the Barrons story with the publishers of the WSJ.

March 8, 2008 UST Memo
March 10, 2008 Barron's Story
March 14, 2008 Bear Stearns Fails

Wonder if UST expected BS to fail within a week of the planted document?

Hi Robert,

In case anyone is interested - here is the list of public available documents released from the FCIC Commission hearings:

https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/
Some interesting notations around the March 8, 2008 UST Memo including a draft Statement By OFHEO that the GSEs were adequately capitalized.

For anyone interested there is a Resource Library hosted by Stanford -
fcic.law.stanford.edu/resource

For example you can search Daniel Mudd but it seems that the doc list is more interesting because there are emails that are listed that do not come up in the Daniel Mudd search. The docs appear to be in chronological order and much of the Commissions work was done after 2008.

I wonder when the FNMA BOD became aware of the Barron's leak - before or after their "heads hit the ground"?

Hi Kthomp

Thanks again for sharing your perspectives

Regarding the relevance for acts committed prior to 2008 - arent these acts material if SCOTUS allows derivative suits and if the UST looses in the Court of Claims? Wouldn't the damage award go to the GSEs minus well deserved legal fees. Derivative damages would increase the net equity of the GSEs - wouldnt they?

Some of us were investors in FNMAT and owned common going into Conservatorship but I think all GSE investors would benefit from the righting or a moral wrong via a derivate suit judgement or settlement?
Do you agree or disagree?

Thanks again Wise Man

Ralph Nader sent a letter to UST Jacob Lew in 2013 well before the UST Barron's Memo was disclosed. He sets out multiple representations by US Govt officials including the UST Secretary why it was prudent to invest in the GSEs prior to imposition of the Conservatorship.

Here is the link to Mr. Nader's Letter

https://nader.org/wp-content/uploads/2013/05/lew-5-18-13-11.pdf

Hopefully Secretary Yellen will take Mr. Nader's arguments for fairness to heart especially in light of the UST actions during early 2008.

Thanks for the citations Wise Man.

I purchased shares of FNMAT at $ 25 per share from a May 2008 offering just two months after this Memo was written within the UST. The shares were rated AA-.

Here is the link to the offering:

https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/stock-info/series_T_05152008.pdf

FNMA also issued 94.3 million shares of common at $ 27.50 per share and another issue of 8.75 Mandatory Preferred Stock at $ 50 per share. All together well over $ 6 bn of public capital after the intentional leak by UST to Barrons.

Obviously the Rating Agencies were not aware of the nationalization talk by UST just two months prior.

Hi Guido,

Thanks again for all your efforts on behalf of shareholders.

Here is a Reuters link regarding the UST official that received the Memo regarding the March 2008 Barron's article.

It looks like he resigned from UST after getting the Wachovia job.

https://www.reuters.com/article/us-usa-treasury-steel/treasurys-steel-quits-his-post-idUSN0938317520080709

There is a lot here including a part of Cramer's Wall of Shame. Lots and lots here.

My hope is that Secretary Yellen goes out of her way to make sure current shareholders are treated fairly. Clearly UST was wrong in their financial assessment of the GSEs in March 2008 and clearly there were alarming ethical breaches by senior UST officials if one gives the UST the benefit of the doubt. A reasonable analysis could easily come up with scenarios of egregious self dealing and worse.

There is no reasonable basis to impugn our quest for compensation for the wrong done by the UST and for fair dealing and transparency which are the cornerstone of our financial markets.

YES!!! Thank you so much - I wish the best of success!! Thank you so much for standing up for what is right and just!!..

Sorry again about the link. Not sure why it does not work

Here is a article from the Citizen Guide to Wall Street. Maybe this link works. Wall Street Parade May 25, 2016 " Confidential" Memo in the Hedge Fund Battle for Freddie and Fannie Comes Out.

https://wallstreetonparade.com/2016/05/confidential-memo-in-the-hedge-fund-battle-for-freddie-and-fannie-comes-out-of-hiding/

Hi Guido

Sorry for the bad link.

Here is the cite for the document that came out of the Financial Crisis Inquiry Commission Hearings It looks like the records were released in 2016. The Hearings were in 2009.

Here is the excerpt of an internal UST Memo a few months before billions of dollars of Junior Preferred were sold to the public

March 8, 2008
"This is for your eyes only. I send it only to help inform potential internal Treasury discussions about the potential costs and benefits of nationalization."

https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document

Check out the conclusion on Page 12

"As shareholder capital gets wiped, the government will have no choice but to seize the company and place it in conservatorship or receivership."

A few months after this Memo - billions were raised from public preferred investors and then in July the UST official receiving this email resigned after being appointed the CEO of Wachovia.

This is what happened at the Treasury Department of the United States of America according to public information

Hi Guido,

Thanks for all your posts -

Doesnt the plant of the Barron's article by the UST make the whole campaign against the GSE's much more intentional and shocking given the fact that the same UST stuffed retail investors only a few months later?

" I send it only to help inform potential internal Treasury discussions about the potential costs and benefits of nationalization" This was sent March 8, 2008 - almost 13 years to the date.

https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document

Thanks Trunk

I agree with you about how heart wrenching this process has been. The SCOTUS ruling will mean a lot more to me than just the chance to get my money back on the FNMAT I bought in 2008 before the Conservatorship. The crooks in Washington seem to be an endless parade from both sides of the aisle.

Hi Robert,

Perhaps this is good news from a timing perspective? Sherwood may only have two years to get something done that he has waited a long time for. Probably cant afford to wait for the litigation to make its way through the courts so they will need to settle?

Many Thanks Bryndon for standing up for the little guy! Maybe you can succeed where Ralph Nader could not.

You are right pocket. We are just hoping Yellen does not continue to play politics. SCOTUS has to deem the SPS paid and award the $ 30 bn - this will force a settlement.

Thanks for your perspective Pocket:

The best thing that the current UST Secretary can do is settle as fast as possible after the SCOTUS ruling and start raising capital. UST 10 year rates have doubled in the last few months and the last thing we need is to loose the opportunity to properly capitalize the GSEs while rates are low in order to cram down innocent common shareholders who were screwed by every UST Secretary before her.

If rates start climbing and inflation comes back without settling the GSE mess created by the UST then we all are in trouble.

The GSEs definitely made mistakes but Freddie was cash flow positive through everything. Fannie got stuffed by Countrywide because everyone wanted Fannie to purchase garbage. The red ink was accounting adjustments - as I said Freddie's cash earnings were always greater than expenses and realized losses - this is why they came back so massively - the accounting adjustments were intentionally puntitive. The were obviously wrong in that they were built on estimates that clearly and abundantly were proven wrong in a few years.