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.
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.
The US Treasury Secretary was no boyscout. Boyscouts dont intentionally leak articles to Barron's. If the GSEs were so important - why try to nationalize them via leaks which would destabilize the markets and then try to fix the mess you caused by raising capital from massive sales of JPS. The Treasury Secretary started the ball rolling toward destabilization and it became a disaster.
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
Ralph Nader had it right. Those of us who purchased JPS thought the GSEs were properly capitalized for the road ahead - otherwise why would Paulson want retail investors to risk their hard earned money a few months before conservatorship.
Here is Naders letter:
https://nader.org/wp-content/uploads/2013/05/lew-5-18-13-11.pdf
Hi JPS
Do you think it is time to change the bird roost? Cramdown Janet and FHFA TBD should be on top?
Hi Kthomp,
Thank you for your reply and your contribution to the Board. Although you continue to paint the least favorable scenario for Common you are reasoned in your approach.
I just dont get how the UST would be justified or want to cram down the little guy common shareholders after the BO administration ripped them off for so many years. Seems like terrible precedent for future public private partnerships going forward and really bad timing in front of potentially a massive infrastructure bill. Just think what the UST govt would do to foreign investors if they can find ways to rip off their own citizens and little guys who drank the kool aid and believed what the UST Secretary said before stuffing JPS investors with $ 10 - $ 20 bn in newly issued JPS right before conservatorship. If a guy like Ralph Nader could not get traction it shows how corrupt our government and the UST is. Cramdown Janet? or Janet Cramdown?
Hi Kthomp,
Are you assuming that the UST will execute on a cramdown leaving zero value for outstanding common?
If all the value comes from the SPS - isnt that your assumption?
The Brookings Paper seems to have legs especially since Yellen was most recently with Brookings? Thoughts?
Any opinion on whether the Brookings Paper may become part of legislation sponsored by Senator Brown? If so do you think Toomey would support a complete cramdown of common?
Thanks Savy,
Isnt this a big deal? Going to trial?
Hi Glenn,
Thank you again for all your contributions to this board and behalf of all shareholders.
Do you have any insight about what is happening with the FA firms? Perhaps that is why the JPS is selling off if they feel the cap raise is not going forward?
Dont you think that SCOTUS will clear the way for more direct and derivative lawsuits under Delaware and Virginia law? How can the UST as shareholder enter into such a one sided agreement under Delaware law if they cant hide behind the APA?
Thanks for your insights.
Yes - Lets Thank President Biden and Secretary Yellen in advance for "doing the right thing" As Hindes said - Enough with the Lies and Enough with the Charade. Treasury has been lying and deceiving since March 2008 when they planted the Barrons story as a pretext for the nationalization of the GSEs. - It is time for the Administration to do the right thing. As Hindes said - Mr. President , please do the right thing
Thank you Guido. Really interesting that John Yoo also chimed in about the GSEs. Probably something to keep in the information distribution toolbox depending on how the SCOTUS case goes. Thanks again for all your support for investors!
UST Official background - time for UST and Secretary Yellen to do the right thing!
https://www.sourcewatch.org/index.php/Robert_Steel
UST sent the ex- Vice Chairman of GS the source document for a planted Barrons Article discussing the "costs and benefits of nationalization" in March of 2008. Did the shorts get a heads up? Months later - How could UST justify raising billions of dollars from retail investors, mutual funds, public pension plans and other investors after knowingly disseminating information to market participants who had incentive to short the stock of the GSE's?
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 This email was cited in the FCIC commission and has been cited in some litigation.
It is time for Secretary Yellen to do the right thing!
Yellen has the opportunity to stand up for retail investors by righting a wrong that Jacob Lew did not. Secretary Yellen - please listen to the words of Ralph Nader and do the right thing for common and JPS shareholders!
https://nader.org/wp-content/uploads/2013/05/lew-5-18-13-11.pdf
Ralph Nader had it right 8 Years ago! It is time to do the right thing!
Interesting tweets by Kaoboy. He seems to think the Sept 30 marker in the new LA is real - good thing is he thinks timing is shorts. Seems like SCOTUS damages will be the big issue for us. Wondering how much of the $ 29.5 bn requested in Collins should go to FMCC and how much to FNMA and then how much to common and JPS?. Wondering if we can expect more than $ 29.5 bn?
Wondering if we will get credit for our share of retained earnings even if warrants stay outstanding? Wondering if we are looking something like $ 10 to $ 20 as best case rather than higher levels?
Hi Robert - Appreciate all the contributions. Did you see the requested resignation of NLRCB Counsel? - more like FTC and first request since 1950.
Maybe Collins will be determinative?
https://www.msn.com/en-us/news/politics/biden-asks-for-resignation-of-nlrb-counsel-report/ar-BB1cW4vy?ocid=msedgdhp
Hi Shanon, - Thanks for mentioning the filing. Regarding the FMCC 8-K - is the Related Party discussion new?
Is there something going on because the UST has to exercise the warrants for 79.9% - arguably the UST owns more than 80% in substance. Just wondering if the Related Party discussion is new because the GSE balance sheet is quite large even for Uncle Sam.
Lambert is probably a DC swamp RINO. Sweeney has done the right thing so far but had to wait for SCOTUS. Look at the majority of the En Banc opinion in the 5th Circuit - POTUS45 appointments. Thomas is definitely conservative - we will see about the POTUS45 big 3. Roberts is definitely a RINO. New CFC judge and Chief Judge are POTUS45 appointments.
Hi Rumple - Thank you for your insights and sharing them with the Board.
Isnt the most likely remedy from SCOTUS the one you highlighted in the oral argument. Please correct if incorrect but 1. UST paid in full - SPSA = $0, 2. UST owes $ 29.5bn and 3. No future NWS?
A. If so how much of the $ 29.5 bn goes to FNMA and to FMCC common and JPS?
B. How much to the common and how much to the JPS?
C. Do JPS get unpaid divs since 2012 or could they possibly get more than that?
D. How would the UST pay the $ 29.5 bn?
E. Would the UST give up warrants to satisfy the $ 29.5 bn claim?
F. How much is the commitment fee?
G. When would the commitment fee be payable? Could it be retroactively applied?
Thanks Rumple - did not see the previous posts before responding. Hard to argue with Tim Howard - dont understand how this gets resolved but I am all for waiting for SCOTUS to decide next steps.
My assumption was that the new Amendment was intensely negotiated based off the detail and the comments that Yellen and Bidens people were advised. I assumed that the FA and Legal Advisors believed it was a credible plan. There sure will be a lot of legal and investment banking fees if things get settled and the cash is raised.
Hi Rumple - I dont see a easy way out of settlement and I would be happy with long term value in the $10 to $ 20 range with dividend income. Basically keep the stock without tax consequences for a long time and expect safe dividend income. It is the same reason I bought the JPS in 2008.
Practically what can we do? Settlement is a condition of the exit from Conservatorship except for $ 5 bn. Could we opt in to a law suit that will want to be part of that $ 5 bn? Maybe Appraisal rights under Delaware law?
For me the biggest issue is a fair resolution and that is why I hope we get a strong shareholder rights opinion from SCOTUS. I would think $ 10 to $20 with a 3% dividend would be fair and reasonable. Also - I am looking at everything from a FMCC common perspective - I owned both in 2008 but now I am just in FMCC because they were always cash flow positive through 2008 and to date and there a less shares outstanding. FNMA probably has a lot more upside but I like the dynamics of FMCC because they UST was probably overpaid more from FMCC on a per share basis. Dick Syron had a more conservative portfolio back in the day.