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Perry's case is "clean". Unlike Fairholme's.
The latter will get even messier. I have followed the whole WAMU soap opera in bankruptcy court and recall the judge decided for a middle ground discovery scope, enough to satisfy both parties.
Hopefully, Judge Sweeney will favor broad discovery and broad depositions. Berkowitz seems to know where to look and who to depose. Even then, it is almost a sure thing the government will continue to throw wrenches in the works making the process difficult, at best.
Thanks 44.
Oh.. thank YOU + 44c
and everybody here for being patient.
Beta,
donotunderstand,
no, it was not set aside. I got happy too quickly and misled others.
If 44cents is correct, and I think he is, these filings by plaintiff oppose dismissal by the government, request an oral argument to their motion, and request the Court "to enter summary judgment in favor of plaintiff to “hold unlawful and set aside the sweep amendment".
As part of this, plaintiff offers an exit/resolution in the "proposed" text. In the cross motion for summary judgment Ted Olson explains his reasons. In the memorandum (opposing the dismissal), he reaches the same conclusion but offers another set of arguments.
All this is sitting on the judge's desk. We haven't heard anything from him. He is one step behind Sweeney.
I have found this to be important.
One argument the government uses to stop the lawsuits is that “no court may take any action to restrain or affect the exercise of powers or functions of [FHFA] as a conservator or a receiver.” 12 U.S.C. § 4617(f).
Ted Olson offers a counter-argument:
Rather than accept binding circuit precedent, Treasury and FHFA grab hold of Gross’s “clearly outside” language to argue, in effect, that courts are powerless to prevent FHFA from engaging in unlawful conduct, so long as FHFA’s conduct is not too obviously unlawful. See Treasury Discovery Opp. 13-14; see also FHFA Discovery Opp. 19-20. That is not the law. Indeed, the Supreme Court recently rejected any distinction between unlawful agency conduct and conduct beyond the scope of the agency’s powers: The “power to act and how [agencies] are to act is authoritatively prescribed by Congress, so that when they act improperly, no less than when they act beyond their jurisdiction, what they do is ultra vires.”
This demolishes one important argument the government had to send us to the graveyard.
Unlike Fairholme's lawsuit which requires discovery to dig out the government/fhfa assessment of the companies future profitability/earnings projections and potential ending of conservatorship, here Perry/Ted Olson argues simply that the 3rd amendment has been illegal and needs to be vacated.
Can the judge rule partially, in 2 steps? Denying first the motion to dismiss by Treasury and FHFA. Later on, on the legality of the sweep.
All links to documents are here:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=99274595
These are the filings for Friday 21st. Read the text of the proposed order. And remember the key word is "proposed". No reason to get excited as 44cents rightly noticed. This comes from the plaintiff, not from the judge.
But, we can always dream to one day see the signature of the judge on a document like the one proposed. Just don't get carried away like I did.
Ah... got carried away :(
That's why there was no signature by the judge. Something didn't square.
IT IS FURTHER ORDERED THAT within 20 days of the date of this Order, the parties shall submit briefs with respect to what remedy is appropriate with respect to all payments made to Treasury under the Third Amendment in excess of the amounts which would have been due, as of the dates of such payments, as dividends absent the Third Amendment, and what further relief, if any, should be embodied in a Judgment to implement the terms of this Order.
IT IS FURTHER ORDERED THAT the FHFA Defendants and their officers, employees, and agents shall not implement, apply, or take any action whatsoever pursuant to the Third Amendment.
IT IS FURTHER ORDERED THAT the Treasury Defendants and their officers, employees, and agents shall not implement, apply, or take any action whatsoever pursuant to the Third Amendment.
The Third Amendment, including its provisions that sweep the full amount of the Companies’ net worth to Treasury, that prevent redemption of the Government Preferred Stock, and that accelerate the Companies’ dissolution, is hereby VACATED and SET ASIDE.
Judge Royce C Lamberth - Friday 21st
Memorandum in opposition to re32 MOTION to Dismiss All Claims and, in the Alternative, for Summary Judgment as to Plaintiffs Arbitrary and Capricious Claims and Memorandum in Support MOTION for Summary Judgment,31 MOTION to Dismiss or, in the Alternative, for Summary Judgment MOTION for Summary Judgment filed by PERRY CAPITAL LLC.(Olson, Theodore)
Text of Proposed Order
Declaration of Michael C. Neus
Declaration of Eugene G. Ballard
Declaration of Bruce R. Berkowitz
Declaration of Sean Beatty
Cross MOTION for Summary Judgment on Administrative Procedure Act Claims by PERRY CAPITAL LLC(Olson, Theodore)
Text of Proposed Order
Declaration of Michael C. Neus
Declaration of Eugene G. Ballard
Declaration of Bruce R. Berkowitz
Declaration of Sean Beatty
"... the Court is of the opinion that Plaintiffs are entitled to judgment as a matter of law on their claims that the Third Amendment to Preferred Stock Purchase Agreements executed by Defendants Department of the Treasury and the Federal Housing Finance Agency, on behalf of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (collectively, the “Companies”), on August 17, 2012, is not in accordance with the Housing and Economic Recovery Act of 2008, 12 U.S.C. §§ 1455, 1719, 4617, within the meaning of 5 U.S.C. § 706(2)(C); and that Defendants acted arbitrarily and capriciously within the meaning of 5 U.S.C. § 706(2)(A) by executing the Third Amendment."
Another victory!
In the last 'bipartisan' conference she referred to the GSEs as government owned companies stating many times 'we could do this' 'we could do that' 'because government has control' and blah blah. It is pathetic to see someone with her background not understanding the minutiae whereby the government doesn't own anything at this point. Just some rights to shares. Not to mention the Srs. have no voting power and the only relationship between the companies and the Treasury is through a contract agreed to with their conservator.
Leftish have the strongest dislike of the word "profits". They can never acknowledge them.
I agree with some aspects of that article but not with others. After this piece, he wrote one last article stating how he will BOHICA the shorts. It sounded like a mad pumper from yahoo boards lol.
I just think he was trying too hard before the crash.
Where is Bove?
He disappeared after the crash. After spewing pumping articles twice a day with unrealistic price targets for the common. Is he in Ackman's payroll?
taint, your opinion of Watt may not be that bad for the Jrs.
When will hedge funds sue Mel Watt?
He must be next in line if he doesn't "preserve and conserve" the companies assets based on the continuation of the 3rd. He could clearly find reasons to ask Treasury to go back to the board and renegotiate the PSPAs. He could even suggest Treasury that were it not for the sweep the companies could capitalize and be on their way out of conservatorship, aligning the FHFA with its mandate as conservator. Mel Watt has the same responsibility as DeMarco had. By going along with the 3rd he is also breaking the law.
Well, this will be deleted as the rest of the out of topic messages. But for this message brief existence, I agree with you.
"I had Mark Warner and Bob Corker on this"
lol Thanks for the link letgo. Awesome video. "Buy as many shares before we release them"
"The criminally inept Treasury Secretary"
http://www.ritholtz.com/blog/2010/07/hank-paulson-blame-it-on-housing/
It's an old article from 2010. Just found it looking for an answer to taint's question. Funny how Ritholtz calls him.
His 08' official statement:
"... This commitment will eliminate any mandatory triggering of receivership and will ensure that the conserved entities have the ability to fulfill their financial obligations. It is more efficient than a one-time equity injection, because it will be used only as needed and on terms that Treasury has set. With this agreement, Treasury receives senior preferred equity shares and warrants that protect taxpayers. Additionally, under the terms of the agreement, common and preferred shareholders bear losses ahead of the new government senior preferred shares. "
Conservatorship is the line in the sand. There is a before and an after. The recovery of funds that happened during conservatorship is for the only existing shareholder: the conservator. FHFA as conservator succeeded all rights, including the one to litigate and recover funds.
An investment in a MLP could lose value. Whereas that same capital in FF Jrs. -if dividends are ever restored and shares become money good- will be tier 1 rock solid.
And I don't believe c-ship is the critical issue for our dividends.
The real issue is Treasury's funding commitment that is keeping the companies afloat as they don't have real capital and are being denied recapitalization. It is this funding commitment that needs to end. Right now this funding commitment takes the place of *their* capital. Declaring it "no more" will signal the possibility of recap.
1. Taxpayers need to be declared as paid off.
2. Funding commitment finished.
3. Reversing yearly wind down of networth.
All this can happen while in c-ship. And #2 will open the doors for the companies to rebuild their own capital.
excess capital?
What do you mean? Dividends come out of profits. They are a portion of the earnings passed unto shareholders. It has nothing to do with capital or excess capital. Plus, how do you know what the board of directors may decide once/if c-ship ends and the companies are returned to shareholders? Who knows what threshold must be reached before they ok a distribution? Dividends are decided upon. And what is in the mix of that decision nobody knows.
Choco, you forget one fine detail...
The PSPAs have been set up so that there is no repayment. These are not sincere words from the Treasury. All the spokesman is trying to do is put out a formidable pr fire.
We know there's been no loans, no lending and no repayment structure. It has never been about that.
Hopefully, this will force their hands into a 4th amendment.
I like your optimism!
I think firemen don't step on each other's hoses... but who knows.
The best summary of the issues at hand. Thanks!
The monoline insurer idea for FF is Millstein's. This proposed bill is another indication winds are changing.
Looks like a nice little company :)
What would the motivation for Watt to end the conservatorship? As it is, he is in the shoes of shareholders, management and the BOD. *He* is the GSEs. If it only comes to politics now or soon -and I agree- Watt may continue the conservatorship under some excuse.
We could still be paid our dividends though. The right thing to do if the funding commitment is terminated.
Re: Eric Stein. His line of thinking of a mutual ownership resembles one of the Treasury's original proposals: the co-op. There may or may not be a threat here for us where banks become the preferred co-op partners and lobby to push out shareholders (wipe out without compensation). But then, Fannie and Freddie could also become part of a co-op and remain in existence in some form. Watt's moves and preferences are going to be key.