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Glenn, What is the significance of this post on your website?
https://www.glenbradford.com/2023/10/miracle-1/
Hi Robert,
I think it is interesting that the Mr. Market has treated the 5th Circuit Panel Decision which was released on Oct 12th as a non- event or perhaps supportive. Perhaps Mr. Market is just waiting for the En Banc.
What I thought was interesting was the fact that the Panel opened the way for a future Constitutional Challenge which can not be barred by the anti-injunction provisions of HERA and it disagreed with the Bhatti District Court decision based on its interpretation of the SCOTUS Collins decision. I am thinking there could be a MQD Challenge regarding
the affordable housing initiatives such as those mentioned in the Haggerty Letter to the FHFA or a Takings Challenge by Common if the cramdown occurs?
Here is an excerpt on Page 14:
This analysis is buttressed by the nature of the majority opinion in
Collins. The plaintiffs brought both statutory and constitutional challenges
to the third amendment. See id. at 1775. The majority dedicated nearly four
pages to explaining why § 4617(f) barred plaintiffs’ statutory challenge to the
third amendment. See id. at 1776–79. Yet the opinion did not mention
§ 4617(f) when discussing whether plaintiffs could show that the unconsti
tutional removal restriction caused them harm. See id. at 1787–89. If
§ 4617(f) barred consideration of constitutional claims, one would expect the
opinion would have noted that. It would be strange for Collins to leave open
the possibility of retrospective relief based on an unconstitutional removal
restriction, give examples of when such relief would be available, and remand
the case for resolution of that issue if the entire question was outside our
ability to review.
Therefore, § 4617(f) does not bar count I of the amended complaint
seeking relief directly under the Constitution, and we may finally proceed to
the merits of plaintiffs’ contention that HERA’s unconstitutional removal
provision caused compensable harm.
https://www.glenbradford.com/2023/10/collins-v-fhfa-3/
It should be noted that the Collins 5th Circuit Decision was released on Thursday Oct 12 when the common rallied. Mr. Market knew the decision during trading on Thursday and by the open on Friday. I have not spent enough time looking at the decision, but it looks like they did a reasoned analysis under the new CFSA precedent for the 5th Circuit - maybe this decision could be used to challenge a UST cramdown going forward. The removal remedy seems dead for Collins and Bhatti but the Appropriations remedy may have life in the 5th but with one of the 9 needed Judges saying it was barred in this decision what would make him change his mind En Banc?
Robert and others do you have thoughts? Bottom line is that the market knew the decision by Friday open.
Good For You Navy - looks awesome!
Hi Guido and Ace Trader
For what it is worth I think this is a definite negative because the Opinion was written by one of the Judges we need for a favorable En Banc. Bhatti may be toast after this also. It was a bad panel selection for Plaintiffs and it was a bad selection at the Circuit also on Remand.
Others may have different opinions- it would seem that we need the 5th to take the En Banc on the Appropriations Clause because the Removal Clause remedy seems dead.
Just saw this 5bagger - thanks. Dec 31 is good because if there is going to be a political push on affordability we will start seeing it before the Final Rule comes out.
Thanks Navy:
Final Rule For Enterprise Regulatory Capital Framework should be out by December 31, 2023 From Page 15 of FHFA Report. Expectations 2.5%?
1.3.3 Issue a final rule enhancing the
Enterprise Regulatory Capital
Framework (ERCF) December 31, 2023
Hi Skeptic7 - you sure seem like you are afraid to be happy for GSE Shareholders. Maybe some therapy is needed?
It would seem like a good appeal especially since the previous trial was 4/4 - 1.5 juries have found for shareholders. 5. has found against.
Like JNO -WaY?
Is there an organized media blackout on the GSEs?
Thanks Guido - I looked at the report just a cursory mention of $ 421 bn with no basis for the amount. Where does this amount come from?
Hi No Name - Rodney is taking the same position as the CBO - you will probably say that we should trust a poster with No Name and no position in the GSEs rather than the CBO? We are on the CBO 5 year plan - this is the excerpt from the CBO Restructuring Paper:
https://www.cbo.gov/publication/56511
CBO’s Analysis of Options to Recapitalize the GSEs
CBO examined two hypothetical options for recapitalizing Fannie Mae and Freddie Mac through administrative actions by FHFA and the Treasury rather than through legislation. Under the options, the GSEs would keep all of their profits for an initial period—either three or five years—to build up capital. After that, they would try to raise enough funds to complete their recapitalization by selling common stock to investors. The GSEs would use any proceeds left over from the common-stock sale to repurchase (redeem) previously issued senior preferred shares held by the Treasury and junior preferred shares held by investors.4
CBO’s analysis focuses on key outcomes of recapitalization, including the following:
The effects on cash flows to the Treasury from eliminating or redeeming some or all of its liquidation preference in the GSEs (the amount of money the Treasury is eligible to receive before more junior investors are paid);
The size of the payments to and from investors as a part of recapitalization; and
The legal and financial considerations of recapitalizing the GSEs through the sale of new common stock during conservatorship or through other approaches, such as receivership. (In receivership, FHFA or a designated agent would restructure the GSEs by liquidating some or all of their assets or transferring those assets to other entities, including the Treasury and existing shareholders.)
To analyze the options, CBO had to make projections about various factors related to recapitalization, such as FHFA’s final capital requirements for the GSEs, the growth rate of their earnings, and how potential shareholders would estimate the value of the GSEs. In its analysis, CBO created multiple scenarios using different combinations of estimates for those factors.
So - No Name do you think we should trust you or the CBO and TH?
You are right Louie Louie - nothing done on a long term solution for affordable housing. Why wasnt anything proposed when JB controlled the House and Senate? Here we are going into the 4th year of another Admin and people can not afford to purchase a house to live in while the cost of rent and transportation increases.
Lets see Bernstein can get the Magic Beans? Dont you think we have to have a revised capital rule first even to start the trade for the Magic Beans? Any idea about when the new Capital Rule could come out - TH said that the Comment Period for the revised Capital Rule closed on the same day as the Lamberth jury decision.
Thanks Skeptic7 - you probably know better than me on that one. It is really kind of mindboggling incompetence at first glance. At this point I dont think it is fair to judge Jared Bernstein - Deese sure didnt do anything on housing. Maybe Donot has an opinion? He seems to think anything JB touches is golden.
Thanks LuLeVan - Dont you think Bernstein and Parrot and the rest of the Affordable Housing crowd will have to make a decision?
Maybe we should ask Donot - but do you think JB cares if it is Constitutional or if the GOP House objects - dont you think JB will just take the money if he is told to do so?
And there is a 50/50 chance that the Big Bad Wolf could get the keys to the chicken house on Jan 2025. It would make sense to take trade the eggs for some magic beans sometime before Nov 2024. A sure thing vs a 50/50 chance on a deal that may not get any better.
Thank you Fannie Heyyyyy for your points and the open discussion.
Yes - Do you mean Bryndon! He is kind of awesome isnt he?
Hamish Hume keeps on fighting for the shareholders!
Hi Fannie Heyyyy - Low chance rather than No Chance. The FHFA could release the GSEs if POTUS directed the FHFA and UST to do so. With the JB Admin - it really is a political calculation and a long term policy consideration. Would a release be a net political positive for the 2024 election? Do the affordable housing advocates like Parrot and Bernstein want to risk loosing control of the GSEs to implement the Utility Model from a long term policy point of view. If DJT wins the Utility Money and a lot of the affordable housing initiatives go away. Does Sherrod Brown get reelected? Will Brown's legacy be a lost opportunity to restructure the GSEs in the Utility Model framework?
Hi Glenn,
The correct order is :
1. Dilution necessary for Capital Raise
2. Warrants
3. SPSA
All the policy discussions are what is the required ROI for private capital and what are the different ROIs necessary for a Utility Model or the return to the historical model for the GSEs.
Do you know when we should expect the new FHFA Capital Rule to be released. As TH mentioned this will be very important and the GSEs will be close to meeting a 2.5% capital ratio in the next few years. What did he say about the amount of new capital needed- maybe less than $ 50 bn even in the next couple of years?
JPS are generally trading at 8% of Par or a 12.5 times upside. Dont you think the market has this figured out and the potential return for common is greater than 12.5 times?
Thanks Navy and Guido - The Senate Banking Committee Letter from Senator Hagerty signed by all the GOP Members and this Bill in the House are great developments on the political front.
Wow! We all should be making contributions and thanking him for the Bill, He is on the House Financial Services Committee. This is the start .
Maybe you will be wrong again Skeptic7! -should know soon.
Hope you will be wrong and happy again!
Good Morning Skeptic7,
I know you would be happy to see shareholders do well but are you saying that Judge Lamberth will try to set aside the verdict and/or the damages? It seems like you are nervous about your future happiness?
Finally! Thank you Shelly!
Thanks Guido! How did this get into the Fisher Reid Docket - was it due to an Court Order by Sweeney or just a filing by Bryndon? Are you saying that Judge Sweeney allowed or ordered that the Plaintiff's brief be made public on 9/29/23?
Since this was filed on March 2018 under seal it really impacted the public discourse of the UST and Calabria's options from the time that Calabria took over? If this doc was public it could have been used to push for Exit and would have changed the whole public discourse regarding Calabria's priorities during the DJT Admin? Dont you think this should be judicial notice for the Collins and Bhatti hearings?
Did SCOTUS know about this fact pattern when it ruled on Collins? Did the 5th Circuit know about this fact pattern when it narrowly upheld the NWS in Collins when it was the 5th Circuit the first time?
Imagin if DJT could have gotten rid on Watt on Day 1 and this fact pattern was public during the DJT Admin - got to believe we would have been out of Conservatorship by 2020.?
Thanks for the information tut1126 - I was not aware of this.
Does anyone know why the Fisher Reid March 2018 Complaint was release to the Public. I has an amazing fact pattern but was filed under seal in March 2018 - over 5 years ago. The fact pattern is worth the read.
https://www.glenbradford.com/
Good observation 5bagger - for what it is worth Familymang had Sept 30th as the outside date for a reply so perhaps it is just par for the course of judicial deliberation - definitely frustrating like everything about the GSEs.
Does anyone have an idea when we should know about the new capital requirements, if any, from the FHFA?
You dont want it to
Good Points Navy - Thanks - Wonder what Seiberg is saying now?
Thanks tutt1126 for the info:
Here is what Jared Seiberg said in 2020 before JB was elected. Navy might be interested is his statement that he thought the JB Admin would release the GSEs before risking a new GOP Admin.
https://structuredfinance.org/news/what-could-happen-to-the-gses-under-a-biden-administration/
https://www.housingwire.com/articles/if-biden-wins-what-happens-to-fannie-and-freddie/?
Go Vols! Do all or your Xs live in Texas? Seriously it is more than just Sen Haggerty - all the GOP Senate Banking Committee signed the Letter! This is a great development because it sets up a MQD challenge to any policy objectives while in Conservatorship - they need to exit and monetize to do policy to comply with the MQD.
WOW! Robert did you see this Letter? MQD Up the Wazoo!!
Have you thought about getting a Netflix subscription? - I think you can find a lot of comedy shows there for laughs. With all your restructuring experience I would think you would have better use of your time than looking for laughs on IHUB? - OR are you just a short?
"If" is why the stock is at 66 cents. I thought you would be happy if shareholders were treated fairly - seems like you like being miserable?
Susan knows that USG officials coerced the GSEs to buy subprime and Alt A mortgages and she knows that screwed the GSE shareholders who have lost billions including the JPS shareholders who bought JPS at $ 25 after the NEC started to execute its Nationalization Plan with the leaked Barron's article in March of 2008.
Susan should come clean and tell us which USG officials coerced the GSEs before she stuffs the taxpayers with a FHA controlled housing sector that ultimately will stuff US taxpayers with credit losses and a lost AAA Sovreign credit rating.
Who coerced the GSEs to buy the subprime mortgages Susan? You told the FCIC interviewers - now is the time to come clean.
See the last few minutes of the 59:27 tape, She goes into her background around minute 54 and then talks about HUD and the CRA program under Cisneros - the last dialogue was that she would tell the interviewers which USG regulators stuffed the GSEs if they shut off the tape.
https://elischolar.library.yale.edu/ypfs-audio/304/
FCIC - "What if we turn off the tape? - can you tell us of the record?" Wachter " Sure" FCIC - "I am going to turn it off"
When did you read the Statute No Name? You have been hawking the US Bankruptcy Code for months so perhaps you read it yesterday?
It will go down like this:
1. The NEC and UST will decide if they want to exit
2. They will confer but basically tell the FHFA what they want to do
3. They will ask the Civil Division of the DOJ to write a Memo justifying a compromise of debt under 902.2
4. They will let JB know how it will help him politically if he still is Pres.
No Attorney General is going to get in the way of the UST Secretary or the Chair of the NEC. Lawyers work for Clients and Clients make the business/policy decisions. Yes - this will be perfunctory.
Someone should ask Wachter what she told the FCIC at the end of her interview when she went off the record. If USG Govt officials were successful pressuring the GSEs which were public companies as she stated in her interview - just think what they could do with the bureaucrats that currently run the GSEs in Conservatorship.
Check out the interview from the 55 minute mark to the end when she went off the record. It ends with the interviewer saying " what if we turn off the tape - will you tell us off the record" Her last words "sure"
https://elischolar.library.yale.edu/ypfs-audio/304/