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Thank you Barron for all the information and effort you bring to our cause.
For the benefit of the possibility of new investors to this board they may not fully understand the importance of the statement you made, Quote: “ They just need to stay clear of any actions of the conservator and there will be none of the legal nonsense we have witnessed over the last 15 years or so.” End of Quote
Below is a quote you made that will clarify in more detail.
Barron said, “ I propose claims alleging illegal exaction due to Treasury and FHFA violating Federal statutes that any district court has jurisdiction over. The Federal statutes are the Charter Act, the Safety and Soundness Act of 1992, as amended by HERA, Administrative Procedures Act, and potentially the Chief Financial Officers Act.
None of the current litigation makes any claims of violation of these acts. They all challenge the actions of the Conservator and attempted to squeeze the APA and the 5th amendment takings into the Actions of the FHFA-C within the terms of the SPSPA. all have failed to this point.”
Viking61 Said Quote: “ If the warrants happen to ever be exercised, the price will be the average price over multiple trading periods. That is why I believe in this scenario that the government will cancel the Seniors and the LP to give the warrants a higher potential worth. Not that I want the warrants to be exercised but to increase their value” End of Quote
The strike price of the warrants if exercised has absolutely nothing to do with the value of Fannie Mae’s business. It doesn’t matter if the warrants are exercised at 0.60 cents or 200 dollars. If the warrants are exercised it will give the Treasury 79.9 percent ownership of the common stock which will give the Treasury 79.9 percent ownership of the earnings power of the business. THAT’S IT.
EARNINGS POWER OF THE BUSINESS
CALCULATED VALUE $240 billon
latest earnings report
Fannie Mae
June 30, 2023
Fannie Mae Reports Net Income of $5.0 Billion for Second Quarter 2023 projection of $20 billion net per year. A multiple of 12 is not unreasonable
Price to Earnings Ratio of 12 x $20 billion = $240 billion Intrinsic Value of the Earnings Power of the business.
With the WARRANTS: Fannie Mae’s common stock outstanding 1,158,087,567 diluted by the warrants at 79.9 percent adds a total of 5,761,629,686 shares outstanding…
Viking61 Quote: “ What do you all believe that the SP would be if the Seniors and the LP were written down and then the Warrants were were exercised?” End of Quote
First off the SPSPA agreement is an illegal contract and I agree with our friend Barron’s statement at the end of this post.
To answer your question will use the latest earnings report; first calculation the Treasury doesn’t get away with the theft, and the second calculation with the warrants as you asked:
Fannie Mae
June 30, 2023
Fannie Mae Reports Net Income of $5.0 Billion for Second Quarter 2023
A multiple of 12 is not unreasonable
EARNINGS POWER OF THE BUSINESS
Fannie Mae’s common stock outstanding 1,158,087,567
$5.0 billion net income for the second quarter of 2023. Fannie Mae’s net earnings $5.0 billion per quarter, a projection of $20 billion net per year.
$20 billion net / 1,158,087,567 = $17.27 per share of earnings
Price to Earnings Ratio of 12 x $17.27 = $207.24 per share Intrinsic Value
With the WARRANTS: Fannie Mae’s common stock outstanding 1,158,087,567 diluted by the warrants at 79.9 percent adds a total of 5,761,629,686 shares outstanding…
$20 billion net / 5,761,629,686 = $3.47 per share of earnings,
PE Ratio of 12 x $3.47 = $41.64 per share intrinsic value,
Barron Quote:
“I posit that the variable liquidation preference outlined in the SPSPA and all amendments are an illegal commitment fee/charge attached to the purchase of the senior preferred shares. Prohibited by the Charter Act. The warrants are also a fee in consideration for access to the commitment. Prohibited by the Charter Act.
I posit that the senior preferred shares with their variable liquidation preference as outlined in the SPSPA constitute a new product for the purpose of the secondary mortgage market outlined in the charter act at sec 1719.
I posit that under the safety and soundness act as modified by HERA, the sale of SPS with a variable liquidation preference to Treasury under authority of sec 1719(g) of the Charter Act required notice in the federal register, opportunity for public comment, and official rule making by the plain language of the safety and soundness act.
I posit that the above statutory violations necessarily violate the warranties on behalf of the FHFA-C contained in the SPSPA.
301 Billion to be returned to the corporation. LP and warrants canceled. Future of 191 billion of taxpayer debt illegally given to corps to be determined.” End of Quote
Someone should ask Regulator Sandra; What appropriation was afforded the Regulator to give a capital distribution? What law gave the Regulator the authority to give away the companies' money while the enterprises are undercapitalized?
Code of Federal Regulation
1237.12 Capital distributions while in conservatorship.
(a) Except as provided in paragraph (b) of this section, a regulated entity shall make no capital distribution while in conservatorship.
chessmaster from the article: "It often goes well beyond “ghost” shares, too. The most nefarious of short sellers target companies with negative reports–sometimes with legitimate information, and sometimes with falsehoods or half-truths–to drive down share prices with maximum impact, thus ensuring that the companies lose their ability to obtain financing. Once that process is completed, naked shorters then begin to offer those same companies alternative financing (predatory debt), which they have no option but to accept."
Sounds all too familiar, the White Paper exposed the counterfeit shares in the take down of Fannie and Freddie in 2008 and according to the writer billions of counterfeit shares were created. A successful cram down will make these illegal shares vanish, including short shares and naked shorts. Certain people on this board push extremely hard for a cram-down.
If the Treasury were to convert the SPS and exercise the warrants into common stock in essence the Treasury will own 99.9% of New Common Shares: Treasury can do a reverse split with any number of outstanding shares they choose remaining, this wipes out today’s existing common stock, shorts, naked shorts and any number of counterfeit shares outstanding.
Transfer of Ownership Cram-Down
Explained,
Legacy Shareholders means, collectively, each person that owns common stock of the Company immediately prior to the closing of the Transaction (cram-down) which in no event shall include any of the Investors; or very few will remain afterwards maybe 1% or less.
A cram-down deal refers to a situation where an investor or creditor is forced into accepting undesirable terms in a transaction or bankruptcy proceedings.
In the case with Fannie Mae the Treasury's holding of senor preferred stock in the amount of $120.8 billion, with a liquidation preference of $185.5 billion.
If the Treasury converts this amount of SPS into common stock the Treasury in essence will own 99.9% of all the common stock outstanding. The number of shares outstanding depends on price per share at the time converted. The amount of shares outstanding after the cram-down does not matter at all, it's the percent ownership, a transfer of ownership from the legacy common shareholders to the Treasury. This transaction will cause the legacy common stock to vanish along with any short positions, naked short positions as well as any counterfeit common stock outstanding. Afterwards, the Treasury can do a reverse split reducing the amount in number of the new common stock outstanding.
camaro4me, The key part is "Purchaser may, in its sole discretion". The Purchaser here is Treasury. It's safe to say that Treasury will never voluntarily choose to do that.
Fact of the matter the Treasury had the clause written in the contract. With this clause the Treasury can limit the amount of damages “In the event that any provision of this Agreement, the Senior Preferred Stock or the Warrant is determined to be illegal or unenforceable,”
The SPSPA is an illegal contract. The Charter Act passed by Congress is the law. The Plaintiffs will never win fighting the FHFA/Treasury on the wording written in the contract. These experts should focus on the numerous violations the FHFA/Treasury have committed against the law.
Barron, the “complaint narrative” to the Kelly Attorney as the basis to file a new Takings claim; if you will share your correspondence to the Attorney with this board. Best Regards
Where is "maximize profits for taxpayers" written in the Charter Act?? Specifically, in this provision entitled Fee Limitation of the United States: ??
Mr. Howard Quote: “Treasury is more likely to embrace this reality when it understands that there is a politically acceptable way to do so that allows it to maintain its pledge to get maximum value on behalf of taxpayers for its “investment” in the companies, while also restoring their access to the capital markets.” End of Quote.
These experts should write an article listing the numerous violations the FHFA/Treasury has committed instead of encouraging the theft.
The FHFA forced Fannie Mae and Freddie Mac into a contract with the United States Treasury by Senior Preferred Stock. The Senior Preferred Stock Purchase Agreement is not a law: The SPSPA is an illegal contract. The Charter Act passed by Congress is the law.
Barron, I would recommend stressing the Statute of Limitations expires 2025. There are a lot of investors following this that has it in mind the limits have expired.
Example,
Mr. Tim Howard Quote: “I honestly don’t see any issue where a new claim, brought by a plaintiff with standing and the wherewithal to finance the suit, and that is not time-barred by the statute of limitations, has a realistic chance of being successful.” End of Quote WRONG
The above is one example of many that explains the problem that has lasted 15 years. Will the so-called experts ever apply the law?
Violations of the Charter Act and the Federal Enterprises Financial Safety and Soundness act of 1992 both as amended by HERA.
Barron Quote: "Statute of limitations would rely on DOJ guidance for recurring claims due to material changes introduced in the letter agreements. For example the new increase of liquidation preference for free introduced within the last 6-years." End of Quote
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172340943
The FHFA / Treasury continue to change the contract, letter agreement dated January 14, 2021, So, the Statute of Limitations are not up. PAGE 6 Liquidation Preference increases dollar for dollar for all the retained earnings of the enterprises.
https://home.treasury.gov/system/files/136/Executed-Letter-Agreement-for-Fannie-Mae.pdf
Thank you, Barron, for bringing to our attention all the information you put on this board. Kindly, use any part of the writing.
The post you responded to is not the most recent, I added a few more important aspects to the writing.
Updated: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172987595
I would recommend adding the following statement you made: Quote: "I posit that the above statutory violations necessarily violate the warranties on behalf of the FHFA-C contained in the SPSPA. 301 billion to be returned to the corporation. LP and warrants canceled. Future of 191 billion of taxpayer debt illegally given to corps to be determined." End of Quote: Adding this before the subject matter changes in the writing to the court case, add it to the violations discussed in the above writing.
"IF THE FHFA / TREASURY are allowed to continue with the violations discussed in the above writing, and the illegal contract of the SPSPA agreement is allowed to stand the Committee should give consideration to the FHFA Breach of Contract Bad faith and Unfair Dealings actions of the government in litigation that took place in Judge Lamberth's Court. It took 8 random DC Jurors only 10 hours of deliberations to see right through the Government's false narratives."
Vancmike, the republican senators of the banking committee who sent the recent letter to S. Thompson:
Did you snail mail these senators? I want to contact them.
Comments are welcome with suggestions, unless this board suggest necessary changes this it. The letter is long, do not know how to make it shorter with the information I want the committee to read.
FINANCIAL SERVICES
Committee
Committee Members
118th CONGRESS
The purpose of this letter is to bring attention to the Committee violations by the Federal Housing Finance Agency (FHFA) violating of the Charter Act, and the Federal Housing Enterprises Financial Safety and Soundness act of 1992 (FHEFSSA); Both as amended by the HOUSING AND ECONOMIC RECOVERY ACT OF 2008, (HERA). The Charter Acts are Fannie Mae and Freddie Mac's enabling statutes. FHEFSSA and HERA are regulatory statutes, governing the companies' regulators. All are laws passed by Congress.
The conservatorship of Fannie Mae and Freddie Mac has continued for over 15 years. I am not sure if Committee Members understand the history of the takeover of the companies and pray the Committee will of your clemency hear me in a few words.
Before the take down of the companies Treasury Secretary Paulson was unaware that the FHFA Regulator had sent both Fannie Mae and Freddie Mac letters saying the companies were safe and sound and exceeded their regulatory capital requirements. Paulson told FHFA Director Lockhart that he had to change his agency’s posture on the two companies, and FHFA did exactly that. FHFA sent each company an extremely harsh mid-year review letter, and two days later, Paulson, Lockhart and Fed chairman Bernanke met with the companies’ CEO's and directors to tell them they had no choice but to agree to conservatorship.
When Paulson met with the directors of Fannie Mae and Freddie Mac to inform them of his intent to take over their companies, neither entity met any of the twelve conditions for conservatorship spelled out in the newly passed HERA legislation. Paulson since has admitted he took the companies over by threat.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008 Page 2734 Twelve Conditions
APPOINTMENT OF THE AGENCY AS CONSERVATOR OR RECEIVER
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
The FHFA freely admitted the companies were adequately capitalized.
SECOND QUARTER CAPITAL RESULTS
Minimum Capital
Fannie Mae’s FHFA-directed capital requirement on June 30, 2008 was $37.5 billion and its statutory minimum capital requirement was $32.6 billion. Fannie Mae’s core capital of $47.0 billion exceeded the FHFA-directed capital requirement by $9.4 billion.
Freddie Mac’s FHFA-directed capital requirement on June 30, 2008 was $34.5 billion and its statutory minimum capital requirement was $28.7 billion. Freddie Mac’s core capital of $37.1 billion exceeded the FHFA-directed minimum capital requirement by $2.7 billion.
Link: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Suspension-of-Capital-Classifications-During-Conservatorship-and-Discloses-Minimum-and-RiskBased-Cap.aspx#:~:text=During%20the%20conservatorship%2C%20FHFA%20will%20not%20issue%20a,submit%20capital%20reports%20to%20FHFA%20during%20the%20conservatorship.
The FHFA forced Fannie Mae and Freddie Mac into a contract with the United States Treasury by Senior Preferred Stock. The Senior Preferred Stock Purchase Agreement is not a law: The SPSPA is an illegal contract between Treasury and FHFA as conservator of the two companies. The Charter Act, FHEFSSA and HERA passed by Congress is the supreme law of the land that governs the two companies.
Fannie Mae and Freddie Mac's regulatory guidelines would have prohibited the companies form paying dividends to the Treasury while severely under-capitalized, but the FHFA suspended those guidelines because the regulator wanted the companies to have to draw more senior preferred stock from the Treasury to pay the annual dividends in cash, ballooning their outstanding senior preferred stock and increase their required annual dividends. FHFA and its Director are executive branch entities and can not make changes to federal laws. Only Congress can change the law. Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee.
When Fannie Mae and Freddie Mac were taken over by the FHFA no emergency existed and the FHFA had no authority granted by Congress to take over the companies, no authority written in the Charter Act that gave the FHFA right to take down the companies.
Charter Act: SUBSECTION (g) TEMPORARY AUTHORITY OF TREASURY TO PURCHASE OBLIGATIONS AND SECURITIES; CONDITIONS.— EMERGENCY DETERMINATION REQUIRED. Page 16
Under this subsection no emergency existed.
This leads to the question, who authorized the appropriation of taxpayer debt to provide the 200 billion commitment? Certainly not Congress. Treasury took it upon themselves and authorized a 200 billion commitment available in exchange for One Million Shares (1,000,000) with an initial liquidation preference of $1,000 per share. Shares of senior equity illegal and unconstitutional.
Page 5
Link: https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-SPSPA_09-07-2008.pdf
Charter act prohibits the commitment fees (Seniors, warrants, variable liquidation preference). More importantly the actions of Treasury to appropriate 200 billion in taxpayer debt, take non regulatory control of the companies through the SPSPA (require Treasury permission at least 10 separate times) and ownership of more than 50% of the companies requires them under the GAO act and the CFO act to consolidate the GSEs onto the nations balance sheet. The fact that that hasn't happened means the Treasury has violated the 14th amendment to the Constitution by repudiating the 5 trillion plus in debt the Treasury has acquired through their actions since 2008. Their actions have resulted in a takings of the entire enterprise value of the formerly private companies. These actions have necessarily turned the GSEs back into agencies of the executive branch as they were originally created. This is the definition of a major question and also a separation of powers problem since Congress did not authorize the actions Treasury took and continues to take.
In addition 'Deferred Tax Assets' the Treasury forced the companies to write down and record these non-cash expenses making the companies appear bankrupted. Fannie Mae and Freddie Mac were no where near bankrupted.
Mr. Howard wrote below,
Quote: “Between the time Fannie and Freddie were put into conservatorship and the end of 2011, well over $300 billion in non-cash accounting expenses were recorded on their income statements. These non-cash expenses, most of which were discretionary, eliminated all of the Companies’ capital and forced them, together, to take $187 billion from Treasury. But because accelerated or exaggerated expenses cause losses that are only temporary, Fannie’s and Freddie’s non-cash losses began to reverse themselves in 2012. Coupled with profits resulting from a rebounding housing market, the reversal of these losses enabled both Companies to report in August 2012 sufficient second quarter income to not only pay their dividends to Treasury but also retain a total of $3.9 billion in capital. As soon as it became apparent that a large percentage of the non-cash accounting losses booked during the previous four years was about to come back into income, Treasury and FHFA entered into the Third Amendment to the PSPA. The Third Amendment substituted for the fixed dividend payment a requirement that all future earnings—including reversals of accounting-related expenses incurred earlier—be remitted to Treasury. From the time the Third Amendment took effect through the end of 2014, Fannie and Freddie paid Treasury $170 billion, $133 billion more than they would have owed absent the Amendment.” End of Quote
The United States was not obligated after 1968 to back debt of Fannie Mae. The United States Taxpayers became obligated when the government took over the two companies.
Originally, Fannie Mae had an explicit guarantee from the United States government; if the entity got into financial trouble the government promised to bail it out. This changed in 1968. Fannie Mae became a private stockholder owned company. Fannie Mae securities received no actual explicit or implicit government guarantee. This is clearly stated in the securities themselves, and in many public communications issued by Fannie Mae.
Quote: “Although we are a corporation chartered by the U.S. Congress, the U.S. Government does not guarantee, directly or indirectly, our securities or other obligations. We are a stockholder-owned corporation, and our business is self-sustaining and funded exclusively with private capital. Our common stock is listed on the New York Stock Exchange and traded under the symbol “FNM.” Our debt securities are actively traded in the over-the-counter market.” End of Quote.
Information from: Fannie Mae form 10K Dec 31, 2007
part I, page 1, item 1.
https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/quarterly-annual-results/2007/form10k_022708.pdf
Where is "maximize profits for taxpayers" written in the Charter Act? Specifically, in this provision entitled Fee Limitation of the United States:
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 304. SECONDARY MARKET OPERATION
Fee Limitation
Quote: “(f) PROHIBITION ON ASSESSMENT OR COLLECTION OF FEE OR CHARGE BY UNITED STATES.—Except for fees paid pursuant to section 309(g) of this Act and assessments pursuant to section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, no fee or charge may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any mortgage, asset, obligation, trust certificate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury pursuant to subsection (c) of this section.” End of Quote. Page 16
Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 309. GENERAL POWERS OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION
Federal Reserve Banks to Act as Fiscal Agents (Fannie Mae and GNMA)
Quote: “(g) DEPOSITARIES, CUSTODIANS, AND FISCAL AGENTS.—The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a)(2), for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.” End of Quote. Page 29
Link:
FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT
As amended through July 25, 2019
link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
The Senior Preferred Stock, with a variable liquidation preference outlined in the SPSPA and its amendments and share certificates is a new product for the purposes of the Safety and Soundness Act of 1992 as amended by HERA.
Congress directed the Director of FHFA to apply the Administrative Procedures Act to the new products sold to Treasury. The FHFA did not follow the administrative procedures congress required in the plain language of the safety and soundness act.
The Director of FHFA as regulator violated the safety and soundness act and the administrative procedures act by not following the statutory duty to approve new products issued by the GSEs to Treasury for the purpose of stabilizing the secondary mortgage market.
The law required the publication in the federal register of the SPS with their variable rate liquidation preference tied to the commitment. It requires a public comment period, and a rule making process to make the SPS legal. It is the same law that required the capital rule. And the same law that required FHFA a year ago issue the new products law for MBS products. They have ignored this requirement for 15 years.
Director Lockhart Regulator, and Director Lockhart Conservator. Holding both positions as Regulator and Conservator; Conservator Lockhart is required by law to file notice to himself as Regulator.
The Safety and Soundness Act required Director Lockhart as regulator not conservator to approve a new product issued by Director Lockhart acting as conservator FHFA-C (SPS with variable liquidation Preference) to Treasury under the terms of the SPSPA for the purpose of carrying out the secondary mortgage market. He was required as regulator to file notice in the federal register, seek public comment and issue federal regulations for the new product we call the Senior Preferred shares sold to Treasury.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Page 2689
SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
The CFO act requires the Treasury department based on published accounting standards to determine if their actions of funding through appropriations, ownership of 100% of the GSEs net worth and non-regulatory control of the GSEs through the SPSPA require the consolidation of the GSEs liabilities onto the nations balance sheet. Do the actions of Treasury under the SPSPA require such consolidation under the plain language of the Chief Financial Officers Act?
The Congressional Budget Office publication states, “Federal Government effective ownership of Fannie Mae and Freddie Mac.”
The Enterprises have been Nationalized by the Government according to the CBO: The liabilities have not been added to the National Debt nor have the Shareholders been compensated by U.S. Law of the 5th Amendment.
Congressional Budget Office
From: Estimates of the Cost of Federal Credit Programs in 2023
Page 1, Foot Note 1.
Quote: “Fannie Mae and Freddie Mac have been in federal conservatorship since September 2008. CBO treats the two GSEs as government entities in its budget estimates because, under the terms of the conservatorships, the federal government retains operational control and effective ownership of Fannie Mae and Freddie Mac. For more discussion, see Congressional Budget Office, Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions (August 2020), www.cbo.gov/publication/56496; and Congressional Budget Office, The Effects of Increasing Fannie Mae’s and Freddie Mac’s Capital (October 2016), www.cbo.gov/ publication/52089” End of Quote
Link: https://www.cbo.gov/system/files/2022-06/58031-Federal-Credit-Programs.pdf
The United States Treasury in violation of the Charter Act has failed to treat as public debt the transactions of the United States when the FHFA placed Fannie Mae and Freddie Mac into conservatorship. This obligation was never recorded as public debt as required by law.
The Charter Act the Law of the Land.
Charter Act SEC. 304. SECONDARY MARKET OPERATIONS
(c) Terms and Rates
Quote: “All redemptions, purchases, and sales by the Secretary of the Treasury of such obligations under this subsection SHALL BE TREATED AS PUBLIC DEBT TRANSACTIONS of the United States.” End of Quote Page 14
Link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
IF THE FHFA / TREASURY are allowed to continue with the violations discussed in the above writing, and the illegal contract of the SPSPA agreement is allowed to stand the Committee should give consideration to the FHFA Breach of Contract Bad faith and Unfair Dealings actions of the government in litigation that took place in Judge Lamberth's Court. It took 8 random DC Jurors only 10 hours of deliberations to see right through the Government's false narratives.
It’s bad faith and unfair dealing when the Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval to pay down the Senior Preferred Stock the Director has the authority from Congress written in HERA:
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
RESTRICTION ON CAPITAL DISTRIBUTIONS.— page 2731
‘‘(1) IN GENERAL.—A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized. The exception.
Quote: “Page 2732
EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.
NOTE: REPURCHASE, REDEEM, RETIRE...
WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
In essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full. The Treasury did not take a Perpetual Equity Investment in the enterprises, the Treasury stated a temporary investment period!
The calculation of the pay down of the liquidation preference of the Senior Preferred Stock, I am asking this committee to apply the law written in the HERA legislation passed by Congress.
https://drive.google.com/file/d/15978NWfDcTtuClMBnwgWFmoPnwK94vWn/view
The liquidation preference has be paid and the Senior Preferred Stock should be canceled.
The law actually exists! FHFA and its Director are executive branch entities. They can not make changes to federal laws. Only Congress can change the law.
Therefore, the U.S. Congress did not give DeMarco the power to take all the future profits of their wards in conservatorship into perpetuity, thus Nationalizing the GSES, based on an Incidental Power in HERA: The Net Worth Sweep.
The U.S. Congress would have given the FHFA more explicit instructions to do so than merely drafting in the HERA to do whatever it feels is in its best interests. DeMarco, this non-elected bureaucrat, has been allowed to steal the companies for the Treasury.
The SCOTUS upholding the NWS does not change the fact the liquidation preference can be paid down and the Senior Preferred Stock redeemed under the terms of the law of HERA. The money kept by the Treasury by the NWS should be applied to principle and 10% interest and over payment should be returned to the companies. $301 billion is more than enough to pay the liquidation preference and redeem the Senior Preferred Stock.
Rough Draft
Comments are welcome with suggestions.
NOTE: one of the links to information on the FHFA website stopped working. This has happened on two different occasions, not sure why, but the information is accurate and can be verified from the companies financial statements.
FINANCIAL SERVICES
Committee
Committee Members
118th CONGRESS
The purpose of this letter is to bring attention to the Committee violations by the Federal Housing Finance Agency (FHFA) violating of the Charter Act, and the Federal Housing Enterprises Financial Safety and Soundness act of 1992 (FHEFSSA) Both as amended by HOUSING AND ECONOMIC RECOVERY ACT OF 2008, (HERA).
The conservatorship of Fannie Mae and Freddie Mac has continued for over 15 years. I am not sure if Committee Members understand the history of the takeover of the companies and pray the Committee will of your clemency hear me in a few words.
Before the take down of the companies Treasury Secretary Paulson was unaware that the FHFA Regulator had sent both Fannie Mae and Freddie Mac letters saying the companies were safe and sound and exceeded their regulatory capital requirements. Paulson told FHFA Director Lockhart that he had to change his agency’s posture on the two companies, and FHFA did exactly that. FHFA sent each company an extremely harsh mid-year review letter, and two days later, Paulson, Lockhart and Fed chairman Bernanke met with the companies’ CEO's and directors to tell them they had no choice but to agree to conservatorship.
When Paulson met with the directors of Fannie Mae and Freddie Mac to inform them of his intent to take over their companies, neither entity met any of the twelve conditions for conservatorship spelled out in the newly passed HERA legislation. Paulson since has admitted he took the companies over by threat.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008 Page 2734 Twelve Conditions
APPOINTMENT OF THE AGENCY AS CONSERVATOR OR RECEIVER
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
The FHFA freely admitted the companies were adequately capitalized.
SECOND QUARTER CAPITAL RESULTS
Minimum Capital
Fannie Mae’s FHFA-directed capital requirement on June 30, 2008 was $37.5 billion and its statutory minimum capital requirement was $32.6 billion. Fannie Mae’s core capital of $47.0 billion exceeded the FHFA-directed capital requirement by $9.4 billion.
Freddie Mac’s FHFA-directed capital requirement on June 30, 2008 was $34.5 billion and its statutory minimum capital requirement was $28.7 billion. Freddie Mac’s core capital of $37.1 billion exceeded the FHFA-directed minimum capital requirement by $2.7 billion.
Link: https://www.fhfa.gov/mobile/Pages/public-affairs-detail.aspx?PageName=FHFA-Announces-Suspension-of-Capital-Classifications-During-Conservatorship-and-Discloses-Minimum-and-RiskBased-Cap.aspx
The FHFA forced Fannie Mae and Freddie Mac into a contract with the United States Treasury by Senior Preferred Stock. The Senior Preferred Stock Purchase Agreement is not a law: The SPSPA is an illegal contract. The Charter Act passed by Congress is the supreme law of the land that governs the two companies.
When Fannie Mae and Freddie Mac were taken over by the FHFA no emergency existed and the FHFA had no authority granted by Congress to take over the companies, no authority written in the Charter Act that gave the FHFA right to take down the companies.
Charter Act: SUBSECTION (g) TEMPORARY AUTHORITY OF TREASURY TO PURCHASE OBLIGATIONS AND SECURITIES; CONDITIONS.— EMERGENCY DETERMINATION REQUIRED. Page 16
Under this subsection no emergency existed.
This leads to the question, who authorized the appropriation of taxpayer debt to provide the 200 billion commitment? Certainly not Congress. Treasury took it upon themselves and authorized a 200 billion commitment available in exchange for One Million Shares (1,000,000) with an initial liquidation preference of $1,000 per share. Shares of senior equity illegal and unconstitutional.
Page 5
Link: https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-SPSPA_09-07-2008.pdf
Charter act prohibits the commitment fees (Seniors, warrants, variable liquidation preference). More importantly the actions of Treasury to appropriate 200 billion in taxpayer debt, take non regulatory control of the companies through the SPSPA (require Treasury permission at least 10 separate times) and ownership of more than 50% of the companies requires them under the GAO act and the CFO act to consolidate the GSEs onto the nations balance sheet. The fact that that hasn't happened means the Treasury has violated the 14th amendment to the Constitution by repudiating the 5 trillion plus in debt the Treasury has acquired through their actions since 2008. Their actions have resulted in a takings of the entire enterprise value of the formerly private companies. These actions have necessarily turned the GSEs back into agencies of the executive branch as they were originally created. This is the definition of a major question and also a separation of powers problem since Congress did not authorize the actions Treasury took and continues to take.
In addition 'Deferred Tax Assets' the Treasury forced the companies to write down and record these non-cash expenses making the companies appear bankrupted. Fannie Mae and Freddie Mac were no where near bankrupted.
Mr. Howard wrote below,
Quote: “Between the time Fannie and Freddie were put into conservatorship and the end of 2011, well over $300 billion in non-cash accounting expenses were recorded on their income statements. These non-cash expenses, most of which were discretionary, eliminated all of the Companies’ capital and forced them, together, to take $187 billion from Treasury. But because accelerated or exaggerated expenses cause losses that are only temporary, Fannie’s and Freddie’s non-cash losses began to reverse themselves in 2012. Coupled with profits resulting from a rebounding housing market, the reversal of these losses enabled both Companies to report in August 2012 sufficient second quarter income to not only pay their dividends to Treasury but also retain a total of $3.9 billion in capital. As soon as it became apparent that a large percentage of the non-cash accounting losses booked during the previous four years was about to come back into income, Treasury and FHFA entered into the Third Amendment to the PSPA. The Third Amendment substituted for the fixed dividend payment a requirement that all future earnings—including reversals of accounting-related expenses incurred earlier—be remitted to Treasury. From the time the Third Amendment took effect through the end of 2014, Fannie and Freddie paid Treasury $170 billion, $133 billion more than they would have owed absent the Amendment.” End of Quote
The United States was not obligated after 1968 to back debt of Fannie Mae. The United States Taxpayers became obligated when the government took over the two companies.
Originally, Fannie Mae had an explicit guarantee from the United States government; if the entity got into financial trouble the government promised to bail it out. This changed in 1968. Fannie Mae became a private stockholder owned company. Fannie Mae securities received no actual explicit or implicit government guarantee. This is clearly stated in the securities themselves, and in many public communications issued by Fannie Mae.
Quote: “Although we are a corporation chartered by the U.S. Congress, the U.S. Government does not guarantee, directly or indirectly, our securities or other obligations. We are a stockholder-owned corporation, and our business is self-sustaining and funded exclusively with private capital. Our common stock is listed on the New York Stock Exchange and traded under the symbol “FNM.” Our debt securities are actively traded in the over-the-counter market.” End of Quote.
Information from: Fannie Mae form 10K Dec 31, 2007
part I, page 1, item 1.
https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/quarterly-annual-results/2007/form10k_022708.pdf
Where is "maximize profits for taxpayers" written in the Charter Act? Specifically, in this provision entitled Fee Limitation of the United States:
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 304. SECONDARY MARKET OPERATION
Fee Limitation
Quote: “(f) PROHIBITION ON ASSESSMENT OR COLLECTION OF FEE OR CHARGE BY UNITED STATES.—Except for fees paid pursuant to section 309(g) of this Act and assessments pursuant to section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, no fee or charge may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any mortgage, asset, obligation, trust certificate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury pursuant to subsection (c) of this section.” End of Quote. Page 16
Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 309. GENERAL POWERS OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION
Federal Reserve Banks to Act as Fiscal Agents (Fannie Mae and GNMA)
Quote: “(g) DEPOSITARIES, CUSTODIANS, AND FISCAL AGENTS.—The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a)(2), for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.” End of Quote. Page 29
Link:
FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT
As amended through July 25, 2019
link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
The Senior Preferred Stock, with a variable liquidation preference outlined in the SPSPA and its amendments and share certificates is a new product for the purposes of the Safety and Soundness Act of 1992 as amended by HERA.
Congress directed the Director of FHFA to apply the Administrative Procedures Act to the new products sold to Treasury. The FHFA did not follow the administrative procedures congress required in the plain language of the safety and soundness act.
The Director of FHFA as regulator violated the safety and soundness act and the administrative procedures act by not following the statutory duty to approve new products issued by the GSEs to Treasury for the purpose of stabilizing the secondary mortgage market.
The law required the publication in the federal register of the SPS with their variable rate liquidation preference tied to the commitment. It requires a public comment period, and a rule making process to make the SPS legal. It is the same law that required the capital rule. And the same law that required FHFA a year ago issue the new products law for MBS products. They have ignored this requirement for 15 years.
Director Lockhart Regulator, and Director Lockhart Conservator. Holding both positions as Regulator and Conservator; Conservator Lockhart is required by law to file notice to himself as Regulator.
The Safety and Soundness Act required Director Lockhart as regulator not conservator to approve a new product issued by Director Lockhart acting as conservator FHFA-C (SPS with variable liquidation Preference) to Treasury under the terms of the SPSPA for the purpose of carrying out the secondary mortgage market. He was required as regulator to file notice in the federal register, seek public comment and issue federal regulations for the new product we call the Senior Preferred shares sold to Treasury.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Page 2689
SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
The CFO act requires the Treasury department based on published accounting standards to determine if their actions of funding through appropriations, ownership of 100% of the GSEs net worth and non-regulatory control of the GSEs through the SPSPA require the consolidation of the GSEs liabilities onto the nations balance sheet. Do the actions of Treasury under the SPSPA require such consolidation under the plain language of the Chief Financial Officers Act?
The Congressional Budget Office publication states, “Federal Government effective ownership of Fannie Mae and Freddie Mac.”
The Enterprises have been Nationalized by the Government according to the CBO: The liabilities have not been added to the National Debt nor have the Shareholders been compensated by U.S. Law of the 5th Amendment.
Congressional Budget Office
From: Estimates of the Cost of Federal Credit Programs in 2023
Page 1, Foot Note 1.
Quote: “Fannie Mae and Freddie Mac have been in federal conservatorship since September 2008. CBO treats the two GSEs as government entities in its budget estimates because, under the terms of the conservatorships, the federal government retains operational control and effective ownership of Fannie Mae and Freddie Mac. For more discussion, see Congressional Budget Office, Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions (August 2020), www.cbo.gov/publication/56496; and Congressional Budget Office, The Effects of Increasing Fannie Mae’s and Freddie Mac’s Capital (October 2016), www.cbo.gov/ publication/52089” End of Quote
Link: https://www.cbo.gov/system/files/2022-06/58031-Federal-Credit-Programs.pdf
The United States Treasury in violation of the Charter Act has failed to treat as public debt the transactions of the United States when the FHFA placed Fannie Mae and Freddie Mac into conservatorship. This obligation was never recorded as public debt as required by law.
The Charter Act the Law of the Land.
Charter Act SEC. 304. SECONDARY MARKET OPERATIONS
(c) Terms and Rates
Quote: “All redemptions, purchases, and sales by the Secretary of the Treasury of such obligations under this subsection SHALL BE TREATED AS PUBLIC DEBT TRANSACTIONS of the United States.” End of Quote Page 14
Link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
IF THE FHFA / TREASURY is allowed to continue with the violations discussed in the above writing, and the illegal contract of the SPSPA agreement is allowed to stand the Committee should give consideration to
The FHFA Breach of Contract Bad faith and Unfair Dealings actions of the government in litigation that took place in Judge Lamberth Court. It took 8 random DC Jurors only 10 hours of deliberations to see right through the Government's false narratives.
It’s bad faith and unfair dealing when the Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval to pay down the Senior Preferred Stock The Director has the authority from Congress written in HERA:
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
RESTRICTION ON CAPITAL DISTRIBUTIONS.— page 2731
‘‘(1) IN GENERAL.—A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized. The exception.
Quote: “Page 2732
EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.
NOTE: REPURCHASE, REDEEM, RETIRE...
WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
In essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full.
The calculation of the pay down of the liquidation preference of the Senior Preferred Stock, I am asking this committee to apply the law written in the HERA legislation passed by Congress.
https://drive.google.com/file/d/15978NWfDcTtuClMBnwgWFmoPnwK94vWn/view
The liquidation preference has be paid and the Senior Preferred Stock should be canceled.
The law actually exists!
FHFA and its Director are executive branch entities. They can not make changes to federal laws. Only Congress can change the law.
Therefore, the U.S. Congress did not give DeMarco the power to take all the future profits of their wards in conservatorship into perpetuity, thus Nationalizing the GSES, based on an Incidental Power in HERA: The Net Worth Sweep.
The U.S. Congress would have given the FHFA more explicit instructions to do so than merely drafting in the HERA to do whatever it feels is in its best interests. DeMarco, this non-elected bureaucrat, has been allowed to steal the companies for the Treasury.
The SCOTUS upholding the NWS does not change the fact the liquidation preference can be paid down and the Senior Preferred Stock redeemed under the terms of the LAW OF HERA. The money kept by the Treasury by the NWS should be applied to principle and 10% interest and over payment should be returned to the companies. $301 billion is more than enough to pay the LP and redeem the SPS
Think about it. Why would anyone hangout on this board continuing to push a cram down on the common shareholders?
The White Paper exposed the counterfeit shares in the take down of the enterprises in 2008 and according the writer billions of counterfeit shares were created. A successful cram down will make these illegal shares vanish, including short shares and naked shorts. This is how I see it.
Why else would anyone advocate such a hideous crime?
Committee Members
118th CONGRESS
FHFA Breach of Contract
Bad faith and unfair dealing actions of the government in current and upcoming litigation. It took 8 random DC Jurors only 8 to 10 hours of deliberations to see right through the Government's false narratives.
It’s bad faith and unfair dealing when the Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval. The Director has
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Quote: “Page 2732
EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.
NOTE: REPURCHASE, REDEEM, RETIRE...
WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
Thank you, Vancmike,
Did you receive any response from Mr Hill?
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172673244
Vancmike
Re: None
Thursday, 08/24/2023 9:05:23 AM
This letter represents the thoughts of thousands of interested voters, throughout the United States, who regularly participate and post on INVESTORSHUB, FNMA website. My letter also posted.
August 24, 2023
Mr. French Hill, United States Congressman
1533 Longworth House Office Building
15 Independence Ave SE
Washington, DC 20515
Subject: Urgent Review Required – FHFA and the Conservatorship of Fannie Mae and Freddie Mac
Dear Congressman Hill,
I extend my greetings to you as a distinguished Vice-Chairman of the House Financial Services Committee, and a renowned businessman. I trust your comprehensive understanding of financial systems and the vital role of housing within the United States.
I write to address a longstanding concern that has negatively impacted Fannie Mae (FNMA) and Freddie Mac (FMCC) shareholders for more than fifteen years – the overreaching actions of the Federal Housing Finance Agency (FHFA) and the extended conservatorship. This issue has not only affected countless Americans but also has implications for the broader financial landscape.
In light of your exceptional insight into these matters, I am confident you are aware of the magnitude of the problem. The shareholders of FNMA and FMCC, including millions of American citizens who have invested directly or indirectly through mutual funds and pensions, have endured substantial financial losses. Families have seen their retirement savings, children's education funds, and future financial security erode as a consequence of these circumstances. Moreover, the actions taken have had a ripple effect, causing community banks to suffer losses due to government actions and misleading statements.
It is disheartening to observe the conservatorship of FNMA and FMCC was initiated without adherence to the mandated conditions outlined in the HERA legislation. The Treasury Secretary at the time, Hank Paulson, conceded the takeover was coerced, deviating from the principles of fairness and transparency, that underlie our financial system. The terms of the agreements reached were not only abusive, but also fiscally unviable, a fact that any reasonable individual, particularly one with your background, can attest to. Morgan Stanley's CEO told Ben Bernanke, "We'll go down in flames before I agree to these terms!"
Recent developments, such as the verdict in the first district Federal Court regarding the Net Worth Sweep, have brought attention to the injustice suffered by shareholders. The jury's ruling confirmed the violation of the "Implied Covenant of Good and Fair Dealing", leading to a substantial award of damages amounting to $612 million.
Of particular concern is the impact of the "Net Worth Sweep," implemented by acting FHFA director Ed DeMarco. This amendment unilaterally altered the repayment terms, resulting in an exorbitant 100% of net worth to be paid back quarterly, indefinitely. This approach is fundamentally at odds with the purpose of conservatorship, which is to facilitate the recovery of FNMA and FMCC to sound financial health.
Numerous infractions of federal regulations and laws have occurred under FHFA's oversight, casting a shadow over the integrity of the conservatorship. An alarming instance is the blatant violation of Code of Federal Regulation 1237.12, which explicitly states that capital distribution is prohibited while under conservatorship. Ed DeMarco's admission, under oath, he unilaterally diverted over $300 billion to the Treasury, without consultation, is a stark reminder of the extent to which the original goals of the conservatorship have been disregarded.
The consequences of FHFA's actions have extended beyond shareholders. Homeownership for hard working middle class American Families has become more expensive due to inflated commitment fees and a tripling of Guarantee Fees on mortgages, directly impacting citizens seeking to establish stable residences.
Moreover, the unprecedented expansion of FHFA's workforce raises pertinent questions. The number of employees has tripled, an anomaly when compared to well-operated entities like FNMA and FMCC, as noted by Warren Buffet, who stated it would only require a handful of people for oversight responsibilities.
As a steward of the House Financial Services Committee, I urge you to pose essential questions to FHFA regarding the Net Worth Sweep:
1. Did the Net Worth Sweep enhance risk-based capital levels? NO
2. Did it contribute to long-term financial stability? NO
3. Was the NWS in the interest of the regulated entities? NO
4. Was it in the public interest? NO (Taxpayers bear the liabilities).
It is abundantly clear the Net Worth Sweep failed to achieve rehabilitative effects and directly contradicted the FHFA Director's responsibility to safeguard assets.
Curiosity persists regarding the rationale behind sealing 11,000 documents and emails regarding FHFA by President Obama. The claim of "national security" warrants further scrutiny and demands transparency.
The attached charts, illustrating the staggering financial transfers from FNMA and FMCC to the Treasury under the Net Worth Sweep, emphasize the severity of the situation. A comprehensive analysis underscores Treasury's gains are far in excess of a reasonable estimate, and the ongoing senior preferred dividend payments could have been avoided.
FHFA Director Sandra Thompson's assertion of willingness to collaborate on housing finance reform raises concerns. It is my perspective this stance masks a reluctance to take decisive action.
Recent Dodd-Frank stress tests affirm FNMA and FMCC's profitability even under extreme economic conditions.
I advocate for the House Financial Services Committee to assert its authority and release FNMA and FMCC from conservatorship. This step would nullify ongoing legal disputes and prompt FHFA to return to its fundamental operational and oversight role. The reforms undertaken by both companies position them for a responsible transition.
I propose a Congressional inquiry into the litany of FHFA and conservatorship violations, further underscoring the urgency of the situation.
I beseech you to utilize your influence to effect change and uphold the interests of American taxpayers.
I am confident that your attention to this matter will yield significant benefits. The implications of your actions extend beyond the housing market, impacting the economy and the lives of countless citizens.
Sincerely,
Let’s put together a letter from this board and send it to the committee, in addition a copy to each individual committee member.
I think this is the most current list.
Committee Members
118th CONGRESS
Patrick McHenry, North Carolina, Chairman
Frank D. Lucas, Oklahoma
Pete Sessions, Texas
Bill Posey, Florida
Blaine Luetkemeyer, Missouri
Bill Huizenga, Michigan
Ann Wagner, Missouri
Andy Barr, Kentucky
Roger Williams, Texas
French Hill, Arkansas, Vice Chairman
Tom Emmer, Minnesota
Barry Loudermilk, Georgia
Alexander X. Mooney, West Virginia
Warren Davidson, Ohio
John Rose, Tennessee
Bryan Steil, Wisconsin
William Timmons, South Carolina
Ralph Norman, South Carolina
Dan Meuser, Pennsylvania
Scott Fitzgerald, Wisconsin
Andrew Garbarino, New York
Young Kim, California
Byron Donalds, Florida
Mike Flood, Nebraska
Mike Lawler, New York
Zach Nunn, Iowa
Monica De La Cruz, Texas
Erin Houchin, Indiana
Andy Ogles, Tennessee
Maxine Waters, California, Ranking Member
Nydia M. Velázquez, New York
Brad Sherman, California
Gregory W. Meeks, New York
David Scott, Georgia
Stephen F. Lynch, Massachusetts
Al Green, Texas
Emanuel Cleaver, II, Missouri
Jim A. Himes, Connecticut
Bill Foster, Illinois
Joyce Beatty, Ohio
Juan Vargas, California
Josh Gottheimer, New Jersey
Vicente Gonzalez, Texas
Sean Casten, Illinois
Ayanna Pressley, Massachusetts
Steven Horsford, Nevada
Rashida Tlaib, Michigan
Ritchie Torres, New York
Sylvia Garcia, Texas
Nikema Williams, Georgia
Wiley Nickel, North Carolina
Brittany Pettersen, Colorado
https://financialservices.house.gov/about/members.htm
You are absolutely right LuLeVan, It's simply illegal for social welfare programs to be paid out of FnF's equity - bypassing Congress. What gives this Sandra person the right to steal from the companies?
Code of Federal Regulation
1237.12 Capital distributions while in conservatorship.
(a) Except as provided in paragraph (b) of this section, a regulated entity shall make no capital distribution while in conservatorship.
(b) The Director may authorize, or may delegate the authority to authorize, a capital distribution that would otherwise be prohibited by paragraph (a) of this section if he or she determines that such capital distribution:
No 1: Will enhance the ability of the regulated entity to meet the risk-based capital level and the minimum capital level for the regulated entity;
No 2: Will contribute to the long-term financial safety and soundness of the regulated entity;
No 3: Is otherwise in the interest of the regulated entity; or
No 4: Is otherwise in the public interest.
Section c, this section is intended to supplement and shall not replace or affect any other restriction on capital distributions imposed by statute or regulation.
DID THE NET WORTH SWEEP
Enhance the ability to meet risk-based capital level? NO
Contribute to the long-term financial safety and soundness of the regulated entity? NO
In the interest of the regulated entity? NO
Is otherwise in the public interest? NO
(The taxpayers are responsible for the liabilities of the enterprises).
The Net Worth Sweep could not possibly have any rehabilitative effect and that one of the principal duties of the FHFA Director is to preserve and conserve assets.
Fannie is allowed to retain its earnings until it fully meets its applicable risk-based capital requirement (it’s currently short by $247.8 billion), but those increased retained earnings are matched by a dollar-for-dollar increase in Treasury’s liquidation preference.
https://gov.ecfr.gov/current/title-12/chapter-XII/subchapter-B/part-1237/subpart-D/section-1237.12
If the Treasury were to convert the SPS and exercise the warrants into common stock in essence the Treasury will own 99.9% of New Common Shares: Treasury can do a reverse split with any amount of outstanding shares they choose remaining, this wipes out today’s existing common stock, shorts, naked shorts and any amount of counterfeit shares outstanding.
Explained this below link:
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172843308
I think he may work for the Market Makers. According to the white paper billons of counterfeit shares outstanding and a cram-down will make the illegal shares go away.
Kthomp, your argument has been the CONTRACT SPSPA doesn’t allow the pay down of the Liquidation Preference with the cancellation of the SPS. That maybe so under the terms of the contract but the Law does. The FHFA Director doesn’t need the Treasury approval.
Congress
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
The Treasury did not take a Perpetual Equity Investment in the enterprises, the government said so themselves, temporary investment period!
Cumulative Senior Preferred Stock with a 10% coupon that’s redeemable. The money sent to the Treasury above 10% pays down the Liquidation Preference and the SPS cancelled by LAW!
The lawyers are stuck on the Senior Preferred Stock Purchase Agreement. APPLY THE LAW!
THE LAW allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Quote: “Page 2732
EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.
NOTE: REPURCHASE, REDEEM, RETIRE...
WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
Quote:” That doesn't apply because FHFA has suspended capital classifications during conservatorship”. WRONG
FHFA and its Director are executive branch entities. They can not make changes to federal laws. Only Congress can change the law. And certainly cannot negotiate the law away.
HappyAlways, I don’t think the NWS is a violation of HERA, what’s done after the sweep is the crime: or should I say what was not done.
It’s bad faith and unfair dealing when the Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval. The Director has
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Quote: “Page 2732
To stay within Congressional Law governing the Enterprises the Jury award will have to be collected after the companies are adequately capitalized. IF NOT the FHFA will violate the law yet again just as the FHFA has numerous violations already.
Restrictions on Capital Distributions
Page 2731 Capital distributions while in conservatorship.
(a) Except as provided in paragraph (b) of this section, a regulated entity shall make no capital distribution while in conservatorship.
https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
Guido, sent the following to your contacts
FHFA Breach of Contract
dthompson@cooperkirk.com
ccooper@cooperkirk.com
vcolatriano@cooperkirk.com
ppatterson@cooperkirk.com
hhume@bsfllp.com
Leverage the FHFA Breach of Contract and emphasize the Bad faith and unfair dealing actions of the government in current and upcoming litigation. It took 8 random DC Jurors only 8 to 10 hours of deliberations to see right through the Government's false narratives.
It’s bad faith and unfair dealing when the Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval. The Director has
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Quote: “Page 2732
EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.
NOTE: REPURCHASE, REDEEM, RETIRE...
WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
“He that saith he is in the light, and hateth his brother, is in darkness even until now. He that loveth his brother abideth in the light, and there is none occasion of stumbling in him. But he that hateth his brother is in darkness, and walketh in darkness, and knoweth not whither he goeth, because that darkness hath blinded his eyes.” 1 John 2:9-11.
“If a man say, I love God, and hateth his brother, he is a liar: for he that loveth not his brother whom he hath seen, how can he love God whom he hath not seen? And this commandment have we from him, That he who loveth God love his brother also.” 1 John 4:20-21
Absolutely, as you said Robert, “Leverage the FHFA Breach of Contract and emphasize the Bad faith and unfair dealing actions of the government in current and upcoming litigation. It took 8 random DC Jurors only 8 to 10 hours of deliberations to see right through the Government's false narratives.”
It’s bad faith and unfair dealing when the Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval. The Director has
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Quote: “Page 2732
EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.
NOTE: REPURCHASE, REDEEM, RETIRE...
WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
Your argument doesn’t work anymore, we see right through your smoke and mirrors.
The problem with Professor Epstein his evaluation focused on the contract SPSPA between two government agencies. All he had to do was to apply the LAW WRITTEN IN HERA: with that being said doesn’t change the fact in what the Professor wrote is the ABSOLUTE TRUTH.
According to Professor Richard Epstein
The Senior Preferred Stock would have been redeemed.
Quote “The conflict of interest took a more ominous turn with the adoption of the Third Amendment between FHFA and Treasury nearly four years later. At that time, the market had quieted down, and the GSEs were making timely dividend payments on Treasury’s preferred stock. Nonetheless, FHFA and Treasury ripped up the old agreement, and substituted in its place a new deal that created a “net worth sweep” whereby all of the funds received by the GSEs were paid over to Treasury as a dividend, even in amounts far in excess of the original 10 percent dividend. The consequences have been huge. Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed. With the Third Amendment, about $128 billion that could have been used to redeem the preferred shares has been reclassified as a dividend payment, rather than a return of capital.” End of Quote
Please Note: “Without the Third Amendment, virtually all the senior-preferred stock would have been redeemed.” Wrote dated April 5, 2016... Today the SPS would not exist more than enough money has been collected by the Treasury.
Link: https://ricochet.com/326448/fannie-freddie-fiasco/
Quote: "Only if Treasury agrees to amend the contracts to allow such redemptions. The seniors are and have always been non-repayable while the funding commitment exists." WRONG!
Kthomp, your argument has been the CONTRACT SPSPA doesn’t allow the pay down of the Liquidation Preference with the cancellation of the SPS. That maybe so under the terms of the contract but the Law does. The FHFA Director doesn’t need the Treasury approval.
Congress
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
The Treasury did not take a Perpetual Equity Investment in the enterprises, the government said so themselves, temporary investment period!
Cumulative Senior Preferred Stock with a 10% coupon that’s redeemable. The money sent to the Treasury above 10% pays down the Liquidation Preference and the SPS cancelled by LAW!
The lawyers are stuck on the Senior Preferred Stock Purchase Agreement. APPLY THE LAW!
THE LAW allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Quote: “Page 2732
EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.
NOTE: REPURCHASE, REDEEM, RETIRE...
WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
Quote: “Hypothetically, JPS would need to vote in favor of conversion, though. Correct?” End of Quote
No, not necessarily, Treasury can opt to wipe-out the JPS with no vote.
If the explained by Barron does not bring results the restructuring of the theft could take place with several different outcomes.
By Barron: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172858519
Treasury restructuring explained below in two different ways, but not limited to the two.
One: Treasury could demand payment in full on the Liquidation Preference wiping out both JPS / Common in receivership.
Two: Transfer of Ownership by Cram-Down.
I hope the Treasury will choose to declare the Liquidation Preference paid in full and cancel the Senior Preferred Stock returning the companies to the shareholders.
The Treasury’s LP continues to grow the regulator is authorized or required to place the companies into receivership under specified conditions, which would result in our liquidation. Money received by the Treasury pays off the LP by confiscation of our companies. Leaving nothing for JPS or Common.
As we speak the value of the LP is greater than the entire business operation of Fannie and Freddie.
Company’s Financial Statement
Risk Factors Summary
GSE and Conservatorship Risk
Quote: "Our business activities are significantly affected by the senior preferred stock purchase agreement. Our regulator is authorized or required to place us into receivership under specified conditions, which would result in our liquidation. Amounts recovered by our receiver may not be sufficient to pay claims outstanding against us, repay the liquidation preference of our preferred stock or to provide any proceeds to common shareholders." End of Quote Page 33
Link: https://www.fanniemae.com/media/46276/display ;
"In the event the assets legally available for distribution to stockholders are insufficient to pay the liquidation preference of all Preferred Stock in full, the assets available for distribution will be divided among all holders of Preferred Stock on a pro rata basis, based on the value of the liquidation preference of each series of Preferred Stock." Page 5
Link: https://www.fanniemae.com/media/46276/display
Transfer of Ownership by Cram-Down
Explained,
Legacy Shareholders means, collectively, each person that owns common stock of the Company immediately prior to the closing of the Transaction (cram-down) which in no event shall include any of the Investors; or very few will remain afterwards maybe 1% or less.
A cram-down deal refers to a situation where an investor or creditor is forced into accepting undesirable terms in a transaction or bankruptcy proceedings.
In the case with Fannie Mae the Treasury's holding of senor preferred stock in the amount of $120.8 billion, with a liquidation preference of $185.5 billion.
If the Treasury converts this amount of SPS into common stock the Treasury in essence will own 99.9% of all the common stock outstanding. The number of shares outstanding depends on price per share at the time converted. The number of shares outstanding after the cram-down does not matter at all, it's the percent ownership, a transfer of ownership from the legacy common shareholders to the Treasury. This transaction will cause the legacy common stock to vanish along with any short positions, naked short positions as well as any counterfeit common stock outstanding. Afterwards, the Treasury can do a reverse split reducing the amount in number of the new common stock outstanding.
If the LP is not enough to wipe-out the common shareholders, the Treasury can exercise the warrants to finish them off. That is if the Treasury gets away with this theft.
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. So, the LP including the warrants are an illegal commitment fee.
You are right Robert
HERA can't ban Constitutional Challenges It is a right shared by everyone in this country, constitutional right at issue.
Collins v. Yellen, 594 U.S. ___ (2021)
Here, the right asserted is not one that is distinctive to shareholders of Fannie Mae and Freddie Mac; it is a right shared by everyone in this country. Because the succession clause transfers the rights of “stockholder[s] ... with respect to the regulated entity,” it does not transfer to the FHFA the constitutional right at issue.[16]
Note 16: The federal parties also argue that the Recovery Act’s succession clause bars the shareholders’ statutory claim. Because we have concluded that the statutory claim is already barred by the anti-injunction clause, we do not address this argument.
The “anti-injunction clause” of the Recovery Act provides that unless review is specifically authorized by one of its provisions or is requested by the Director, “no court may take any action to restrain or affect the exer-cise of powers or functions of the Agency as a conservator or a re-ceiver.” §4617 (f).
https://supreme.justia.com/cases/federal/us/594/19-422/#F16
It does not matter if the common shares outstanding are 4 billion or 500 billion, the number of shares outstanding after the conversion has absolutely nothing to do with the Intrinsic Value of the Business. But what it does do is transfer ownership to the Treasury by reason of the 99.9 % ownership of all of the common stock outstanding after the conversion. Afterwards, the Treasury can do a reverse split reducing the number of new shares outstanding to the amount of what ever number they choose. That will complete the theft wiping out the common shareholders.
I believe you are correct; the LP includes the original or core value of the Senior Preferred Stock.
One other thing I did not include, if the LP is not enough to wipe-out the common shareholders the Treasury can exercise the warrants to finish them off. That is if the Treasury gets away with this theft.
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. So, the LP including the warrants are an illegal commitment fee.
Transfer of Ownership Cram-Down
Explained,
Legacy Shareholders means, collectively, each person that owns common stock of the Company immediately prior to the closing of the Transaction (cram-down) which in no event shall include any of the Investors; or very few will remain afterwards maybe 1% or less.
A cram-down deal refers to a situation where an investor or creditor is forced into accepting undesirable terms in a transaction or bankruptcy proceedings.
In the case with Fannie Mae the Treasury's holding of senor preferred stock in the amount of $120.8 billion, with a liquidation preference of $185.5 billion.
If the Treasury converts this amount of SPS into common stock the Treasury in essence will own 99.9% of all the common stock outstanding. The number of shares outstanding depends on price per share at the time converted. The amount of shares outstanding after the cram-down does not matter at all, it's the percent ownership, a transfer of ownership from the legacy common shareholders to the Treasury. This transaction will cause the legacy common stock to vanish along with any short positions, naked short positions as well as any counterfeit common stock outstanding. Afterwards, the Treasury can do a reverse split reducing the amount in number of the new common stock outstanding.
Another violation of the Law!
ANYONE: What appropriation was afforded the Regulator to give a capital distribution??
What law gave the Regulator the authority to give away the companies' money while the enterprises are undercapitalized??
navycmdr, made an excellent point.
Cmdr Quote: "so how did FHFA under Calabria "Distribute" $1.09 Billion to the
Affordable Housing TRUST FUND from UNDER Capitalized GSEs? and FHFA acting director Sandra L. Thompson announced that the Housing Trust Fund and Capital Magnet Fund will receive a total of
$1.138 billion for affordable housing initiatives from Fannie Mae and Freddie Mac ? Posted on: February 28, 2022 AFFORDABLE HOUSING FINANCE
FHFA Announces Largest Amounts for Housing Trust Fund and Capital Magnet Fund" End of Quote
To stay within Congressional Law governing the Enterprises the Jury award will have to be collected after the companies are adequately capitalized. IF NOT the FHFA will violate the law yet again just as the FHFA has numerous violations already.
THE LAW
Code of Federal Regulation
1237.12 Capital distributions while in conservatorship.
(a) Except as provided in paragraph (b) of this section, a regulated entity shall make no capital distribution while in conservatorship.
(b) The Director may authorize, or may delegate the authority to authorize, a capital distribution that would otherwise be prohibited by paragraph (a) of this section if he or she determines that such capital distribution:
No 1: Will enhance the ability of the regulated entity to meet the risk-based capital level and the minimum capital level for the regulated entity;
No 2: Will contribute to the long-term financial safety and soundness of the regulated entity;
No 3: Is otherwise in the interest of the regulated entity; or
No 4: Is otherwise in the public interest.
Section c, this section is intended to supplement and shall not replace or affect any other restriction on capital distributions imposed by statute or regulation.
DID THE NET WORTH SWEEP
Enhance the ability to meet risk-based capital level? NO
Contribute to the long-term financial safety and soundness of the regulated entity? NO
In the interest of the regulated entity? NO
Is otherwise in the public interest? NO
(The taxpayers are responsible for the liabilities of the enterprises).
The Net Worth Sweep could not possibly have any rehabilitative effect and that one of the principal duties of the FHFA Director is to preserve and conserve assets.
Fannie is allowed to retain its earnings until it fully meets its applicable risk-based capital requirement (it’s currently short by $247.8 billion), but those increased retained earnings are matched by a dollar-for-dollar increase in Treasury’s liquidation preference.
https://gov.ecfr.gov/current/title-12/chapter-XII/subchapter-B/part-1237/subpart-D/section-1237.12
Thank you Robert well said,
Quote: “Are you saying that more Federal Spending by Unelected Bureaucrats in DC (the FHFA and UST) a potential violation of the US Constitution, is the Motivation Necessary and Proper to Exit the CONservatorships?” End of Quote
THE LAW
Code of Federal Regulation
1237.12 Capital distributions while in conservatorship.
(a) Except as provided in paragraph (b) of this section, a regulated entity shall make no capital distribution while in conservatorship.
(b) The Director may authorize, or may delegate the authority to authorize, a capital distribution that would otherwise be prohibited by paragraph (a) of this section if he or she determines that such capital distribution:
No 1: Will enhance the ability of the regulated entity to meet the risk-based capital level and the minimum capital level for the regulated entity;
No 2: Will contribute to the long-term financial safety and soundness of the regulated entity;
No 3: Is otherwise in the interest of the regulated entity; or
No 4: Is otherwise in the public interest.
Section c, this section is intended to supplement and shall not replace or affect any other restriction on capital distributions imposed by statute or regulation.
DID THE NET WORTH SWEEP
Enchance the ability to meet risk-based capital level? NO
Contribute to the long-term financial safety and soundness of the regulated entity? NO
In the interest of the regulated entity? NO
Is otherwise in the public interest? NO
(The taxpayers are responsible of the liabilities of the enterprises).
The Net Worth Sweep could not possibly have any rehabilitative effect and that one of the principal duties of the FHFA Director is to preserve and conserve assets.
Fannie is allowed to retain its earnings until it fully meets its applicable risk-based capital requirement (it’s currently short by $247.8 billion), but those increased retained earnings are matched by a dollar-for-dollar increase in Treasury’s liquidation preference.
https://gov.ecfr.gov/current/title-12/chapter-XII/subchapter-B/part-1237/subpart-D/section-1237.12
Mr Tim Howard Quote: “I honestly don’t see any issue where a new claim, brought by a plaintiff with standing and the wherewithal to finance the suit, and that is not time-barred by the statute of limitations, has a realistic chance of being successful.” End of Quote WRONG
The above is one example of many that explains the problem that has lasted 15 years. Will the so called experts ever apply the law?
Violations of the Charter Act and the Federal Enterprises Financial Safety and Soundness act of 1992 both as amended by HERA.
Barron Quote: "Statute of limitations would rely on DOJ guidance for recurring claims due to material changes introduced in the letter agreements. For example the new increase of liquidation preference for free introduced within the last 6-years." End of Quote
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172340943
The FHFA / Treasury continue to change the contract, letter agreement dated January 14, 2021, So, the Statute of Limitations are not up. PAGE 6 Liquidation Preference increases dollar for dollar for all the retained earnings of the enterprises.
https://home.treasury.gov/system/files/136/Executed-Letter-Agreement-for-Fannie-Mae.pdf
I just noticed today that someone named “Rodney” posted on Mr Howard’s blog. This person was not me.
I have a ton of respect for Mr Howard, I personally believe he is wrong pushing the exercise of the warrants. What gives anyone the right to give away our companies?
Where is "maximize profits for taxpayers" written in the Charter Act? Specifically, in this provision entitled Fee Limitation of the United States: and this fee limitation includes the warrants.
The Law actually exists!
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 304. SECONDARY MARKET OPERATION
Fee Limitation
Quote: “(f) PROHIBITION ON ASSESSMENT OR COLLECTION OF FEE OR CHARGE BY UNITED STATES.—Except for fees paid pursuant to section 309(g) of this Act and assessments pursuant to section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, no fee or charge may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any mortgage, asset, obligation, trust certificate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury pursuant to subsection (c) of this section.” End of Quote. Page 16
Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 309. GENERAL POWERS OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION
Federal Reserve Banks to Act as Fiscal Agents (Fannie Mae and GNMA)
Quote: “(g) DEPOSITARIES, CUSTODIANS, AND FISCAL AGENTS.—The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a)(2), for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.” End of Quote. Page 29
Links:
FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT
As amended through July 25, 2019
link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
Think about it. Why would anyone hangout on this board claiming to have no investment position, continuing to push a cram down on the common shareholders??
The White Paper exposed the counterfeit shares in the take down of the enterprises in 2008 and according the writer billions of counterfeit shares were created. A successful cram down will make these illegal shares vanish. This is how I see it.
Why else would anyone advocate such a hideous crime?
Guido, sent the following to your contacts
Treasury/FHFA violation of federal statutes
dthompson@cooperkirk.com
ccooper@cooperkirk.com
vcolatriano@cooperkirk.com
ppatterson@cooperkirk.com
hhume@bsfllp.com
The Senior Preferred Stock Purchase Agreement is an illegal contract.
Explained:
Treasury and FHFA violating Federal statutes. The Federal statutes are the Charter Act, the Safety and Soundness Act of 1992, as amended by HERA, Administrative Procedures Act, and potentially the Chief Financial Officers Act.
The FHFA had no right to take over the companies under the Law of HERA.
When Paulson met with the directors of Fannie Mae and Freddie Mac to inform them of his intent to take over their companies, neither entity met any of the twelve conditions for conservatorship spelled out in the newly passed HERA legislation. Paulson since has admitted he took the companies over by threat.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Page 2734 Twelve Conditions
APPOINTMENT OF THE AGENCY AS CONSERVATOR OR RECEIVER
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
The Senior Preferred Stock, with a variable liquidation preference outlined in the SPSPA and its amendments and share certificates is a new product for the purposes of the Safety and Soundness Act of 1992 as amended by HERA.
Congress directed the Director of FHFA to apply the Administrative Procedures Act to the new products sold to Treasury. The FHFA did not follow the administrative procedures congress required in the plain language of the safety and soundness act.
The Director of FHFA as regulator violated the safety and soundness act and the administrative procedures act by not following the statutory duty to approve new products issued by the GSEs to Treasury for the purpose of stabilizing the secondary mortgage market.
The law required the publication in the federal register of the SPS with their variable rate liquidation preference tied to the commitment. It requires a public comment period, and a rule making process to make the SPS legal. It is the same law that required the capital rule. And the same law that required FHFA a year ago issue the new products law for MBS products. They have ignored this requirement for 15 years.
Director Lockhart Regulator, and Director Lockhart Conservator. Holding both positions as Regulator and Conservator; Conservator Lockhart is required by law to file notice to himself as Regulator.
The Safety and Soundness Act required Director Lockhart as regulator not conservator to approve a new product issued by Director Lockhart acting as conservator FHFA-C (SPS with variable liquidation Preference) to Treasury under the terms of the SPSPA for the purpose of carrying out the secondary mortgage market. He was required as regulator to file notice in the federal register, seek public comment and issue federal regulations for the new product we call the Senior Preferred shares sold to Treasury.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Page 2689
SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
The CFO act requires the Treasury department based on published accounting standards to determine if their actions of funding through appropriations, ownership of 100% of the GSEs net worth and non-regulatory control of the GSEs through the SPSPA require the consolidation of the GSEs liabilities onto the nations balance sheet. Do the actions of Treasury under the SPSPA require such consolidation under the plain language of the Chief Financial Officers Act?
The Congressional Budget Office publication states, “Federal Government effective ownership of Fannie Mae and Freddie Mac.”
The Enterprises have been Nationalized by the Government according to the CBO: The liabilities have not been added to the National Debt nor have the Shareholders been compensated by U.S. Law of the 5th Amendment.
Congressional Budget Office
From: Estimates of the Cost of Federal Credit Programs in 2023
Page 1, Foot Note 1.
Quote: “Fannie Mae and Freddie Mac have been in federal conservatorship since September 2008. CBO treats the two GSEs as government entities in its budget estimates because, under the terms of the conservatorships, the federal government retains operational control and effective ownership of Fannie Mae and Freddie Mac. For more discussion, see Congressional Budget Office, Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions (August 2020), www.cbo.gov/publication/56496; and Congressional Budget Office, The Effects of Increasing Fannie Mae’s and Freddie Mac’s Capital (October 2016), www.cbo.gov/ publication/52089” End of Quote
Link: https://www.cbo.gov/system/files/2022-06/58031-Federal-Credit-Programs.pdf
The United States Treasury in violation of the Charter Act has failed to treat as public debt the transactions of the United States when the FHFA placed Fannie Mae and Freddie Mac into conservatorship. This obligation was never recorded as public debt as required by law.
The Charter Act the Law of the Land.
Charter Act SEC. 304. SECONDARY MARKET OPERATIONS
(c) Terms and Rates
Quote: “All redemptions, purchases, and sales by the Secretary of the Treasury of such obligations under this subsection SHALL BE TREATED AS PUBLIC DEBT TRANSACTIONS of the United States.” End of Quote Page 14
Link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 304. SECONDARY MARKET OPERATION
Fee Limitation
Quote: “(f) PROHIBITION ON ASSESSMENT OR COLLECTION OF FEE OR CHARGE BY UNITED STATES.—Except for fees paid pursuant to section 309(g) of this Act and assessments pursuant to section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, no fee or charge may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any mortgage, asset, obligation, trust certificate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury pursuant to subsection (c) of this section.” End of Quote. Page 16
Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 309. GENERAL POWERS OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION
Federal Reserve Banks to Act as Fiscal Agents (Fannie Mae and GNMA)
Quote: “(g) DEPOSITARIES, CUSTODIANS, AND FISCAL AGENTS.—The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a)(2), for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.” End of Quote. Page 29
Links:
FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT
As amended through July 25, 2019
link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
SENIOR PREFERRED STOCK PURCHASE AGREEMENT
Dated September 7, 2008.
link: https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-SPSPA_09-07-2008.pdf
ALL THE AGREEMENTS
link: https://www.fhfa.gov/Conservatorship/Pages/Senior-Preferred-Stock-Purchase-Agreements.aspx
Perry, Fairholm and all the other Plaintiffs made the fatal error to not challenge the SPSPA using what I believe are violations of the Charter Act and the Safety and Soundness Act that would nullify the SPSPA outright. Further arguments could be made that the 200 billion commitment where not authorized by The Appropriations act as they werent used to purchase obligations or securities but rather used as a tax payer debt obligation of the GSEs with a rate that also violates the Charter. Potential violations of the CFO act leading to 14th amendment violations could have been argued as well as MQD issues. But none of that was brought before a court.
The Plaintiffs attempted to get around the HERA sand trap by arguing the NWS was ultra vires by way of the APA’s arbitrary and capricious language, or Delaware corporate Law etc etc. All failed except the Common Law implied good faith and fair dealings implicit to contracts that Congress can’t legislate away. So here we are cheering on the last scraps of a failed legal strategy that will do nothing but take cash from the beleaguered GSEs and make some Attorneys more money.
I believe that the 2nd, 3rd, and 4th amendments to the SPSPA have created new distinct injuries to the GSEs and shareholders such that under the continuing claims doctrine, the Statute of limitations on the original Charter Act and Safety and Soundness act violations instituted by the SPSPA are still ripe.