Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
I think you are being hyperbolic. Chevron ruling does not create an imperial POTUS. The unitary executive does not create a king. The official acts with immunity is not the Chevron ruling. What these rulings do is set the boundaries back to what the constitution declares. They actually strip power from the imperial king. The Chevron doctrine means that unelected bureaucrats under the president can no longer legislate through the administrative actions and rule making of the executive branch. It means Congress can no longer pass overly broad open ended statutes. It means that Congress will have to compromise and vote on new laws that would cover “major questions of society”. They need to do their homework and draft statutes that tell the Executive branch exactly what they are to administer. Over all this is a check on the power of the unitary executive if that is how you want to describe it. Imagine if the unitary executive could continue with the deference of the courts under the old Chevron decision. That is how we got into Fanniegate in the first place. It doesnt mean any of the fear mongering that you are spouting. We now have 3 co-equal branches of government again as it was originally conceived.
Can’t do it. I’m too lost wandering in the woods. Twice now this weekend I am misremembering things. First Trump is firing Mell Watt. And now Im remembering the dissent opinion of Collins and turning that into there being a non-severability clause when in fact Congress did not include either a severability clause or a non-severability clause. Thank you for correcting me. Barron should refrain from thinking on FNMA for a while. Brain is getting stale.
The reason I think the SCOTUS was wrong was because HERA as written in plain as day language by Congress includes a non sever-ability clause at the beginning of law. SCOTUS did the very thing Congress instructed not to be done. Sever a clause from HERA and leave the rest in direct contradiction to the written words Congress included in the law. All of HERA should have been found Unconstitutional. But the Supremes do whatever they want.
Hey thanks for looking out. Im pretty sure I typed up my thought backwards. Error is all on me. I truly am lost sometimes. Was trying to say that Trump had to wait to appoint Catman because of the unconstitutional clause in HERA. Catman should have been in the job on day 1 of the Trump Administration awaiting Senate approval. But Trump had to wait for Mels term to end. I think I have the chronology correct now. But if I screwed that up again. Please correct it for the board.
Come on man! How do you think Mark Calabria got his job when he did? The Supreme Court found the “for cause” requirement for the POTUS to remove the FHFA Director unconstitutional. The Supremes used a scalpel to remove that clause and keep the rest of HERA instead of a bulldozer to get rid of HERA. That enabled Trump to can Mel Watt and install Mark Calabria the cat man. I think that was a lousy decision. They should have nullified all the decisions done up to that point by unconstitutional single directors and sent HERA back to the drawing board at Congress. Congress should have required an independent commission be created and appointed conservator of a GSE. Imagine if the Commission had to vote on accepting Treasury’s corrupt terms and conditions for its purchase agreements? It would be like just about every other independent agency and would only have needed to be independent when acting as a Conservator.
I think there are two concepts at play here that get commingled. First the social safety-net programs that the US has enacted over the years within a framework of a regulated almost free-market capitalism of a constitutional Republic nation. I don’t think most Americans have a problem with safety nets. They speak to the morality of a people willing to provide for the neediest among us. And are generally good government. These programs are the product of both political parties throughout our history. What many people fear is a transformation of our form of Government to some form of authoritarian regime using the tactics of Marxism to bring us “socialism” through the equitable redistribution of wealth from a formerly sovereign people to an authoritative state. Call it what you want. Socialism, communism, fascism. The result is the same for a formerly mostly free society and has been repeated across the globe and throughout time. Always appealing to the sense of victimhood of the masses with equity for all sold through the virtues of “socialism”.
Guido its ok to disagree. But I feel you commented with your disagreement too early. This post (Post #796755) clearly addressed your reasonings. It was not HERA that caused the problems with fanniegate. If the plain language of HERA was actually followed, the GSEs would be trading as private companies now. It was the corrupt actions of Treasury in their corrupt terms and conditions of their purchase agreement that violates other foundational statutes that are responsible for all the things you stated. The corrupt bureaucrats love nothing better than to have the victims blame the wrong entity for their vial actions. We must focus our resolve on the actual perpetrators of the crimes. Obfuscation and misdirection wrapped in misinformation is the weapons they have used since the beginning. The SPSPA and Treasury’s role in it must be the focus of shareholders to fix this.
HERA was challenged and found to be unconstitutional. Remember the removal for cause issue? What is wrong with HERA? The law is fine. The problem of the permanent temporary Conservatorship has its roots in the Treasury Department’s terms and conditions of its purchase agreement. Those terms give control over if, when, and how the Conservatorship can end. I believe the only path for a legal solution to ending the Conservatorship is to bring lawsuits against the Treasury Department and FHFA-R for violating the Charter Act and maybe some other laws. HERA is a fine law. SPSPA is and always was the problem.
Also, Congress was very specific in HERA that courts could not question the actions of the Conservator. So there is no ambiguity there and this Chevron decision doesnt apply to the actions of the conservator,in my opinion.
Im not too sure that it will have much impact on the GSEs. The ruling doesn’t revisit regulations that have already been promulgated. The Chevron decision has to do with federal agencies interpretation of ambiguous federal laws when proposing regulations. So moving forward from today, FHFA’s rule making ability will have a judicial oversight if needed on any new regulations they propose. But as far as conservatorship goes, FHFA-C doesn’t promulgate regulations. The real impact of this ruling will be its effect on congress. Congress will have to focus more on meaning what they say and saying what they mean in new statutes and stop writing open ended ambiguous laws that leave the interpretation up to the director of an agency. Those types of statutes lead to the major questions issues in regulations drafted by unelected bureaucrats.
Hey great comment thanks again. How is releasing the GSEs from conservatorship advocating for socialism? Hmmm. Also Treasury allegedly paid 1 billion for their equity of 1 million shares of senior preferred shares. The Jury already ruled on the LP as violating common law. Collecting the LP increased for free under the latest agreements would just trigger more of the same violations. Treasury received back all the money they loaned through the commitment thereby satisfying the requirement to protect the taxpayer. Calling the commitment dollar amount tacked on to the shares equity is just word play. I call it an illegal charge or fee attached to their 1 billion equity investment. If on the other hand Treasury bought 400 million shares of seniors your calling the outstanding LP equity might make sense. Thanks again for the comments.
It doesn’t matter, I am explaining what the contract in fact says. What actually happened is a different topic. Donotunderstand doesn’t understand, which means many others don’t understand what has happened as well. Knowledge is power.
The only section of the Charter Act that was amended by HERA was Section 304(G). That section gave Treasury temporary authority to purchase GSE obligations and securities to help the secondary mortgage market. That section expired long ago. It is the section that Treasury used to enter into the SPSPA with FHFA gaining 100 percent of ownership of GSEs net worth and non-regulatory control of FNMA including whether and if the Conservatorship can ever end.
Close but no cigar. If you read the SPSPA, you will see the Treasury Department bought 1million shares of Senior Preferred Shares for $1,000 per share or $1 billion dollars. However, the “variable Liquidation Preference” is a charge that is tacked on to the 1million shares of SPS that reflects dollar for dollar, how much “commitment” FNMA uses from Treasury. Initially $100 billion available to draw from. Second amendment increased that to $200 billion of commitment. The Treasury did not purchase 100 billion worth of SPS and then purchased another 100 billion worth of SPS in the second amendment to the SPSPA. No. They only ever bought 1 million shares of SPS at $1000 per share. So what is the Variable Liquidation Preference? And what are the warrants? Well, if you read the SPSPA they are defined as a “commitment fee”. If FNMA takes treasuries money, then in consideration of that money, FNMA must give treasury warrants for common stock, and must attach the money borrowed plus 10% (later NWS) to each share of the Senior Preferred. The problem with a “commitment fee” is that the Law “Charter Act” forbids or prohibits the USA including Treasury from imposing any “charge” or “fee” on the purchase of any obligation, mbs, or security issued by FNMA.
Now that was a good coherent post. And I agree. More please.
Seems you’ve run out of incoherent ideas and are now just making stuff up.
Hey thanks for the pushback Clarencebeaks21. Your arguments are precisely what I look for and need from posters. They help me alot. I don’t think the APA new products angle is a slam dunk. But it is worth exploring. The SPS aren’t like any type of existing security or obligation. I think that section 4.4 is different from other shareholder agreements because a potential shareholder of a company usually doesn’t get to write their own terms and conditions for valid issuance of shares in the agreement for the shares they will purchase before they actually purchase them.
Do yourself a favor and stop with the fancy word salad. Post hoc, ad-hominem, static statutory analysis. Sounds impressive but again I stand by my analysis. The SPS are not preferred equity shares issued by the corporations under section 303. They are defined as a variable liquidation preference senior preferred shares in an agreement between Treasury and FHFA. They obligate the corporations to surrender their entire net worth to Treasury. They are obligations in my book. No capital stock or preferred equity with these features,have ever existed before from the Corporations. It is not “perhaps” as you say but rather a “fact”. Sorry I was not clear. The SPS product are not a stock issued by the Corporation, it is an ever evolving agreement called the SPSPA. The SPSPA is the new “product”. Not the preferred shares themselves. They just enable the rest of the agreement. All you need to do to realize this is read the share certificates. The following is the SPSPA:
https://www.fhfa.gov/sites/default/files/2023-07/FNM-SPSPA_09-07-2008.pdf
Just read the background to see the entire agreement is prefaced on section 304 to purchase the SPS. Read section 4.4 to see that the SPS “when issued in accordance with the terms of this Agreement, the Senior Preferred Stock, and Warrant will be duly authorized, validly issued….” So the black letter words of this contract between FHFA and Treasury don’t mention section 303 but that the SPS are valid only if issued under the terms of their agreement. It is a new product for the purpose of stabilizing the secondary mortgage market under section 304. Again the agreement is all that has mattered since 2008. The agreement is the product.
But it is all academic, because the variable liquidation preference and warrants are an illegal charge or fee assessed on the issuance of 1,000,000 senior preferred equity shares that Treasury bought for $1 billion.
Not far-fetched at all. Section 303 does cover preferred stock. What you are suggestion is that Treasury used section 304 authority to purchase section 303 preferred securities. Correct? But that is not what happened. You would be correct had treasury used section 304 to purchase $187 billion of section 303 preferred stock. That would have been fine. In fact that is what Treasury was supposed to do according to the law. The problem is that the creation of the SPS was not done by the GSEs under section 303 but rather Treasury used section 304 to purchase $1 billion worth of senior preferred shares then added an infinite return that somehow has ballooned to over 300 billion in LP and warrants for 79.9 % of common stock. The novel terms of the SPS were created externally from the GSEs (GSEs had no say) in an agreement between 2 agencies of the federal government premised in the agreement on Section 304 of the FNMA charter act. Section 303 has no bearing on this. These are new products conceived by fellow traveling conspirators using section 304 of the Charter act. If lawyers are duped into thinking like you propose, then it is no wonder that they have failed in every attempt. They aren’t thinking corruptly enough.
Clarence,
Section 304 of the FNMA charter act is found on pg 13-18 of the below link:
https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
It is pretty simple. The only way to not understand the plain language of the law here is to read into the words something that is not written. Like wiseman does when he erroneously states a product must be an activity. The law only says new products issued under Section 304 of the FNMA Charter Act. The SPS are a new novel security product issued for the purposes of section 304. The SPSPA itself states that the SPS are authorized by section 304. It is such a novel product that nobody can agree what the SPS actually are. Are they a loan? Obligation? Equity? Ive read arguments for all here. The only thing they are in my opinion is illegal.
Interestingly, the original House Bill in 1992 did not use the term “Products” but rather the term “Program”. The original proposed bill also did not include section 304 of FNMA’s charter act.
Thank you Clarence, I have read all of this very carefully. You are correct with respect for Freddie Mac. However, you will see that in the case of FNMA the APA requirements of the director of FHFA also apply to any new products issued under section 304 of the Charter act. This section includes the general corporate obligations, original Treasury backstop, prohibition of fees by US, and Treasury’s temporary purchase of obligations or securities. So clearly, The SPS is a new type of security product under section 304 with its commitment fee or charge of warrants in consideration of nothing and a variable LP based on how much money the GSEs used. A fee that violates the plain letter law of the very section 304 that prohibits such an abomination. These SPS products would never have made it past the public comment and rule making process. A clear violation of the APA by the regulator.
Patience is a virtue.
Ok sometime during the up-coming week.
If you are serious about filing a claim, it must be done in the federal district Court in Newark, not a NJ small claims court. Read through my posts to get an idea of what a possible claim could entail, if you are still interested, let me know. There is still time under the statute of limitations for the recent letter agreements and there may be a chance of pulling in the original agreement using the doctrine of continuing claims. There are others interested as well.
You cannot file a Federal Tucker Act claim in a state small claims court. You can only sue the United States In a federal court. As long as the claim is less than $10,000 it can be done in any Federal District Court. As to why I haven’t yet done so, can be found in my past posts.
Wise Man,
That was a lot of words about the SPS. Next time try reading what you are replying to. My posts have said the LP is not on the balance sheet. Nowhere have I said the SPS are not on the balance sheet because they are. Reading is fundamental. I guess you dont want anyone to agree with your hypothesis. Thats ok. I think you might be right. I dont understand why you post if you dont want anyone to agree with your theory. Strange behaviors.
Thanks Rodney. If you look at page 59 you will see that the SPS are listed as 120 billion of liability and equity. I don’t know what that means. I do know that the LP is factored correctly in footnote 15. Here the proper accounting under the statutorily required regulatory capital rules of the Safety and Soundness act of 1992 is done. Not GAAP. It is shown here, using very poorly worded sentences, to result in a shortfall of greater than 200 billion. So much for a positive net worth. If you read this footnote they say something to the effect that “awh man, Do we have to follow this law? but but If we use GAAP we can show a 80 billion positive net worth”. Therefore as wiseman has been saying, the LP is legally and properly accounted for in a distant footnote far removed from the make believe consolidated balance sheet. Financial statement fraud at its finest brought to you by our helpful friends from the government running our companies for us.
Kt,
Thanks for replies. Can you educate me on the following? What is the current LP of the SPS? Is that total LP reflected on the balance sheet? If I were to look at the 10K or another official financial statement, where would the total LP be listed? I thought the LP has never been paid down. Still owe the original 200 billion borrowed. So isn’t the total like some astronomical number hundreds of billions and growing every quarter? If it is on the balance sheet why wouldn’t there be a negative net worth? If it is not on the balance sheet, is it a real liability? Is it fake? What is it exactly? Why do we need a cram down or even acknowledge it if isn’t on the balance sheet of the GSE’s? If it is not reflected on GSE balance sheet then would that not be financial fraud? Or has Wise Man been correct all along and it is in a separate account not reflected on the balance sheet? Thanks for any potential replies.
You say the SPS are equity. Are you sure? The SPS are a novel financial product that has never existed before 2008. (Violation of the Safety and Soundness act of 1992) If anything the SPS are more like obligations. Afterall, if the Companies are obligated to pay back the LP that has been accumulating since day one, how can you consider them to be equity? Isnt equity the residual ownership after all debts are paid off? The SPS LP is a debt that is owed to Treasury. The current value of which is greater than the company. So what equity do the SPS have in GSEs of a negative net worth of a couple hundred billion?
I and my other 35 pro se aliases don’t understand you. Maybe ask someone to help you compose your posts so they make sense to anyone other than yourself. From the evidence I can find, the only separate accounts have been that Treasury used Tarp funds in an illegal “separate account” to provide the “commitment” in the SPSPA. While they purchased billions worth of MBS on the secondary market to help their banking buddies. The whole Conservator charades purpose has been to cover up those other super secret separate accounts while hiding the evidence behind national security and executive privilege.
Thank you no name. Your right. Mental block on my part. By the way. The mini-kt was in reference to how you tend to comment on my comments to KT usually with a reference to his signature page about lawsuits. No offense intended. I like kt perspective. He is a realist, I agree with both him and you that the gov can and will do whatever they are going to do. But I do feel that just because they can, have, and will do what they want, doesnt mean shareholders shouldn’t explore what the law actually says they should do. Discussion is good. I got into this investment as a binary all or nothing trade back in 2013. It is an investment in the future of our country. If legacy shareholders make out in the end it will be because we have maintained a Democratic Republic with a crony capitalist economy. If legacy shareholders are wiped out it means our country has turned tyrannical, call it what you want communist, socialist whatever. The equitable needs of the state will outway the needs of the individual. We can enjoy our new wallet of CBDCs with negative interest rates and social credit scores. We can enjoy our 45% capital gains tax to make sure that equity reigns supreme. So, for me it has always been a political trade.
So if this plan happens as many here are speculating, the commons will most likely be worth less than a dollar? After decades of conservatorship when the GSEs are finally released and turned back over to the private shareholders, two of the largest financial companies with trillions in assets and the underpinning of the real estate market with a gov backstop will be relegated to trading as a penny stock on the OTC? What am I missing? Can they get back onto a real stock exchange with sub dollar common equity?
Ok mini kt. Obviously filing another claim against the Gov for the net worth sweep would not fly for the reasons you state. However, FHFAs duty to act in good faith and fair dealings is still mandatory should the current SPSPA terms and conditions be implemented and as a result undermine legacy shareholder share certificates.
Hi Kthompt, I am pretty confident that your explanation of a breach of good faith and fair dealings is wrong and why it would not carry foreword to new claims. As I understand it, the implied covenants arise from common law. In the United States, they are a permanent feature of all contracts imposed on all parties to a contract. Can a judge or court ruling really make it go away because of a prior ruling of 800 million awarded to shareholders? In the case of GSE shareholders, the implied covenants are a permanent feature of the share certificates (contracts). The covenants are separate and distinct from the fiduciary duty to act in good faith. That duty arises from Statutory law, and can be waived and indeed has been waived. Because of the terms of the Conservatorship, the FHFA-C assumes the role of the GSEs as the counter-party to the shareholders in the share certificate contracts. FHFA-C under common law (implied covenants) has a duty to act in good faith and fair dealings in upholding the terms of the share certificates.
Because we still live in a free society based on the rule of law, this inconvenient fact pattern of the common law of contracts is an unmovable barrier to implementing the SPSPAs as they are currently written. The SPSPAs do not square with the letter or spirit of the applicable laws and clearly undermine the terms of the existing (legacy)share certificates. FHFA had the opportunity to put the GSEs in receivership. The implied covenants would not have applied and congress could have drafted new charters and created a new housing finance system. FHFA chose instead to be a conservator. Common law is the foundational law of the United states, upon which all of our statutes are based on. Common law requires that FHFA-C for as long as it remains conservator must act with good faith and fair dealings with respect to the terms of the share certificates. It cannot be satisfied and waived in the future by a court ruling awarding monetary damages. The duties remain. I believe shareholders can continually sue to prevent the terms of the contracts from being undermined by a Conservator who fails to act in good faith and fair dealings. In my opinion the current terms of the SPSPA continue to undermine the shareholders. If I am wrong, please educate me. Be specific, if you know of court cases that support your thesis that the Lamberth Court case puts an end to future litigation of implied covenants because a Jury awarded money damages please let me know.
Hi Clarence,
It is quite a confusing situation to wrap one’s head around. There are 3 laws, and 3 potential roles for a Director of FHFA to play. First the Charter act privatized the former gov agencies and created FNMA. The safety and soundness act of 1992 established the framework for regulating the GSEs. Finally HERA came along and modified both the charter act and the safety and soundness act. HERA replaced the original regulator with the new “independent agency” FHFA. The Director of FHFA priority role is to regulate the GSEs based on the requirements enumerated in the statutes. This role of the Director establishes regulations required of him such as the Capitol rule, and new products rule. The Director in this role also issues reports and is supposed to provide in writing, permission for the GSEs to make a capitol distribution from the retained earnings account if the retained earnings account is below the statutory minimum. Thus all of these requirements of the director must follow the Administrative Procedures Act. In other words, the Directors role as regulator is Administrative and subject to potential APA claims. HERA also allows the Director in the regulator role to appoint himself as either a receiver or a conservator of the GSEs. The role of receiver is subject to the enumerated actions in the statutes to achieve the end result of liquefying the GSE. Therefore there is no guesswork to achieve the result. The law states exactly what a receiver is allowed to do. Finally, HERA allows the Director as Conservator to take any action necessary to put the GSE in a sound and solvent position and benefit the FHFA itself. Unlike a receivership, the final result of Conservatorship can’t be guaranteed by statute. It is necessary therefore to provide the Conservator the assumption of correctness in the actions that he takes to achieve the goals of rehabilitation of the GSEs and benefit the FHFA. Congress includes the anti-injunction clause only for the actions taken by the Director acting as Conservator. All of the courts have ruled that only when the Director acting as Conservator acts ultra-vires will a court step in. They have ruled that the Conservator has not acted ultra-vires. To date there have been no legal claims against the Director as regulator for violations of other laws.
No they didnt lose. The APA doesnt apply to the actions of a conservator under HERA. APA deals with rule making. I contend that the FHFA as regulator violated the APA when it allowed the FHFA as Conservator to sell to treasury a new novel investment product consisting of senior shares with an illegal commitment fee or charge in the form of a variable liquidation preference based on the amount of money leant from the Government’s treasury. This is a magical commitment fee whose form can change with the stroke of a pen. The statutory APA requirements for such a new investment product are written in the Safety and Soundness act of 1992. Well to continue the theme. The corrupt plaintiff Attorneys, or as FFF likes to say the dumb attorneys didn’t bother to bring an APA claim based on the actual laws that matter, choosing instead to play in the HERA actions of a Conservator sandbox. You know the actions that Congress bared the Courts to review? What a great idea, let’s ignore all the laws governing the GSEs and FHFA and instead focus all our efforts for 16 years on the actions of FHFA as Conservator. Now the Statute of limitations has run out. Better hope Crazy Carlos is right.
The reason you do not understand is because you fail to understand. The answer to why the Supremes and every other court for that matter ruled the way they did has been answered in my posts for a couple years now. You have eyes. Go read them. The plaintiff attorneys have corruptly conspired to obfuscate the issues for decades and run the clock out by refusing to allege any law breaking by the government, choosing instead to play nicely in the HERA powers of Conservator sandbox. Hello. HERA says you cant challenge the actions of the conservator. Its called the presumption of correctness. The same way you can never actually win a property tax claim, unless the tax assessor does something wrong. Plaintiff attorneys had some 15 years to bring claims of illegal activity wrt charter act safety and soundness laws etc. they corruptly chose not to. Now here we are. Better hope carlos is right.
You are correct. When I say void, I am referring to my prior reasoning in multiple posts. You correctly state that the SPSPA is not void as a matter of court rulings yet. What I was trying to state, is that I believe the gov knows that if this verdict is aloud to stand then there will be a 8-0 finding of facts that the terms of the SPSPA result in a violation of common law contract rights as codified in Del, and Virginia law. The current arrangement of LP on the Seniors that increases dollar for dollar of net-worth is just a NWS part 2. The SPSPA has been found by the DC courts to violate common contract law. Full stop. I believe Lambirth shouldn’t approve the gov motion on the merits. But I dont think merits have anything to do with it. I believe that should the verdict stand, there is now the ability for injuntive relief based on the terms of the SPSPA itself. I don’t think the agreement will withstand any attempt to collect on the LP or warrants should there be a new lawsuit from any shareholder in any district court just by filing a little tucker act claim for illegal exaction. Kind of hard to dismiss that 8-0 jury verdict in DC. This is what I believe.
Saying something is false or partly false without stating why you believe that with either an opinion or some facts is a waste of time. I have established over many posts why I believe part 1 and 2 to be creditable assumptions. You have not. So your post serves no actual purpose. I have no problem and would prefer you educate me so that I don’t perpetuate any falsehoods. Thanks. Dumb is one way to think of the attorneys. I prefer to think of their strategy as malicious and extremely effective if the goal is obfuscation and run out the clock. Given the exponential rise in unethical law-fare perpetuated by the industry over the last decades I see no other explanation.