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you are claiming the companies were not in distress but the financial documents surrounding this event are sealed and the 2008 sealed BOD meeting minutes are not public, so no way to tell if it was coercion or a breach of the BOD, how did you determine it was legal per 12 U.S. Code § 4617(a)(2) / 3(a)-(l) ?
The common shareholder has 6 rights when they buy shares, but you also have personal rights as the 5th amendment to the constitution, which holds among others, a guarantee that government cannot seize private property without making a due compensation at the market value of the property
The preferred shareholder basically have the same rights but do not have voting rights, and preferred stockholders receive dividends before common stockholders, and they have a priority claim over common on Liquidation proceeds, all the preferred series rank equal to each other in rights,
And they have no right to redemption of the preferred stock (fnmas) So Common stock take greater risk, but stand to make a greater return on their investment if the company succeeds
The Preferred shares are typically bought and held by institutional investors as they have some tax benefits, private individuals however are not eligible for such favorable tax treatment
The Common and Preferred both have NO “PAR value”, and both types are suspended from their rights, preferred shares have NO PAR value but instead have the non-mandatory “stated value” of $25 or $50, historically preferred traded higher during conservatorship than common because they had the APA claim, now that is lost and the preferred thus trade substantial lower
District court
1) 16-3113 Patrick J Collins v. FHFA-C, FHFA, and Treasury(SCOTUS opinion "for cause" IS illegal)
2) 13-1053 Fairholme Fund, Inc. v. FHFA and Treasury
3) 13-1288 In re: Fannie Freddie
4) 13-1439 Arrowood v. FHFA Treasury FNMA/FMCC
5) 17-497 Rop v. FHFA and Treasury
6) 18-2506 Atif F. Bhatti vs. FHFA and Treasury
7) 18-3478 Wazee Street Opp. v. FHFA and Treasury
Federal Court
8) 13-465C Fairholme Funds, Inc. v. United States
9) 13-496C American European Insurance
10) 13-542C Francis J. Dennisd
11) 13-385C Washington Federal v. United States
12) 13-608C Bryndon Fisher (FNMA)
13) 14-152C Bruce Reid (FMCC)
14) 13-672C Erick Shipmon
15) 13-698C Arrowood Indemnity Company
16) 14-740C Louise Rafter
17) 13-466C Joseph Cacciapalle.
18) 18-281C Owl Creek Asia I L.P.
19) 18-369C Akanthos Opportunity Master Fund
20) 18-370C Appaloosa Investment
21) 18-371C CSS LLC
22) 18-529C Mason Capital L.P
23) 18-1124C Wazee Stree
24) 18-1150C Highfields Capital
25) 18-711C 683 Capital Partners
26) 18-712C Joseph S. Patt
27) 18-1226C Perry Capital LL
28) 18-1155C CRS Master Fund LP
29) 18-1240C Quinn Opportunities Master LP
30) 20-737C Joshua J. Angel v United States Treasury
The problems are several, the Direct claim is "a takings claim" for now, as SCOTUS refused to give relief on APA, so the lawsuits are derivative in nature as Sweeney earlier mentioned, the rights and thus the harm shareholders have however is direct, so relief must be given
Derivative: The government wants the lawsuits to be derivative and then later claim plaintiffs do not have standing because the succession clause prohibits this
Direct: the government does not want it to be direct as they certainly will have to pay a large amount of money to shareholders, as the 3rd amendment is in effect in perpetuity and confirms it is a taking (it is only suspended temporarily until they are fully capitalized)
So the rulings from now on will be very interesting as basically everybody who ruled something made the mess worse than it was
The FHFA and treasury certainly do not want it to be a taking claim, as then they own the mortgage market, and adding these trillions to their budget was not their intention, besides that, the problem is they can never sell the shares again as they took them for the people
Then the options become very limited as the government does not want direct but wants it to be a derivative claim, but doesn’t want to return the funds, but from a conservators point of view it could not have entered into the 3rd amendment as that would create a 4th branch in the constitution that the SCOTUS allowed, while not having the power to create this 4th branch, and the SCOTUS said the Legislative branch granted the powers so “it is a very special conservatorship” what FHFA forgot to tell upfront, and why we have the lawsuits in the first place
Then if the direct and derivative claims fail you have the property interest which basically says that if you own something it cannot be taken away by legislation without due process and the “prop-erty rights” and subsequently the 14th amendment comes into play, what is more of the same “the right you have cannot be taken away”
In Oral arguments the government recognized this and concluded it “it is not clear” and it is a “merits” question, this of course is strange as the constitution doesn’t allow semi-legal or semi-illegal
So the Common shareholders have six rights:
1) voting power
2) ownership
3) the right to transfer ownership
4) dividends
5) the right to inspect corporate documents
6) and the right to sue for wrongful acts
Then if it is not derivative or direct the above #5 is breached as the documents are sealed in the lawsuits, so that shareholder right was also breached, but all in all to keep a short story long it is a monster Breach by the government that keeps getting worse
The removal of “for cause“ in HERA did not fix the constitutional defect, the SCOTUS knows it is not severable, and therefore did not rule on it, the FHFA is now because of SCOTUS unconstitutionally structured again, the issue was not solved it is worse than before it was tested, before CFPB and FHFA it was not legal either only no SCOTUS did not rule on it, so it is was tolerated, now after SCOTUS it is not legal for an independent agency to be headed by a single director, in CFPB it concluded it could be severed for the Dodd-Frank act but it did not in FHFA
For this the separation of powers is important, there are 3 branches
1) Legislative power
2) Executive power
3) Judicial power
These 3 branches operate independent from each other and cannot prevent actions of another branch, so when something is decided by the legislative branch it cannot exclude the Judicial branch, and when the Executive branch does something it CAN be challenged by the judicial branch, so the Legislative and Executive branch are controlled by the Judicial branch
Then the action taken by the Legislative branch (in HERA) is they prevented judicial review in 4617(f), this is possible as it is an independently structured agency headed by a board, as the law says 44 USC 3502(5) an independent agency IS headed by a board of governors, among others the FHFA is one of them, however “independent” has an EXCEPTION in the separation of powers, as SOTUS decided in several precedents: it can be independent but should be headed by a multimember board or the powers granted must not be executive
The Novel style single director and independent executive powers did not make it thru the SCOTUS and is illegal, so now the FHFA has to choose either between a dependent/executive or an independent agency with a board of governors
Both sides however (executive or independent) will have a severe effect on the powers, if the FHFA stays independent is must be headed by a board, and the powers granted to the single director are taken away and are thus unconstitutional, or the agency becomes executive and the fiduciary duties would never have allowed them to enter into the 3rd amendment what would end the PSPA
Also in SCOTUS is noted 12 U.S.C. § 4617(b)(2)(J)(ii) (may act in the best interest of the FHFA ) It said because the legislative branch allowed this provision it MIGHT be legal, however this does not work in the conservator statute as siphoning profits is not something a conservator could do, any lawsuit challenging 12 U.S.C. § 4617(b)(2)(J)(ii) would win
Then in the term "Board of Governors" in 44 USC 3502(5) only refers to the Federal Reserve System, it does not, it is declaratory of what an independent agency means
44 U.S. Code SUBCHAPTER I—FEDERAL INFORMATION POLICY
44 U.S. Code § 3502 - Definitions
https://www.law.cornell.edu/uscode/text/44/chapter-35/subchapter-I
https://www.law.cornell.edu/uscode/text/44/3502
The individual rights people own are the shares they bought, if the government comes in and takes the economic value of the shares (either common or pref) it must pay either compensation under the 5th amendment or it must prove it is not a taking if it is challenged in court, however if both fail you have the property interest as your right cannot ever be lost
https://www.law.cornell.edu/constitution-conan/amendment-14/section-1/the-property-interest
You misunderstood, Sandra Thompson, (not Kevin) received the power from the president to be the head of FHFA, which has a statute that gives her power over the GSE’s this power is unlimited within her function, she can decide herself to put the entities in conservatorship, even if they are the most profitable companies on earth, and this is uncontrolled power and should be controlled by the separation of power and by the legislative branch, as the powers of the executive branch are only to administer, the independent style of the FHFA makes that difficult as it is headed by a single director while the law says it should be a board to avoid self-interest by the separation of power i.e. by the president
The SCOTUS decided the 3th amendment was within the authority of the FHFA as it was passed by the executive branch, the FHFA-C however also need to obey the conservatorship statute “put in sound and solvent condition” which is clearly mentioned in HERA, so yes it is not Ultra vires decided by the SCOTUS as the legislative branch gave the power, but yes it was ultra vires as a conservator could never have entered into such a deal in the first place, siphoning profits is not something any conservator could ever agree with as that is not what conservators do, to make matters worse for the government the SCOTUS decided it was a very special conservatorship with a self-dealing statute, however this was not told upfront by Mr. De Marco, he claimed on national television it was a process of stabilizing the entities not to wind them down for the benefit of the government
The Judicial branch in HERA gave power to the single director
(now removable at-will), but the separation of power forbids any branch being excluded from the other branch, so for instance the single director who can do whatever she wants, cannot by statute demand preclusion of the legislative branch, this voids 4617(f) as it is a breach of the separation of powers and no single person can be without Judicial review
So it must be said that per 44 U.S.C. § 3502 (5) the term “independent regulatory agency” means the Board of Governors of……………. the Federal Housing Finance Agency
And for effectively controlling the enterprises it is not wishful for the FHFA to have a new board every 4 years, so yes it could be partisan but it is not the intent of congress as they wanted a “for cause” single director, so logically it now wants be a bipartisan board
The SCOTUS in CFPB asked a supplemental question can “for cause” be severed from the Dodd Frank act, “Our severability analysis does not foreclose Congress from pursuing alternative re¬sponses TO THE PROBLEM—for example, converting the CFPB into a MULTIMEMBER AGENCY."
SCOTUS: In upholding 4617(f) the problem start for the government as it is now a taking under property interest under the constitution, we had this discussion before and you are under the impression individual rights disappear by court order, while only the basic rights shift, it cannot disappear, under no circumstance, as otherwise there is no need for any law as the court can confiscate your right anyway
Yes of course even when you turn the “Handbook for Conservators” upside down you still cannot reprint it, the FHFA will lose all fiduciary cases on 12 U.S.C. § 4617(b)(2)(J)(ii), this self-dealing provision will cause too much collateral damage if it would ever become legal to self-deal
the 3 cases to focus on are the Collins (3) related cases, Lamberth case, and the Schwartz (former Sweeney) case
1) Collins related cases:
17-497 Rop v. Federal Housing Finance agency ……. Common & Preferred, Derivative
Hon. Paul L. Maloney DISMISSED for failure to state a claim on 09/08/20, but the complaint was DECLARATORY AND INJUNCTIVE RELIEF, so it could not have been dismissed in light of SCOTUS
18-2506 Atif F. Bhatti vs. FHFA ………………………… Common & Preferred, Derivative
Basically the same as the ROP case but no ruling yet, the oral argument was on 10/15/19 and holds as most important “striking down independent” and the provisions
18-3478 Wazee Street Opportunities v. USA …… Common, Class action, Derivative
Basically the same as Bhatti but with added Private Nondelegation Doctrine
2) 13-1053 Fairholme Fund, Inc. v. FHFA……Preferred, Direct & Derivative
Complaint for declaratory and injunctive relief and damages, for contract claims fiduciary duty, and fair dealing
13-1439 Arrowood Indemnity Company v. Fannie Mae……Preferred, Direct & Derivative
Complaint for Declaratory and Injunctive Relief and Damages and jury trial demanded
for contract claims fiduciary duty, and fair dealing
13-1288 In re: Fannie Mae/Freddie Mac SPSPA Class Action Litigations …. Common & Preferred, Class Action, Direct & Derivative, Jury Demand for contract claims fiduciary duty
3) 13-465C Fairholme Funds, Inc. v. United States………..Common & Preferred, Direct & Derivative (with 10 consolidated cases)
March 9, 2020 the interlocutory appeal was granted the CFC identified six “controlling questions of law” raised by its order, the most important questions are 1 and 6
(1) Whether the court lacks subject-matter jurisdiction over plaintiffs’ direct claims for breach of fiduciary duty and breach of implied-in-fact contracts.
(6) Whether plaintiffs’ allegations that the FHFA entered into an implied-in-fact contract with the Enterprises to operate the conservatorships for shareholder benefit fail as a matter of law.
FHFA controls the G-fees, but prior to FHFA, OFHEO controlled the G-fees, so it must be said that because of Failing OFHEO, they were put into conservatorship
Thanks FOFreddie, these questions can only be answered after the lawsuits are settled or ruled upon, the problem now is, the FHFA has executive power and the president has 100% control over the outcome of this saga, as he can install 1 person without the courts halting self-deal actions, so there is no future for the FHFA in this construction, as the property interest under the constitution are now breached, and even the government admitted in oral argument it is “not clear” and it is a merits question
The SCOTUS recently added a new layer to the FHFA self-destroy mission, namely if the FHFA is allowed to self-deal, it is per-se a taking and forecloses selling to any new investor who might want to buy shares, as they instantly can be taken away again in the future, this new added SCOTUS stress event specifically point to a problem that was unforeseen by SCOTUS I belief. The government did not tell upfront to the people this was a VERY special conservatorship that could Self-Deal, this was also in lower court a problem as investors “could not reasonably expect siphoning profits of the conservatee”
So solving this mess is not easy for the FHFA, as congress not intended the FHFA to be more powerful than the president, and it basically prevents the FHFA from functioning properly ever again, as at no time in the future the board can, and will accept a voluntary conservatorship again, but upon the wishes of the single director it can put the entities in conservatorship again as it only needs to modify the capital standard to absurd heights (like the latest capital standard) and a decade conservatorship becomes legal again
This controlling of both sides of the coin without Fiduciary duty is not in any way legal by common law, but the courts up to now did not rule against it, and by that, it made the problem worse than it was, the FHFA boxed themselves into a corner, self-dealing is not legal, and will not become legal in the future, not even for the FHFA, the collateral damage will be too much for any administration and will not pass the test of time
Then on relief or remedy it is too hard to predict any future outcome as none of the lawsuits had a ruling on the merits of the case, and even the SCOTUS refused to give direct remedy to shareholders, it only gave a step forward in the ruling “for cause” is illegal by the separation of powers but it did not rule on the severability of “for cause” in HERA, in CFPB they asked this but it wisely(for them) did not do it in Collins
The Commons were not left out, and commons have the same rights as the preferred when the company survives, only if the company is liquidated the preferred rank above the common, but that is not the issue, Fannie and Freddie have never been more profitable, so both classes count in fiduciary duty and fair dealing, as it otherwise is a taking, and if it is a taking it is a breach
Yes, correct, the now illegal installed Sandra Thompson will need to make room for the new board of governors.
The SCOTUS opinion is final and it cannot be disputed (28 U.S. Code § 2201(a) - Creation of remedy). So an independent agency CANNOT be headed by a single (acting) director (44 U.S.C. § 3502 (5)), and thus the power given to this single (acting) director is unconstitutional too, nobody is making a fuss about it yet, but this is a huge problem for the FHFA, if the FHFA is not constitutional ALL the actions are void, if it will come to voiding everything has to be seen, but still
And since the issue is already under litigation, the FHFA wants to wait on the ruling in Bhatti I guess, to say the FHFA can no longer be independent under the separation of powers, after that is it is a matter of “is for cause severable from HERA”, it is, but not without deleting the provisions on which the APA claim in Collins was lost, the government is in a lose-lose situation
12 U.S.C. § 4617(f) Limitation on court action (anti-injunction clause)
The FHFA is now executive and does not operate independently as the president installed and controls the directions of the FHFA now, so consequently, it cannot limit the power of the judicial branch that should control the actions of the president (per the separation of powers)
The class (in 13-1288) no longer holds Fannie Mae common holders, how they left undocumented is a guess for me too
https://www.courtlistener.com/docket/4212341/in-re-fannie-maefreddie-mac-senior-preferred-stock-purchase-agreement/
Updated the class in 13-1288
13-1288 (1:13-mc-01288)
In re: Fannie Mae/Freddie Mac Senior Preferred Stock Purchase Agreement
Class Action Litigations …. Common & Preferred, Class Action, Direct & Derivative, Jury Demand
Honorable: Royce C. Lamberth
District Court for the District of Columbia
The Class:
1) 111 John Realty Corp. … Preferred
2) Barry P. Borodkin ....... Preferred
3) Barry P Borodkin Sep Ira....... Preferred
4) Joseph Cacciapalle....... Preferred
5) Marneu Holdings Co. .. Preferred
6) Melvin Bareiss (RIP). .. Preferred
7) Timothy J. Cassell...... Common Freddie Mac
8) United Equities Commodities Company ….. Preferred
Direct claim, breaches of contract, breaches of the implied
Covenant of good faith and fair dealing, breaches of fiduciary duties,
And violations of Delaware and Virginia law governing dividends
If the Direct claims are denied it also claims these Derivative: breaches of fiduciary duty, compensatory damages and disgorgement, breached the terms of the certificates of designation and the implied covenant of good faith and fair dealing, appropriate equitable and injunctive relief to remedy breaches of contract, breaches of the implied covenant of good faith and fair dealing, breaches of fiduciary duty, and violations of Delaware and Virginia Corporate law, including rescission of the Third Amendment.
Yes I do expect the government to take a stance on what happened, as Now the president (not a lawyer) violated the constitution and no longer respects the law he is serving, we should hear from the president himself, or another high official, the SCOTUS opinion is an official opinion, if abandoned/neglected/disrespected, it will need "an official" to clear the skies, an attorney representing the government will not do for this kind of violation, as it is a basic understanding the president should obey the separation of powers, it now is not lawyers against other lawyers, it now is the president against the constitution, that a whole different ballgame, maybe it is a mistake and soon will be corrected, what happened is a power grab that does not deserve a statement from a lawyer, but in order to correct his wrong, it should be explained by an official what their current stance is, remember this will never ever go away, the FHFA is now unconstitutional FOREVER, sooner or later the president will have to say something about it, with the SCOTUS ruling it is now more urgent because of the rebalanced power, and the power the president illegally took
What do you think the plaintiffs will tell all the judges, the FHFA is now legal and the president did respect the SCOTUS ruling, by the action he took?
Yes, among others, the process is now disrupted, the government now has a HUGE problem, as it was not allowed to take this action (installing Sandra as acting director), nor will it ever become legal in the future(their stance before the SCOTUS ruling), SCOTUS made clear independent and a single director do not go together for FHFA, so as president you will have to obey this judicial branch ruling, the constitutional thinking/understanding of the SCOTUS is what president Biden MUST follow per the constitution, its mandatory, it is his job is to administer this, with this action he now is thus violating (actually much worse obstructing justice) the constitution, he no longer is allowed to install an (acting) single director in FHFA, maybe it was overlooked who knows, but the FHFA now does have a huge problem, it is now an executive agency with a controlling board, we will see what Biden has to say about that, as now no relief can be given on anything the court says, as president Biden might not respect that either, kind of Wild-West for now
No, I do not agree, the court will strike down 4617(f) when SCOTUS answers to question 2) in Collins “strike down the provisions that make FHFA independent” it will therefore strike down 4617(f), this can be seen in the prayers for relief in the 100% ready to release 18-2506 Bhatti case, and 18-3478 Wazee Street Opportunities Fund IV LP v. United States, if the FHFA is no longer independent because “for cause” is illegal it does no longer have the freedom to prohibit the judicial branch from ruling, as an executive agency is to administer, if 4617(f) was to stay, the FHFA would need to replace the single director by a board of governors
Bhatti:
4. Declaring that FHFA’s structure violates the separation of powers, that FHFA may no longer operate as an independent agency, and striking down the provisions of HERA that purport to make FHFA independent from the President and unaccountable to any of the three Branches of the federal government, including 12 U.S.C. §§ 4511(a), 4512(b)(2), 4617(a)(7), and 4617(f);
https://gselinks.com/Court_Filings/Bhatti/17-cv-02185-0027.pdf
Wazee:
1) Declaring that FHFA's structure violates the separation of powers, that FHFA may no longer operate as an independent agency, and striking down the provisions of HERA that purport to make FHFA independent from the President and unaccountable to any of the three Branches of the federal government, including 12 U.S.C. §§ 4511(a), 4512(b)(2), 4617(a)(7), and4617(f);
http://www.glenbradford.com/wp-content/uploads/2018/08/18-cv-03478-0001.pdf
thank you chessmaster315!
me neither, this path is too difficult for the government to continue
Agree “only the allegations being challenged in Court matter”
As a reminder, 13-465C Fairholme COUNT XI, which was granted by Sweeney on Dec 6, 2019, now in Fairholme interlocutory appeal in federal court, If the 3rd is illegal in Collins (Question #2), it is established the BOD never could have agreed to those terms in Fairholme count XI, so the FHFA breached the implied-in-fact contract with the BOD what will end the conservatorship itself because those breaches make the BOD contract void-ab-initio and not voidable
https://www.docketbird.com/court-documents/Fairholme-Funds-Inc-et-al-v-USA/REDACTED-DOCUMENT-filed-by-ACADIA-INSURANCE-COMPANY-ADMIRAL-INDEMNITY-COMPANY-ADMIRAL-INSURANCE-COMPANY-ANDREW-T-BARRETT-BERKLEY-INSURANCE-COMPANY-BERKLEY-REGIONAL-INSURANCE-COMPANY-CAROLINA-CASUALTY-INSURANCE-COMPANY-CONTINENTAL-WESTERN-INSURANCE-CO/cofc-1:2013-cv-00465-00422
Page 94
Breach of Implied-in-Fact Contract Between the United States and the Companies (Derivative Claim on Behalf of Fannie Mae by Plaintiff Barrett)
268. Barrett incorporates by reference and realleges each allegation set forth above, as though fully set forth herein.
269. Before Fannie was placed into conservatorship on September 6, 2008, FHFA and Treasury unambiguously offered to place Fannie into conservatorship by consent, under Section 4617(a)(3)(I), with certain conditions described below, and the board of directors accepted this offer. FHFA made no finding of insolvency, undercapitalization, or any other ground to impose conservatorship under Section 4617(a)(3)(A)-(H) or (J)-(L) without Fannie’s consent.
270. FHFA and Treasury offered, and the board of Fannie accepted, a conservatorship that would aim to “preserve and conserve [Freddie’s] assets and property” and restore Freddie to a “sound and solvent condition.” See 12 U.S.C. § 4617(b)(2)(D). The offer was also of a conservatorship that would end when that goal was achieved. Neither of these conditions was ambiguous.
271. Underlying the Agencies’ offer was their promise that FHFA would not, as conservator, wind down or liquidate Fannie. When it publicly announced the conservatorship, FHFA stated that it could not, as conservator, place Fannie into liquidation. It also stated at the time, and for several years into the conservatorship, that its goal was instead to “restore [Fannie’s] assets and property to a sound and solvent condition,” which continued course of performance constitutes evidence of the offer’s original terms. Fannie’s board shared this understanding of conservatorship when it consented.
272. When consenting to the conservatorship, the board of Fannie furnished good and valuable consideration to the Agencies by agreeing to forbear from a judicial or legislative challenge that the United States feared. See id. § 4617(a)(5). This forbearance was unambiguously furnished in exchange for promises that FHFA would act to restore Fannie to a safe and solvent condition.
273. The United States and Fannie, through the acts described above, entered into an implied-in-fact contract. The terms of that contract, as relevant here, were that FHFA if made conservator would “preserve and conserve Fannie’s assets and property,” that its conservatorship would continue only until Fannie was placed in a safe and solvent condition, and that, in exchange, the board of Fannie would consent to, and not challenge or litigate, such a course of action. Both the Government and Fannie intended that an implied contract would exist. That contract required FHFA to preserve Fannie’s assets and property and forbade the Government from diminishing or expropriating Fannie’s assets and property. This intent was demonstrated through the offer and acceptance detailed above. The Government’s offer was not ambiguous in its terms, and the board’s acceptance was manifested in FHFA’s subsequent imposition of conservatorship based on the board’s consent.
274. FHFA and Treasury had actual authority, as agencies of the Government, to bind the United States.
275. The imposition of the Net Worth Sweep breached the contract by rendering it impossible for Fannie to build and retain the capital necessary to exit conservatorship and return to normal business operations.
276. The Net Worth Sweep, thus, directly harmed Fannie by preventing the termination of the conservatorship; stripping Fannie of its ability to generate and retain capital. Fannie is accordingly entitled to damages.
277. FHFA has a manifest conflict of interest with respect to the Net Worth Sweep. FHFA was a signatory to the Net Worth Sweep, it benefits from it as an agency of the Government, and it has steadfastly defended it in court.
"The AIG case"
Judge Wheeler ruled the 79.9% warrant is an illegal exaction, on appeal this case was overruled because of lack of standing as AIG did not participate in the suit(direct/derivative), then the supreme court refused to hear the case, but the initial order of Judge Wheeler was not overruled, in Fannie and Freddie the FHFA should have filed a lawsuit against the FHFA
"Upon full consideration of the record and the arguments of counsel, the Court finds that FRBNY’s taking of 79.9 percent equity ownership and voting control of AIG constituted an illegal exaction under the Fifth Amendment. The Board of Governors and the Federal Reserve Banks possessed the authority in a time of crisis to make emergency loans to distressed entities such as AIG, but they did not have the legal right to become the owner of AIG"
Agree with you, very frustrating, but to give it another thought, if Collins gets what it wants (3th void-ab-initio/SPS paid down/FHFA unconstitutional/strike down the provision(s)) 12 U.S. Code § 4617(a)(2)” at the discretion of the Director” it gives the relief to Collins 2012 upwards (the thing they asked for), but because Collins receives “strike down the provisions” it also receives 2008 upwards relief because the director had no power to do anything it did
So because both the Government and Collins agree “for cause” is illegal and the SCOTUS will not add a 4th branch to the constitution, the outcome will most likely be it is changed to “at will”
And because an executive agency is not independent, it therefore must strike down the provisions that makes the FHFA independent accordingly, so the director did not have “the discretion” to put the companies into conservatorship, potentially voiding the entire conservatorship
Please do elaborate your thoughts on why the sealed meeting minutes of the BOD in 2008 will not affect conservatorship and how prospective relief will be given after 2012 with a potential of un-redacted 2008 files that will be released in other cases, after the 2012-up relief is given in SCOTUS
This is the class-action lawsuit with jury demand that tells Judge Lamberth the outcome in the Collins case will instantly solve a lot of their counts, and only remedy remains to be addressed
“If the Supreme Court reaches and resolves that issue, its decision may alter the scope and nature of the analysis performed by the parties’ experts on liability, who will address what investors “reasonably expected” before the Third Amendment”
1) The class is telling the 3th is not what can be “reasonably expected”
2) Collins is asking SCOTUS is the 3th legal
Thus if illegal in SCOTUS (most likely) it is solved that it could NOT be reasonable expected
Therefore it would be best to hold a status conference to allow for a fuller discussion of these issues and what adjustments should be made to the current Scheduling Order, as the parties share the Court’s desire to move these cases to resolution as promptly as is reasonably possible
The pre-trial by jury starts in only 10 months
13-1288 In re: Fannie Mae/Freddie Mac Senior Preferred Stock Purchase Agreement Class Action Litigations …. Common & Preferred, Class Action, Direct & Derivative, Jury Demand
Honorable: Royce C. Lamberth
District Court for the District of Columbia
Direct claim, breaches of contract, breaches of the implied
covenant of good faith and fair dealing, breaches of fiduciary duties,
and violations of Delaware and Virginia law governing dividends
If the Direct claims are denied it also claims these Derivative: breaches of fiduciary duty, compensatory damages and disgorgement, breached the terms of the certificates of designation and the implied covenant of good faith and fair dealing, appropriate equitable and injunctive relief to remedy breaches of contract, breaches of the implied covenant of good faith and fair dealing, breaches of fiduciary duty, and violations of Delaware and Virginia Corporate law, including rescission of the Third Amendment.
CAUSES OF ACTION
COUNT I BREACH OF CONTRACT - ANTICIPATORY BREACH (Fannie Preferred Class) Direct Claim Against Fannie Mae and FHFA
COUNT II BREACH OF CONTRACT - ANTICIPATORY BREACH (Freddie Preferred Class) Direct Claim Against Freddie Mac and FHFA
COUNT III BREACH OF CONTRACT - ANTICIPATORY BREACH (Freddie Common Class) Direct Claim Against Freddie Mac and FHFA
COUNT IV BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING (Fannie Preferred Class) Direct Claim Against Fannie Mae and FHFA
COUNT V BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING (Freddie Preferred Class) Direct Claim Against Freddie Mac and FHFA
COUNT VI BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING (Freddie Common Class) Direct Claim Against Freddie Mac and FHFA
COUNT VII BREACH OF FIDUCIARY DUTIES (Fannie Preferred Class & Fannie Common Class) Direct Claims Against Fannie Mae and FHFA
COUNT VIII BREACH OF FIDUCIARY DUTIES (Freddie Preferred Class & Freddie Common Class) Direct Claims Against Freddie Mac and FHFA
COUNT IX VIOLATION OF DELAWARE LAW GOVERNING DIVIDENDS (Fannie Preferred Class & Fannie Common Class) Direct Claim Against Fannie Mae and FHFA
COUNT X VIOLATION OF VIRGINIA LAW GOVERNING DIVIDENDS (Freddie Preferred Class & Freddie Common Class) Direct Claim Against Freddie Mac and FHFA
COUNT XI BREACH OF FIDUCIARY DUTIES (Fannie Preferred Plaintiffs & Fannie Common Plaintiffs) Derivative Claims Against FHFA
COUNT XII BREACH OF FIDUCIARY DUTIES (Freddie Preferred Plaintiffs & Freddie Common Plaintiffs) Derivative Claims Against FHFA
Second Amended Complaint: https://www.courtlistener.com/recap/gov.uscourts.dcd.163155/gov.uscourts.dcd.163155.71.0.pdf
https://www.courtlistener.com/docket/4212341/in-re-fannie-maefreddie-mac-senior-preferred-stock-purchase-agreement/
The Class:
1) N. Bradford Isbell ....... Common
2) Michelle M. Miller ...... Common
3) Charles Rattley ………… Common
4) Timothy J. Cassell ...... Common
5) 111 John Realty Corp… Preferred
6) United Equities Commodities Com ….. Preferred
7) 1:13-cv-01149 Joseph Cacciapalle ..... Preferred
8) 1:13-cv-01421 Marneu Holdings, Co .. Preferred
9) 1:13-cv-01443 Barry P. Borodkin ....... Preferred
July 1, 2020 complete fact discovery by January 22, 2021, trial by jury date is set May 16, 2022
Mar 29, 2021 ORDER granting in part and denying in part 123 Motion to Continue
May 25, 2021 Miscellaneous Relief
What sometimes is forgotten The government presumes all is legal, this basis however is redacted, and plaintiffs question that basis “all is legal” so before it becomes legal it will need to be un-redacted, as otherwise you will not have a legal bases for obtaining and or selling the stake you claim you have, the Consequential damage of being unconstitutional structured and implementing an illegal act makes everything you have done questionable, everybody wants to move on and make the best of it, but in court we are still stuck in the same Groundhog day Sept 6, 2008
The question is really “does the government have what it claims is has”
On current Collins claim we walk backwards and ask: is the 3th legal if not, was the FHFA legal, if not, should the provision which make the FHFA independent be removed, if removed, could they have enacted an illegal act while being illegally structured themselves? The complexity of the question makes it hard to dissent, maybe a concurrence/dissent, but not a dissent
And so they could not have agreed to conservatorship as the power would have been missing to do so
Yes 12 U.S.C. 4617(a)(7) is about “for cause” if the FHFA is truly independent it should NOT be headed by a single director but by a board, as stated in “44 U.S.C. § 3502(5) Term “independent agency” means the Board of Governors of the FHFA” so 4617(a)(7) already breaches 3502(5), this problem is identified by:
1) 17-497 Rop v. Federal Housing Finance Agency and Treasury…….Common & Preferred, Derivative
2) 17-2185 Atif F. Bhatti vs. FHFA and Treasury …Common & Preferred, Derivative
3) 18-3478 Wazee Street Opportunities v. FHFA and Treasury ………Common, Class action, Derivative, Jury Demand
Good point, this is about the inaction and merits, if it should read this way, it is a one-sided contract, so it would be an unconscionable contract, these kind of contract are therefore unenforceable under law, on the other hand it also is a merits question, we all know nobody can participate in an illegal act so why would it be possible for the government to participate in an illegal act only, the words on paper just play out differently in the real world, if you read it differently, it clearly states the government MAY participate in an illegal act, it just doesn’t work that way, nobody can, not even the government
“6.12. Non-Severability. Each of the provisions of this Agreement is integrated with and integral to the whole and shall not be severable from the remainder of the Agreement. In the event that any provision of this Agreement, the Senior Preferred Stock or the Warrant is determined to be illegal or unenforceable, then Purchaser may, in its sole discretion, by written notice to Conservator and Seller, declare this Agreement null and void, whereupon all transfers hereunder (including the issuance of the Senior Preferred Stock and the Warrant and any funding of the Commitment) shall be rescinded and unwound and all obligations of the parties (other than to effectuate such rescission and unwind) shall immediately and automatically terminate.
So if something is declared illegal the purchaser “MAY NOT” participate in it
So now we have following situation, the FHFA-C cannot withdraw the 3th amendment because of 6.12, while if illegal declared by the court, the “government” may or may NOT declare it severable, this it is a unconscionable contract, thus void, the government knows this and that is why it is fighting for prospective relief, meaning the 3th is voidable instead of void an plaintiff should get relief effective 2012 going forward
Collins is asking for both on one hand it wants prospective relief, on the other it wants all payments over and above 18.9B to be treated as a pay-down of principal and that would essentially deem the government paid back, for this to happen however the 3th needs to be voidable, but since a conservator never could have agreed to such an action, it is void, so Collins is asking for prospective, while the courts can only void the action, on the other hand the government is asking is for prospective relief too, claiming if they do not get the prospective the conservatorship itself is void