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FHFA cannot convert the senior, as the money for it was already paid (now under decision in several cases)
There is wishful thinking by FHFA they can keep the money and execute the warrant and keep the liquidation preference until paid. With a 10% interest
Please advice who you think currently has fiduciary duty towards shareholders ? see post 600066
HERA is relying on the constitution you cannot go opposite of the constitution in a law, HERA therefore must comply to the constitution, the conserve and preserve is a global conservator duty, this is not specific to HERA
The 3th amendment:
This amendment gave treasury the authority to receive ALL profits from Fannie and Freddie in perpetually, the amendment was added to the existing SPSPA, this contract(besides it lacks BOD consent)was made between the FHFA and Treasury both governmental agencies, and if there is a contract (SPSPA) and the 3th amendment is added and found by court it is illegal(already declared illegal by the 5th circuit) the contract(SPSPA) becomes voidable
Currently following plaintiffs hold the 3th amendment illegal:
1) 18-2506 Bhatti vs. FHFA……………Common & Preferred, Derivative
2) 13-1288 In re Fannie Mae/Freddie Mac Senior Preferred Stock Purchase Agreement
Class Action Litigations ………………………… Common & Preferred, Class Action Direct & Derivative
3) 17-497 Rop v. Federal Housing Finance agency…….Common & Preferred, Derivative
4) 18-3478 Wazee Street Opportunities v. United States………Common, Class action, Derivative
5) 13-1439 Arrowood Indemnity Company v. Fannie Mae……Preferred, Direct & Derivative
6) 13-1053 Fairholme Fund, Inc. v. FHFA……Preferred, Direct & Derivative
7) 13-465C FAIRHOLME FUNDS, INC. v. United States………..Common & Preferred, Direct & Derivative and most of the other 21 cases pending in Sweeney’s court
The FHFA and Fannie and Freddie are fully authorized and have legal authority to void the contract as that is what the law says https://www.investopedia.com/terms/v/voidable-contract.asp
On page 31 of Sweeney’s opinion she says The contract, otherwise stated, is one step removed from the purported genesis of the fiduciary duty, then the fiduciary duty is already present and logically FHFA has fiduciary duty towards shareholders, because when the warrant is executed the 1 step is taken
The FHFA has fiduciary duty towards Fannie and Freddie but HERA forbids it, that is different than the FHFA has no fiduciary duty towards shareholders, because HERA forbids fiduciary duty and can act out of self-interest(illegal) and does allow self-dealing(illegal) https://www.investopedia.com/terms/s/self-dealing.asp it does not make the fiduciary duty go away, remember shareholder rights must always be protected as otherwise there would be no stock market
The SCOTUS can do whatever it pleases and overturn HERA or not, but ones a verdict comes, shareholder rights are restored and it doesn’t matter if HERA stays or goes, the outcome will be the same both ways
On order to solve this saga:
1) Seila “for cause” solves illegal misbehavior in HERA as “at will” is an executive agency and can only determine upon regulation and not on frivolous private demands
2) Sweeney will restore Fannie and Freddie and recapitalize them instantly
3) Lambert/Atlas/Schiltz/Maloney/Alejandro will solve the rights individual shareholders have in the future and what the stock market can expect in a future downturn, a very important decision that is probably why it is done by 5 judges(although not simultaneously)
It doesn’t matter what FHFA says, if he think the commons get diluted, and I don’t blame him, he is not telling wall street to invest pronto into it, he is out of options, the facts represent themselves, and what anybody thinks, you, me, or anybody else is not important, and will not affect anybody, his goal it to prevent as much as possible people trying to buy into the matter, all people already involved will not make much of it and understand the wrongdoings and implication FHFA faces, this is a total loss for them, or the constitution needs to be re-written, the BOD only gave consent to preserve and conserve and put in sound and solvent condition(they were already sound and solvent) then for FHFA to enter into a contract that gives away 79.9% without consideration is unheard of, we can blame fiduciary duty or self-dealing or whatever we wish, the fact of the matter is, it is wrong and illegal, and for the future of the stock market we hope for the best, but in no lawsuit upto now did I see any negative ruling as stating plaintiffs were wrong, only lack of authority was the motto, but that doesn’t give relief in the SCOTUS and Sweeney
The Robinson case was not a loss at all, it was the same old lack of authority due to unconstitutional HERA https://www.courtlistener.com/opinion/4445969/arnetia-robinson-v-fed-housing-fin-agency
“As relevant here, it explicitly limits judicial review of claims that would hamper FHFA’s conduct as a conservator: “[N]o court may take any action to restrain or affect the exercise of powers or functions of [FHFA] as a conservator or a receiver.” 12 U.S.C. § 4617(f).”
My argument is against the NWS and the SPSPA, and as the NWS is expected to be voided the SPSPA becomes a voidable contract and a voidable contract should be void by either the FHFA that wishes to do so as they state in 6.7 & 6.12 of the contract, or Fannie and Freddie Boards need to do it out of fiduciary duty toward shareholders but since FHFA took their power, the FHFA-C has to do it out of fiduciary duty as the FHFA-C is our best friend and needs to decide what is in the best interest of the shareholders
Of course shareholders are entitled to 100% of the company, but say in a fantasy world the 20.1% would be there, it cannot be diluted as that is the contract they entered into and say they had consent on 20.1% this consent cannot be breached, they could if the financials were terrible but they weren’t, so the 20.1% is a fact and can’t be diluted, I haven’t seen any convincing other than wishful thinking, and it would be cheaper slogans, legally however this is a fact the 20.1% cannot be altered, if you think it can please provide legals to why shareholders are not entitled(assuming Seila and Sweeney are a win)
The FHFA is unconstitutional as the “for cause” forbids actions by the president (1) forbids (2)
Also the powers it received(1) cannot be controlled by judicial power(3) that is also unconstitutional per the founders of the constitution
1) Legislative Power (the power to pass laws) to Congress
2) Executive Power (the power to administer the laws) to the President
3) Judicial Power (the power to interpret and enforce the laws) to the Courts.
Keeping the rest of HERA is wishfull thinking it is not possible after “Seila”, it was not the responsibility of the 5th circuit to alter HERA it is the responsibility of congress to alter his, but if you change “for cause” to “at will” HERA becomes powerless and the director no longer has the power “to do thing”
The FHFA has a statuary mandate to conserve and preserve and put in sound and solvent condition, that means: DONOT siphon profits to treasury
158
Below are the memorandums of the 3 judges that DONOT say shareholders are not entitled to fiduciary duty, or shareholders are exempt from fiduciary duty or shareholders are outside the law if they want fiduciary duty or it is something that they cannot ask for, the fiduciary duty is present but HERA forbids it, then HERA is outside of the law as shareholder fiduciary duty always needs to given, either by Fannie and Freddie or by its replacement FHFA
1) Judge Karen K. Caldwell cannot grant fiduciary duty as FHFA thru HERA is disposing of assets . . . when acting as its conservator
2) Judge Royce C. Lamberth Fiduciary Duties are Preempted by HERA
3) Judge Sweeney M. Congress provided in HERA that the FHFAC
is only required to act in the interests of itself or the Enterprises
Transcript of Memorandum Opinion 15-109-0063 Judge Karen K. Caldwell
“In short, this Court finds that so long as FHFA “is exercise[ing] judgment under one of its enumerated powers” such as “disposing of assets . . . when acting as its conservator . . . [,] a quintessential statutory power of FHFA” this court may not enjoin that act “merely because someone alleges” that it is “improperly or even unlawfully exercising a function or power that is clearly authorized by statute.” Ward v. Resolution Trust Corp., 996 F.2d 99, 103 (5th Cir. 1993); see also 12 U.S.C. § 4617(b)(2)(G) (“[FHFA] may, as conservator or receiver, transfer or sell any asset . . . of the regulated entity . . . and may do so without any approval, assignment, or consent with respect to such transfer or sale.”).”
“3 Plaintiff briefly argues that Treasury violated the APA by ignoring alleged fiduciary duties to minority shareholders. (DE 32 at 68–69.) Despite Plaintiff’s citations to case law concerning circumstances where “[t]he law is well established that the Government in its dealing with Indian tribal property acts in a fiduciary capacity,” and state fiduciary duty law, there is no basis for applying such duties here. Cobell v. Norton, 240 “
Transcript of MEMORANDUM OPINION. Signed by Judge Royce C. Lamberth on 9/28/2018:
C. Plaintiffs’ Claims for Breaches of Fiduciary Duties are Preempted by HERA
Plaintiffs claim that the FHFA—as conservator—breached state law fiduciary duties owed
to shareholders by executing the Third Amendment. See Class SAC Counts VII-VIII and XI-XII;
Fairholme FAC Count IV; Arrowood FAC Count IV. This Court previously dismissed various
shareholder derivative claims, confirming that the power to bring such suits rests solely in the
FHFA. Perry I, 70 F. Supp. 3d at 230. The D.C. Circuit affirmed this ruling while holding that
HERA’s Succession Clause does not bar “direct” stockholder claims. Perry II, 864 F.3d at 627.
Counts XI and XII from the Class Plaintiffs’ complaint are revivals of their derivative
fiduciary duty claims to preserve these issues for appeal. Those counts will be dismissed.
The remaining claims before the Court represent Plaintiffs’ second chance—an attempt to
plead direct claims for breach of fiduciary duties. As an initial matter, all such claims against
Freddie Mac (Class SAC Count VIII, Arrowood FAC Count IV (as related to Freddie Mac), and
Fairholme FAC Count IV (as related to Freddie Mac)) must be dismissed as Virginia does not
recognize a direct shareholder claim for breach of fiduciary duty. Irrespective of this, all of these
claims against both Freddie and Fannie must be dismissed because any direct claim for breach of
fiduciary duty is preempted by HERA.
As previously discussed, Freddie Mac has elected to follow Virginia law for corporate
governance issues not addressed by federal law or Freddie’s charter. In Virginia, “corporate
shareholders cannot bring individual, direct suits against officers or directors for breach of
fiduciary duty, but instead shareholders must seek their remedy derivatively on behalf of the
corporation.” Remora Invs., LLC v. Orr, 277 Va. 316, 323, 673 S.E.2d 845 (2009) (citing Simmons
v. Miller, 261 Va. 561, 576, 544 S.E.2d 66 (2001)); see also Pagliara v. Fed. Home Loan Mortg.
Corp., 203 F. Supp. 3d 678, 690 (E.D. Va. 2016) (stating “shareholders may assert claims of
fiduciary breach against corporate directors only through derivative suits”). Since the opinion in
Perry II foreclosed the possibility of derivative suits against Defendants, 864 F.3d at 625, Plaintiffs
cannot state a claim for breach of fiduciary against Freddie Mac.°
Even if that were not the case, the Court finds that all the direct claims for breach of
fiduciary duty must be dismissed as they are preempted by HERA. State law is preempted to the
extent of any conflict with a federal statute. Hillman v. Maretta, 569 U.S. 483, 490, 133 S.Ct.
1943, 186 L.Ed.2d 43 (2013). “Such a conflict occurs when compliance with both federal and
state regulations is impossible, or when the state law stands as an obstacle to the accomplishment :
and execution of the full purposes and objectives of Congress.” Jd. (internal citations and
quotations omitted). “What is a sufficient obstacle is a matter of judgment, to be informed by
examining the federal statute as a whole and identifying its purpose and intended effects[.]”
Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 373, 120 S.Ct. 2288, 147 L.Ed.2d 352.
Directors of a corporation owe two fiduciary duties to stockholders—care and loyalty. Jn
re Orchard Enters.,. Inc. Stockholder Litig., 88 A.3d 1, 33 (Del. Ch. 2014) (citing Stone ex rel.
AmSouth Bancorporation vy. Ritter, 911 A.2d 362, 370 (Del. 2006)); Bank of Am. v. Musselman,
222 F. Supp. 2d 792, 796 n. 5 (E.D. Va. 2002). Here, Plaintiffs allege the enactment of the Third
Amendment amounted to a breach of the duty of loyalty. See Class SAC Counts VII-VIII and XI-
6 Plaintiffs ask this Court to make an Erie guess that the next time the Virginia Supreme Court is confronted with this issue, it would adopt the standard from the Delaware case Tooley v. Donaldson, Lufkin, & Jenrette, Inc., which allows direct claims for breach of fiduciary duties. In support, Plaintiffs note that in Remora Investments, the court specifically stated it “need not decide whether to adopt the analysis employed by the Delaware Supreme Court in Tooley.” 277 Va. at 324. The Court declines Plaintiffs’ invitation. The Court does not find sufficient indication that the Virginia Supreme Court would change the law. Moreover, even if Plaintiffs could state a direct claim for breach of fiduciary duty in Virginia, in this case, such a claim is preempted by HERA. XI; Fairholme FAC Count IV; Arrowood FAC Count IV. “Essentially, the duty of loyalty mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the stockholders generally.” Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993).
Problematic for Plaintiffs is the fact that HERA specifically permits the FHFA—on behalf
of the GSEs—to “take any action [within its statutory powers] which the Agency determines is in
the best interests of the regulated entity or the Agency.” 12 U.S.C. § 4617(b)(2)(J)Gi) (emphasis
added). As pointed out by the D.C. Circuit, “[HERA] refers only to the best interests of FHFA
and the [GSEs]—and not those of the [GSEs’] shareholders or creditors.” Perry I, 864 F.3d at
608. The Circuit described this as a “deliberate choice” by Congress “to permit FHFA to act in its
own governmental interests[.]” Jd. It stands to reason then how Plaintiffs can’ complain about
self-dealing when the statute authorizes exactly that. So state and federal law clearly conflict and
the state law fiduciary claims are preempted.
Plaintiffs attempt to get around preemption by claiming that they do not seek to force the
FHFA to promote the interests of the GSEs’ shareholders over the GSEs or the FHFA, “only that,
in addition to considering the interests of Treasury and the [GSEs], Defendants were required by
state law to consider, in good faith, the interests of private shareholders.” Class Resp. at 50. They
essentially ask the Court to amend HERA so it reads the FHFA may “take any action [within its
statutory powers] which the Agency determines is in the best interests of the regulated entity or
the Agency, as long as it takes into account the interests of the GSEs’ shareholders.” To do this,
the Court must contravene Congress’ “deliberate choice.”
In Section 4617(a)(7), HERA makes clear that “[w]hen acting as conservator . . . the
[FHFA] shall not be subject to the direction or supervision of . . . any State in the exercise of the
rights, powers, and privileges of the [FHFA].” 12 U.S.C. § 4617(a)(7). To impose state fiduciary
duty law on the FHFA would be just such direction, obstructing the “extraordinarily broad
flexibility” endowed to the agency by HERA. See Perry I, 864 F.3d at 606. “[T]he purpose of §
4617(a)(7) ‘is to provide a preemption defense for FHFA in its role as conservator.’ In other
words, § 4617(a)(7) specifically functions to remove obstacles to FHFA's exercise of conservator
powers—i.e. to preserve FHFA's interests, not those of GSE shareholders.” Saxton v. Fed. Hous.
Fin. Agency, 245 F. Supp. 3d 1063, 1077 (N.D. Iowa 2017) (quoting Robinson v. Fed. Hous. Fin.
Agency, 223 F. Supp. 3d 659, 668 (E.D. Ky. 2016)) (citation omitted). Fiduciary duties, especially
the duty of loyalty, represent such an obstacle. Plaintiffs breach of fiduciary duty claims are
preempted by HERA and must be dismissed.
Transcript of Judge Sweeney M.
http://www.glenbradford.com/wp-content/uploads/2019/12/13-465-0449.pdf
D. The court lacks jurisdiction over plaintiffs’ claim that sounds in tort.
1. Plaintiffs’ direct fiduciary duty claim sounds in tort.
The court, pursuant to the Tucker Act, lacks jurisdiction over tort claims. 28 U.S.C.
§ 1491(a)(1). A breach of fiduciary duty is generally classified as a tort. Newby v. United
States, 57 Fed. Cl. 382, 294 (2003). A fiduciary duty claim, however, does not sound in tort for
purposes of the Tucker Act when the fiduciary relationship is founded on a money-mandating
statute or a contractual provision between the claimant and United States. See Hopi Tribe v.
United States, 782 F.3d 662, 667 (Fed. Cir. 2015) (statute); Cleveland Chair Co. v. United States,
557 F.2d 244, 246 (Ct. Cl. 1977) (contract); see also 28 U.S.C. § 1491(a)(1) (providing
jurisdiction over claims “founded upon . . . any Act of Congress . . . or contract with the United
States”).
The initial issue is whether HERA establishes a fiduciary relationship between the
FHFA-C and the Enterprises’ shareholders. The court begins with the language of the statute.
Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999). “If Congress has expressed its
intention by clear statutory language, that intention controls and must be given effect.” Rosete v.
Office of Pers. Mgmt., 48 F.3d 514, 517 (Fed. Cir. 1995); accord Conn. Nat’l Bank v. Germain,
503 U.S. 249, 253-54 (1992) (“[C]ourts must presume that a legislature says in a statute what it
means and means in a statute what it says there.”). Congress provided in HERA that the FHFAC
is only required to act in the interests of itself or the Enterprises. 12 U.S.C. § 4617(b)(2)(J).
That statement reflects a clear intent: the FHFA-C does not owe a fiduciary duty to shareholders
because the conservator is not required to consider shareholders’ interests.24 See id.; see also
Collins, 938 F.3d at 580 (noting that HERA “may permit” the FHFA-C to pursue actions that are
“inconsistent with fiduciary duties”). The plain language controls, and therefore the court does
not consider the peripheral considerations urged by plaintiffs such as the implications of the
word “conservator,” the FHFA-C’s control over the Enterprises, or the FHFA-C’s other powers.
In sum, plaintiffs cannot establish jurisdiction for their direct fiduciary duty claim by relying on
HERA.
The next issue is whether Treasury owes a fiduciary duty to shareholders because it
purchased securities pursuant to HERA.25 Plaintiffs contend that Treasury assumed such a duty
when it agreed to the PSPAs because of the determinations that Congress required the Treasury
Secretary to make prior to buying the securities. Before purchasing securities pursuant to
HERA, the Secretary is required to determine that the purchase is necessary to protect taxpayers
and evaluate various considerations in connection with protecting the taxpayers. 12 U.S.C.
§§ 1455(l)(1)(B)-(C), 1719(g)(1)(B)-(C). One of those considerations is the need to maintain the
Enterprises as privately owned companies. Id. §§ 1455(l)(1)(C), 1719(g)(1)(C). At no point,
however, did Congress direct (or even suggest) that the Secretary must protect the shareholders.
The court declines to stretch the statutory language to support a fiduciary relationship based on
any incidental benefit shareholders may derive from the Secretary considering the need to keep
the Enterprises privately owned in the context of protecting taxpayers. Simply stated, Treasury
did not assume any fiduciary obligations to the Enterprises’ shareholders by virtue of HERA.
Finally, the court turns to whether Treasury owed a fiduciary duty to the Enterprises’
other shareholders because it acquired control rights by agreeing to the PSPAs. Plaintiffs’
argument is premised on the state-law principle (which they term “general corporate law”) that a
controlling shareholder owes a fiduciary duty to the minority shareholders. The court is not
convinced. First, plaintiffs’ allegation of a fiduciary relationship is not founded on a contract
within the meaning of the Tucker Act. Plaintiffs are not attempting to enforce any duty imposed
on Treasury that is specified in the PSPAs. They invoke the contracts solely to establish that
Treasury is a controlling shareholder and rely on that conclusion to argue that it has a fiduciary
duty based on state law. The contract, otherwise stated, is one step removed from the purported
genesis of the fiduciary duty—the application of state-law principles. That gap is too much in
light of the court’s obligation to narrowly construe the Tucker Act’s waiver of sovereign
immunity. See Smith, 855 F.2d at 1552 (noting that the Tucker Act is narrowly construed); see
also Perry II, 864 F.3d at 619-20 (rejecting the legal theory that the Enterprises’ shareholders’
need to reference the PSPAs for their fiduciary duty claim was enough to conclude that the claim
was rooted in a contract for purposes of the Tucker Act).
25 The gravamen of plaintiffs’ direct fiduciary duty claim is that the FHFA-C owed a
fiduciary duty to plaintiffs. See 2d Am. Compl. ¶¶ 223-33. Indeed, plaintiffs state in their
complaint that the “FHFA violated its fiduciary duty,” id. ¶¶ 233, and make no similar allegation
with regard to Treasury. Although plaintiffs have not alleged that their direct fiduciary duty
claim is premised on Treasury’s actions, the court nonetheless considers the parties’ arguments
on whether such a claim would be within the court’s jurisdiction for two reasons. First, the
parties have fully briefed the issue without noting the discrepancy between plaintiffs’ arguments
and the allegations in their complaint. Second, the court’s resolution of the issue is immaterial to
the ultimate outcome because, as discussed below, plaintiffs lack standing to pursue their direct
claims. Second, plaintiffs fail to demonstrate the applicability of the state-law principles
underlying their theory for why Treasury assumed fiduciary duties. Federal law governs the
obligations Treasury incurred by entering into the PSPAs. See Boyle v. United Techs. Corp.,
487 U.S. 500, 519 (1988) (“The proposition that federal common law continues to govern the
‘obligations to and rights of the United States under its contracts’ is nearly as old as Erie [v.
Tompkins, 304 U.S. 64 (1938),] itself.”). Although courts may shape federal law by drawing
from state-law principles, plaintiffs do not explain why doing so is appropriate in this instance.
Third, plaintiffs do not prevail even if their fiduciary duty claim could be founded on a
contract and federal common law incorporates the state-law principles regarding controlling
shareholders’ fiduciary obligations. Under Delaware and Virginia law, a controlling shareholder
owes a fiduciary duty to the minority shareholders. See Ivanhoe Partners v. Newmont Min.
Corp., 535 A.2d 1334, 1344 (Del. 1987); Parsch v. Massey, 79 Va. Cir. 446 (2009); see also
Quadrant Structured Prod. Co. v. Vertin, 102 A.3d 155, 183 (Del. Ch. 2014) (acknowledging that
those “who effectively control a corporation” owe a fiduciary duty to others).26 To have the
requisite level of control, the controlling shareholder must (1) be able to exercise a majority of
the corporation’s voting power or (2) direct the corporation without owning a majority of stock.
Kahn v. Lynch Commc’n Sys., 638 A.2d 1110, 1113 (Del. 1994). The latter, effective exercise
of control, “is not an easy test to satisfy; the individual or group must be, “as a practical
matter, . . . no differently situated than if they had majority voting control.” In re PNB Holding
Co. S’holders Litig., No. CIV.A. 28-N, 2006 WL 2403999, at *9 (Del. Ch. Aug. 18, 2006).
Plaintiffs have not established that Treasury meets either control test. First, plaintiffs do not
allege that Treasury owns any of the Enterprises’ voting stock. Treasury purchased preferred
stock and acquired the right to buy common (i.e., voting) stock, but there is no indication that
Treasury exercised its warrants or otherwise acquired common stock.27 Second, plaintiffs do not
demonstrate that Treasury exercised effective control over the Enterprises. Although Treasury
acquired the right to preclude the Enterprises from taking certain actions, Treasury did not
control the Enterprises because it could not direct any action—it could only respond to certain
requests made by the Enterprises. As a practical matter, therefore, Treasury is situated
differently than if it had majority voting power.
In sum, plaintiffs’ direct fiduciary duty claim is a tort claim because plaintiffs have not
established that the FHFA-C or Treasury owed shareholders a fiduciary duty based on a statute
26 The court refers to Delaware and Virginia law because Fannie is a Delaware
corporation, and Freddie is a Virginia corporation. When evaluating Virginia law, the court also
looks to Delaware state court decisions because Virginia courts do so to resolve unsettled issues
in the Commonwealth. E.g., U.S. Inspect Inc. v. McGreevy, No. 160966, 2000 WL 33232337, at
*4 (Va. Cir. Ct. Nov. 27, 2000).
27 Even if Treasury had exercised its option to buy a majority of the voting stock, it
would not be a controlling shareholder because the FHFA-C succeeded to all of the shareholders’
rights. See 12 U.S.C. § 4617(b)(2)(A) (noting that the FHFA-C, by operation of law, succeeds to
all rights and powers of any Enterprise shareholder). Treasury, therefore, would have no voting
power.or contract. The court, therefore, dismisses count VII—breach of fiduciary duty—because it
lacks jurisdiction over tort claims.
Fannie & Freddie Lawsuits (Updated March, 2020)
19-422 Collins v. Mnuchin (Pending petition SCOTUS) .…Common & Preferred, Derivative
Claim: “for cause” separation of powers §?4512(b)(2)
https://www.scotusblog.com/case-files/cases/collins-v-mnuchin/
(Decided according to David Thompson 1 week after resolution in Seila Law, ~first week of july-2020)
19-563 Mnuchin v. Collins (Pending petition SCOTUS)…….Relates to all cases
Claim: § 4617(f) prevents ruling on 3th amendment, § 4617(b)(2)(A) (i) forbids challenging the Third Amendment
(Decided according to David Thompson 1 week after resolution in Seila Law, ~first week of july-2020)
https://www.scotusblog.com/case-files/cases/mnuchin-v-collins/
16-3113 Collins v. Lew …………………….…Common & Preferred, Derivative
Honorable: Judge Nancy F Atlas in District Court
Claim: “for cause” separation of powers §?4512(b)(2)
https://www.courtlistener.com/docket/4533994/collins-v-lew/
After appeal 17-20364, the 5th circuit remanded this back to Judge Nancy F Atlas in District Court, S.D. Texas, after a decision in Seila Law it will proceed (~first week of july-2020)
18-2506 (17-2185) Bhatti vs. FHFA……………Common & Preferred, Derivative
Honorable: Patrick Joseph Schiltz
District Court, D. Minnesota
Claim: 3th amendment & “for cause” separation of powers §?4512(b)(2)
https://www.courtlistener.com/docket/7379258/bhatti-v-federal-housing-finance-agency-the/
On appeal in the 8th circuit, Oral Argument 10/15/2019
http://media-oa.ca8.uscourts.gov/OAaudio/2019/10/182506.mp3
(The court strives to issue the opinion within 90 days after oral
Argument or submission to a nonargument panel. http://media.ca8.uscourts.gov/newrules/coa/iops06-19update.pdf)
13-1288 In re Fannie Mae/Freddie Mac Senior Preferred Stock Purchase Agreement Class Action Litigations ………………………… Common & Preferred, Class Action Direct & Derivative
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 is denied it also claims these Derivative: breached 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. 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) Joseph Cacciapalle....Preferred
6) Marneu Holdings, Co..Preferred
7) United Equities Co…..Preferred
8) American European Insurance Co...Preferred
9) Barry P. Borodkin.......Preferred
10)Mary Meiya Liao.......Preferred
https://www.courtlistener.com/docket/4212341/in-re-fannie-maefreddie-mac-senior-preferred-stock-purchase-agreement/
Fact discovery Shall close on April 30, 2020, Trial is set for March 31, 2021 (with a pretrial 30-60 days before)
17-497 Rop v. Federal Housing Finance agency…….Common & Preferred, Derivative
Honorable: Paul L. Maloney
Claim: voiding 3th amendment & “for cause” separation of powers and
striking down HERA 12 U.S.C. §§ 4511(a), 4512(b)(2), and 4617(a)(7)
District Court, W.D. Michigan
https://www.courtlistener.com/docket/13521280/rop-v-federal-housing-finance-agency/
No next Date available (waiting on Collins, as document 64 says “notice of supplemental authority concerning Collins v. Mnuchin” )
18-3478 Wazee Street Opportunities v. United States………Common, Class action, Derivative
Honorable: Nitza I Quinones Alejandro
Claim: voiding 3th amendment & “for cause” separation of powers
District Court, E.D. Pennsylvania
https://www.courtlistener.com/docket/7681282/wazee-street-opportunities-fund-iv-lp-v-the-federal-housing-finance-agency/
Aug 2, 2019 Stipulation and Order doc#36 (waiting on Collins as document 38 says Supplemental authority filed by Defendant ….. in the matter of Collins v. Mnuchin, No. 17-20364)
19-7062 Joshua J. Angel v. BOD of FNMA,FMCC & FHFA-C ….….Preferred, Direct
Previously assigned to: Honorable: Royce C. Lamberth (18-1142)
https://www.courtlistener.com/docket/6880882/angel-v-federal-home-loan-mortgage-corporation/
Claim: Breach of quarterly BOD duties, breach of contract, breached the implied covenant of good faith and fair dealing, breach of contractual rights for dividends, Breach of implicit guaranty on Junior Preferred dividends
District Court for the District of Columbia
On appeal in the United States Court of Appeals for the district of columbia circuit
https://www.courtlistener.com/docket/26534/joshua-angel-v-federal-home-loan-mortgage-co/
The D.C. Circuit will hear oral argument in Angel v. FHFA at 9:30 a.m. on Tues., Apr. 7, 2020 by teleconference
13-1439 Arrowood Indemnity Company v. Fannie Mae……Preferred, Direct & Derivative
Honorable: Royce C. Lamberth
Claim: 3th amendment, breach of fiduciary duty, breach of contract, breach of the implied covenant of good faith and fair dealing
District Court for the District of Columbia
https://www.courtlistener.com/docket/6995674/arrowood-indemnity-company-v-federal-national-mortgage-association/
(Related to case Arrowood 13-698C & Joshua J. Angel, 18-1142 Doc# 3 & 89)
Fact discovery Shall close on April 30, 2020, Trial is set for March 31, 2021 (with a pretrial 30-60 days before)
13-1053 Fairholme Fund, Inc. v. FHFA……Preferred, Direct & Derivative
Honorable: Royce C. Lamberth
Claim: 3th amendment, breach of fiduciary duty, breach of contract, breach of the implied covenant of good faith and fair dealing
District Court for the District of Columbia
https://www.courtlistener.com/docket/4212077/fairholme-funds-inc-v-federal-housing-finance-agency/
Fact discovery Shall close on April 30, 2020, Trial is set for March 31, 2021 (with a pretrial 30-60 days before)
Document # 116 Mar 18, 2020 Order on Motion to Modify
----------------------------------------------------------------
Cases in Sweeney’s U.S. Court of Federal Claims
---------------------------------------------------------------
13-465C FAIRHOLME FUNDS, INC. v. United States………..Common & Preferred, Direct & Derivative
Honorable: Margaret M. Sweeney
United States Court of Federal Claims
Claim: **SEALED**AMENDED COMPLAINT (Entered: 03/08/2018)
GRANTED are the derivative claims:
Taking (count II & III)
Illegal Exaction (count V& VI)
Breach of Fiduciary Duty (count VIII & IV)
Breach of Implied-in-Fact Contract (count XI & XII)
Court: United States Court of Federal Claims https://www.courtlistener.com/docket/4198608/fairholme-funds-inc-v-united-states/
March 9, 2020 - The court, therefore, GRANTS plaintiffs’ and defendant’s respective motions to certify the December 6, 2019 opinion for interlocutory appeal.
The court also GRANTS defendant’s motion to stay further proceedings in this case pending the completion of the interlocutory appeal process. By no later than 14 days after the completion of that process, the parties shall file a joint status report in which they propose further proceedings, if any are necessary.
1) 13-466C Joseph Cacciapalle ………..………… Preferred, Class Action, Direct*
2) 13-496C American European Insurance.…. Preferred, Class Action, Direct
3) 13-542C Francis J. Dennis ………………….…. Preferred
4) 13-385C Washington Federal…………………. Common & Preferred, Class Action, Direct*
5) 13-608C Bryndon Fisher (FNMA) .........….. Common Derivative*
6) 13-672C Erick Shipmon……..…………………… Common Derivative
7) 13-698C Arrowood Indemnity Company . Preferred Direct*
8) 14-152C Bruce Reid (FMCC) …………………… Common Derivative*
9) 14-740C Louise Rafter .........…………………. Common Direct & Derivative*
10) 18-1124C Wazee Street……………….………… Common, Class Action, Direct & Derivative
11) 18-1150C Highfields Capital………………….. Common & Preferred, Direct
12) 18-1155C CRS Master Fund LP…..…………… Preferred, Direct
13) 18-1226C Perry Capital LLC……………………. Common & Preferred, Direct & Derivative
14) 18-1240C Quinn Opportunities Master LP… Preferred, Direct
15) 18-281C Owl Creek Asia I L.P...........………. Preferred, Direct *
16) 18-369C Akanthos Opportunity Master Fund .. Preferred, Direct *
17) 18-370C Appaloosa Investment .........……. Preferred, Direct *
18) 18-371C CSS LLC ……………………………………. Preferred, Direct *
19) 18-529C Mason Capital L.P...........………….. Preferred, Direct *
20) 18-711C 683 Capital Partners………..……….. Preferred, Direct
21) 18-712C Joseph S. Patt………………………..… Preferred, Direct
* Jones Days plaintiffs
Sisti v. Federal Housing Finance Agency
Case number: 17-005 (90-1762)
Honorable: John J. McConnell, Jr
District Court, D. Rhode Island
Claim: FHFA, Fannie Mae, and Freddie Mac are government entities
https://www.courtlistener.com/docket/6900150/sisti-v-federal-housing-finance-agency/
https://ecf.rid.uscourts.gov/cgi-bin/show_public_doc?2017cv0005-52 (not yet released)
Factual Discovery to close by 12/30/2019;
Plaintiff's Expert Disclosures shall be made by 1/30/2020;
Defendants' Expert Disclosures shall be made by 2/28/2020;
Expert Discovery to close by 3/30/2020
Dispositive Motions due by 4/30/2020.
Dec 30, 2019 Main Document Extension of Time to Complete Discovery
Dec 30, 2019 Set/Reset Scheduling Order Deadlines
Dec 30, 2019 Order on Motion for Extension of Time to Complete Discovery
When decided FHFA, FNMA and FMCC are government entities for matters of constitutional claims of due process.
Seila law v. Consumer Financial Protection bureau
Case number: 19-7 (17-56324)
Court: Supreme Court of the United States
Claim: “for cause”” removal violates the separation of powers
https://www.scotusblog.com/case-files/cases/seila-law-llc-v-consumer-financial-protection-bureau/
Transcript of argument on Tuesday, March 3, 2020. Decision in the last 2 weeks of June -2020
https://www.supremecourt.gov/oral_arguments/argument_transcripts/2019/19-7_j4ek.pdf
Audio: https://www.oyez.org/cases/2019/19-7
1) Questions asked by plaintiff: for cause violates the separation of powers
2) The Court added a second question: can for cause be severed from Dodd-Frank Act
Petitioner and the government agree on the first question, but disagree on the second question
Petitioner contends reverse the judgment and either decline to reach the question of severability or declare it is not severable.
The government argues that the Court should remand for further proceedings.
(The decision in this case will decide on Collins SCOTUS 19-422 “backward-looking relief” witch the 5th circuit en banc declined)
The SPSPA contains 2 things a liquidation preference and a warrant, the liquidations preference initially was given on $1B ($1,000 per share) and a warrant representing 79.9% of the common stock, so treasury cannot own more than 79.9%(sure they can buy stock themselves for market value but anybody can) as the contract does not allow it to be more, the commons indeed still own 100% of the commons now, but it REPRESENTS 20.1% of the companies as per the contract the shares are given away without any consideration and most importantly without additional funds, this is not a normal procedure(lack of fiduciary duty) as you cannot ask somebody to give you a loan and ask more(The warrant) than you physically give, let alone ask for future profits, it is depraved
A junior to common conversion, does violate the constitution as the statue of FHFA is to preserve and conserve and to put in sound and solvent condition, any action outside this statue is unconstitutional, it is unheard the government does not follow its own rules
And because they did the opposite, they cannot glue pieces together that were not broken in the first place
The FHFA/FHFA-C does have fiduciary duty to shareholders as that is the consent the BOD gave to the FHFA-C, the BOD represents the shareholders and they agreed to preserve, not to give away anything, the three judges did not do anything other than declaring they lack authority, and none of the 3 judges said there was no fiduciary duty
The government cannot escape the 79.9% ownership fiduciary duty, they are the majority shareholder if the warrant is exercised or not they have the control and this control gives them the fiduciary duty
All lawsuits are built on the case to void the SPSPAs, the mayority hold the 3th amendment is illegal, but what it actually says is because the 3th amendment is illegal the contract is “VOIDABLE” this is a much more sophisticated claim then it at first sides looks, when a contract is voidable (after a ruling the 3th is illegal) the FHFA-C is obligated due to their fiduciary duty to void the contract, and if the contract is void all funds needs to be returned and the recapitalization is a fact
The 10% dividend ranks lower to the outstanding claims and I understand why no lawsuit is asking relief on it, although important and illegal(it will be very costly for treasury to return all funds with 10% premium for 12 years) I don’t see it as crucial as when the 3th amendment is ruled illegal(and it already is) but ones declared illegal the SPSPA debacle is more or less solved because the contract becomes voidable
Sweeney never said treasury was not a controlling shareholder, she can’t because treasury is the controlling shareholders please look at context again, the context of fiduciary duty to shareholders is important while the FHFA-C does not have fiduciary duty to shareholders on regulation or individual things they implemented, they DO have fiduciary duty on giving away 79.9% of the company as it lacks consent of the BOD(shareholders)
The equity raise FHFA is talking about is imo stage crafting, the lawsuits are near completion, and I understand that FHFA is not going to say, “sorry guys we are going to lose the lawsuits and FnF will instantly be capitalized” of course he says what prior administrations said and that is why they keep fighting, the point of no return was a decade ago, it would be very stupid to have a change of mind suddenly, but legally they already lost on all fronts and that is why cooper said pressure is immense
1) All lawsuit challenge the SPSPAs and the warrants, most lawsuits challenge the 3th amendment and by that the SPSPA is voidable and can only be void out of fiduciary duty
2) The 20.1% is important as the government receives 100% of all profits in perpetually and the 20.1% minority shareholders are excluded form profits, and of course the BOD did not agree on that consent to all profits to the government in perpetually
FHFA is NOT allowed to act in its own interest (I think you talk about 12 U.S.C. § 4617(b)(2)(J).) as the FHFA now has the powers of the BOD, the FHFA has 1.000’s maybe even 10.000’s of fiduciary duties to the Fannie and Freddie and Shareholders, some of the fiduciary duties are not granted as the question presented is covered or relief can be given on other grounds( for instance “HERA preempts any state law”, then HERA is unconstitutional as the law and constitution rank higher than HERA)
Then it follows the judge says FHFA-C does not have fiduciary duty, but only because it is preempted by HERA NOT because it does not have fiduciary duty, the shareholder rights are always protected, and anybody whoever does anything to shareholders will be accountable, in this case the FHFA/FHFA-C, so either shareholders have relief on HERA declared unconstitutional as the agency cannot act out of self-interest or shareholders receive relief out of the breached fiduciary duty, however both claims come from the breach of fiduciary duty
If in the future an SPO might be necessary, the court first must make a final ruling on:
1) The FHFA/FHFA-C did not breach consent on the implied-in-fact contract they had with the BOD
(already declared illegal by the 5th circuit as it was contrary to conserve and preserve U.S.C. § 4617(b)(2)(D). and because 4617 contradicts the 3th amendment)
2) The 3th amendment is legal
(already declared illegal by the 5th circuit as it was contrary to conserve and preserve U.S.C. § 4617(b)(2)(D).)
3) The warrant is legal (because of 1 and 2 above the contract is voidable and needs to be voided by Fannie and Freddie and FHFA-C)
Because of the illegal conduct FHFA-C implemented and the total unnecessary Naïve unprofessional implementation of the 3th amendment, the FHFA does not have any right to dilute shareholders, it is very difficult for a world-class regulator to do again the contrary of what is expected, indeed if the courts overrule the 5th circuit and Sweeney and the constitution and the laws are re-written so they don’t conflict, the shareholders can be diluted, but chances of that happening are nil, this is the endgame and the rulings so far have been only in favor of shareholders, there was not a single judge who said the FHFA/FHFA-C did the right thing, they only said it lacks power, Hera preempted etc. there is not a single lawsuit to date that “lost” and confirmed the FHFA/FHFA-C did the “RIGHT” thing
So for now and into the future the current common shareholders (all1.1B/0.65B) are 100% owner of the companies, that FHFA states “shareholders will be heavily diluted by the equity raise” is correct, and if you neglect the red light traffic light you might have an accident, and if you drop your glass of water on the ground it probably will break, all logical, the FHFA is telling the truth but FHFA doesn’t state anywhere it is expected as fact or even likely for that matter a raise is necessary, he only is assuming that an equity raise is needed, and he is looking at the possibilities, well we all know the possibilities and that is void the contract and return the funds, but that is nothing you can broadcast, so he is looking into it, and shareholders know why, at least I know and so do a lot of others, just a matter of perception.
Current common shareholders being diluted below 20.1% can only happen when the rulings are reversed and the constitution is re-written.
FHFA get its authority from HERA who is unconstitutional, as it can act in their OWN best interest, besides this is against all solvency laws, it also breaches regular laws like fiduciary duty, and of course the constitution, not very unimportant ones, beside HERA being unconstitutional, it can only operate what is in the best interest of the companies as that is what solvency laws says, so HERA needs to be adjusted accordingly or voided completely
1) The SPSPA voids fiduciary duty as the FHFA gave away shareholder sharerights without consideration, FnF did not receive any additional funding for the warrant
2) The board of directors cannot reestablish the shareholder property owning’s by themselves, if money is owed it needs to loan the money, ones this money is returned the loan is paid, additional freebees are not granted this isn’t pick a choose, and the fiduciary duty is breached by FHFA-C although HERA preempts fiduciary duty, the constitution does grant it, so 1 of the 2 needs to go
Currently Fairholme is questioning the SPSPA in its entirety see:
Count XI (Fannie) and XII (Freddie)
“Breach of Implied-in-Fact Contract between the United States and the Companies”
This burden cannot be overcome as A party alleging an implied-in-fact contract with the government must plead four elements:
(1) Mutuality of intent to contract,
(2) Consideration,
(3) Lack of ambiguity in offer and acceptance, and
(4) Actual authority’ of the government representative whose conduct is relied upon to bind the government.”
The FHFA has fiduciary duty to Conserve and Preserve and PUT in SOUND and SOLVENT condition, these capital words show the FHFA has fiduciary duty towards parties in conservatorship, otherwise stated how can you put in sound and solvent condition, siphoning all profits?, so although this is preempted by HERA as it can act in their own best interest the law says things are different than HERA is claiming to have authority on. But there are so many examples of contradictions in HERA, that for me it doesn’t sound like HERA can’t survive
The Citi conversion is not a properly comparison to Fannie and Freddie as it is a bank and we all know the “banks” settled for $25B of misconduct, in Fannie and Freddie however the misconduct is done by the FHFA/FHFA-C, don’t want to compare apples to oranges
The Fairholme case challenges the breach of the implied-in-fact contract(count XI and XII), this is the contract in which the BOD agrees to conservatorship, so this contract also contains the a carte blanche from the BOD(the government claims to have) and that is something all shareholders would like to see (apart from FHFA breaching its own statuary duties of course)
1) one parts illegal will make the contract voidable and out of fiduciary duty the FHFA and Fannie and Freddie will have to void it
2) none of the judges said he FHFA did not have fiduciary duty, they said HERA preempted and lack of jurisdiction, non of the judges declared it does not own fiduciary duty
The common holders have 20.1% of the company now and after a final ruling it will be 100%, above I point out to, in order to receive something it must be proven by court the FHFA did the legitimate thing and although we are talking about a world class regulator the dozens of lawsuits suggest otherwise
The FHFA is bound by the constitution, HERA obviously is outside this framework(as declared by the 5th circuit en banc ruling) then in order to proceed either HERA needs to go(altered) or the constitution, my guess is the former
Please provide detail as to why the 20.1% shareholders are not entitled to 20.1%, I did not see any argument or any basis in the previous years that convince me let alone proof, the government also has been fighting this fir years, but they lost on all counts fighting the matter (also as detail the shareholders did not loose any lawsuit because there claim was not legitimate, only on lack of standing HERA forbid etc.)
The breaching of the BOD consent is when the government bargained for the Enterprises’ boards’ consent to place the Enterprises into conservatorship
This bargain is consent and consists of a mutual intent to solve a problem that was not there (as we now know), as FHFA had a strong incentive to pursue consent because that method was less likely to lead to litigation concerning the appointment of the conservator, then to establish and make the consent final there must be agreement on specific factors, one is the conservators needs to put in sound and solvent condition, this was not necessary as the company was solvent when they entered into conservatorship, the other one preserve and converse was also breached, but that was what the FHFA*FHFA-C premised they would do out of their statuary duty towards Fannie and Freddie, as we all know the FHFA-C siphoned the profits and that is contrary to the BOD consent given to the FHFA to put them in conservatorship
The FHFA cannot establish a conversion rate you underestimate the difficulty in measuring how difficult this is, first as the world-class conservator they siphoned the profits and then they want to convert and establish a conversion rate, but say it is possible you run into following problems, probably not the only ones, but just to pick a few:
1)What is the stock price to convert from
2)What would be the current liquidation preference without a ruling
4)What actual losses occurred to prefs depending date of entry
5)What is the interest rate granted
6)What are the missed dividends
7)how to overcome the suspended dividend mode
8)how to overcome a positive pro pref plaintiff ruling
9)how to overcome a positive pre common plaintiff ruling
10)how to overcome a granted relief by court if the prefs are converted
All very very difficult to calculate and most importantly different for each individual pref holder, as some lost a lot of dividend, but if you bought after conservatorship the pref was already in suspended mode, so you are not entitled to relief, to make a long story short this matrix will be endlessly long and not workable
The FHFA is unconstitutional and receives its power from HERA, the “for cause will be changed to “at will” and all corresponding rules in HERA that give the FHFA power based on this “for cause” single director need to be deleted, and because all those lines (hundereds of them) need to be modified or completely stricken, most if not all actions will need to be reversed too, as it was not justified by law to take these measures let alone keep them in place while unlawful
The FHFA has fiduciary duty, it does not to share price, but it has among the other 10.000 fiduciary duties, they have the duty to conserve and preserve that is the statue nothing more nothing less, and that is what not happened, and because Sweeney wants to prevent double recovery they see this currently as a solution, but soon will realize that is not the case as frivolous interpretation of the law it bor something to get shareholders out of this misery(don’t forget you cannot grant count VIII and IV fiduciary duty as derivative and not have the direct claim relief on the same grounds whatever those might be, the granting of these claims grant also the direct claims as it is established there were wrongdoings, so there must be relief)
The likelihood investors will invest in such a hornet nest and blatant abuse is unlikely, the wrongdoings first need to be reversed, the funding commitment is stage crafting they never had any commitment and any problems prior to conservatorship, the SPSPA cannot stay out of fiduciary duty as it is a voidable contract after a final ruling, and the funds distributed need to be refunded, sure there is a fight but the constitution will prevail as what they did is not only very unprofessional but also very dishonest and that doesn’t sound cricket to the way our government works
When we start at the bottom we see now the BOD voluntary agreed to be put into conservatorship as they would preserve and conserve and put in sound and solvent condition, this implied-in-fact contract was given to the FHFA, the FHFA made agreements with treasury that it could own a max of 79.9% in the companies(pending breach of fiduciary duty action) it left the common shareholders with 20.1% of the companies and all rights were suspended but the commons and prefs remained outstanding, then if the FHFA or treasury takes away any of the percentages pref and commons hold it takes property from current holders and uses it to recapitalize Fannie and Freddie, this is confiscating for public use, or beneficial to others than the legal owners of the pref and common stock, the only power the FHFA has is to conserve and preserve because it needs to protect the current pref and common shareholders, of course as we now know they did the opposite, but because they siphoned off all profits since 2012 it does not legalize these actions in any way or means, so they face
1) Breach of implied-in-fact contract https://www.law.cornell.edu/wex/contract_implied_in_fact
2) Breach of fiduciary duty https://www.law.cornell.edu/wex/fiduciary_duty
3) Illegal Exaction Under the Fifth Amendment https://www.law.cornell.edu/wex/takings
4) Just Compensation Under the Fifth Amendment https://www.law.cornell.edu/wex/takings
So to come back to the 20.1% this was agreed by treasury (beside of the breaches) the contract only allowed treasury to hold 79.9% as otherwise they would had to add Fannie and Freddie to their own balance sheet, but apart from that the 79.9% from treasury is solely for treasury and not for Fannie and Freddie’s recapitalization then treasury would give away their illegal received amount and use it to fund privately held companies that are in distress on recapitalization, while they are in distress on recapitalization because of the funds treasury illegal obtained, then if 79.9% is the maximum amount they can hold and because they are the majority holder with fiduciary duty toward the minority holders, as the accounting(the books) all profits are split in favor of the eventual future warrant execution it is established that current holders are entitled to 20.1% (the rest of the 79.9%), and if decided(thus) by court the 79.9% is legal they can keep it, but first it needs to be decided:
1)was the warrant obtained legally
2)was it legal to withhold the 20.1% from profit in perpetually
3)where statuary goals of FHFA breached
And since all of the above3 are a negative to treasury/FHFA it must be undone or corrected
The FHFA is allowed to direct the companies to give out extra shares only on the basis if they had properly done their work and not because they siphoned of the profits, pref and common holders will bleed, the funds transferred to treasury will need to come back with punitive damages, if then maybe a SPO is necessary the extra shares issued will go to treasury 79.9% and common holders 20.1% so only ones treasury voluntary or forced by court will drop the 79.9% claim the companies can make a SPO, and from the new shares issued 20.1% will automatically go to current shareholders as they already hold this percentage of the company and the current shareholders cannot be blamed for the errors FHFA made in siphoning the profits
A taking takes place ones a percentage change occurs in the 79.9/20.1% ratio, this ratio is important as FHFA only has authority from the BOD to put in sound and solvent condition
And as it is impossible for the FHFA to give away 79.9% of the company to Treasury without an explicit contract from the BOD that permits this action, so the FHFA breached their fiduciary duty towards the companies as the BOD could never voluntary give away 79.9%
So you can say the FHFA took private property by breaching the implied-in-fact contract
And the FHFA breached their statuary goals by entering into the SPSPA and treasury will breach fiduciary duty if they try to execute the warrant
The if pref holders in a settlement demand a pref to common conversion it breaches all duties again as it is FHFA statuary duty to preserve and conserve and not give money (stock) to pref holders while common pay for it, and even if commons receive 20.1% of all the new issued shares it breaches their duties again as the profits still go to treasury(now in liquidation preference no longer direct) and as the FHFA currently breaches a lot of duties a pref to common conversion is not possible(it is possible but for current market value only)
The ratio as explained above is the ratio that FHFA entered into on an illegal basis and is questioned in court by Fairholme and Washington Federal (breach of implied-in-fact contract on the 3th and the conservatorship itself) and as Sweeney said “For a contract to exist, “[s]omething more is necessary than just the agency exercising its powers.”
It bears the question when the breach of implied-in-fact contract is declared illegal, the contract is voidable and should be voided by FHFA-C and FnF as it is their fiduciary duty towards (minority)shareholders to do so, not voiding it would be a breach again by FHFA-C
The ratio before FHFA-C started was 100% common and 100% pref, this is the basis before conservatorship, after FHFA-C installed itself(on consent from the BOD to conserve and preserve) the Ratio was 79.9/20.1% common and 100% pref both with suspended rights, then to unleash the whole thing the 79.9/20.1 common and 100% prefs rights need to be re-established before any progress can be made
Then in order to do so you cannot change the ratio from pref to common if favor of prefs based on depressed post conservator share value while the real share value is unknown at this moment due to the accounting in EPS that already include the warrant while the warrant it not executed yet, the basis for an eventual conversion must be set on the losses that occurred and the FHFA maybe illegal made, then if you know the actual losses relief must be given, and maybe a positive conversion is justified, but not at the cost of commons, so whatever is decided, the ownership of 20.1% common shareholders will be kept and all eventual dilution is to new holders because the old shareholders are always entitled to 20.1% of whatever is issued in the future until the release is final just like treasury is
The errors the FHFA made are to begin with breaching the BOD consent, the BOD only authorized and has consented to preserve and conserve and put in sound and solvent condition, and as we all know by now, the opposite happened, and because they did the opposite we all now have the dozens of lawsuits that are pending on resolution soon, then the FHFA is in no position to establish a conversion rate to determine what is best for a resolution and the courts will decide if the FHFA has the constitutional power to do whatever it pleases, but bases on the constitution the FHFA lacked those powers, but we will see what will be changed the constitution or the FHFA powers (my guess it probably is the FHFA)
The BOD consented to conserve and preserve an put in sound and solvent condition, and because the Common shareholders rights are suspended it doesn’t mean the FHFA can do whatever it wants, as there is no consent on the actions to dilute common shareholders
If an SPO is necessary it can only happen after all funds are returned and the SPSPA is voided
but how may are outstanding?
Difficult, but imo the short answers is good
The long answers is, the corona virus will stay with us for a long time and effect every person in the world, but because the companies are fully capitalized (Seila, Fairfolme lawsuits) they can handle the downturn
this year the only stock that is going to go up is probably FnF, yes corona will disrupt al lot of businesses and households and it will be very very tough, but in the end FnF will prevail, a couple of weeks neutral/negative and as the corona crisis deepens the FnF stock will go up again due to the timeline set in seila and fairholme, the problem they now face is they siphoned off the profits so they have to give back the profits in order to keep the companies alive,(what they should have done in the first place) giving another infusion will be very difficult as the lawsuits are near completion, and it will ruin their reputation if they do, and weeks later the lawsuits overrule them
Yes agree Fannie and Freddie are doing fine but the economy will be negative for the next year (maybe longer), it is impossible to have growth in a pandemic
A common to pref conversion still looks unrealistic to me, you didn’t convince me.
A negative to common conversion means you want more than the current market value conversion this is of course legally not possible.
The law says the current common holders are entitled to 20.1% of the companies, so you can convert within that range of the 20.1% (current market value) but it nowhere in the laws says FHFA is authorized to add additional shares and let commons pay for it, they are not authorized to do that, because it would be a taking of property that belong to commons and will not settle a law suit, I understand your wishful thinking but it just doesn’t work that way
The conversion is 100% legal I agree with you and you can do it tomorrow, but only at current market value, nothing more nothing less, so it will not be negative to prefs nor negative to commons, any other than market value conservation is not possible as the basics of the conversion rate cannot be determined due to the errors FHFA made, and a suspended dividend pref stock cannot ask the common suspended dividend stock to convert in a preferable rate at the cost of the common, it would not help anybody
please tell me the thesis you have as to why a conversion is preferable and nobody is asking for it and why a negative to common conversion rate would be legally justified
One possibility is to sell all you have and buy the call options instead for it, that way you will multiply your investment, and by selling it makes the stock even cheaper, win win win,
Another possibility is because you bought the put option the drop in shareprice is covered by your put, you can cash the share and put option and sell them and buy/sell a call/put option now in/out of the money instead for it
(only possible for large investors, not possible for individual investors)
thank you, Overpayment according to the 10-K 2019 of Fannie and Freddie
Fannie Mae
Received 119.8
Paid 181.4
-------------------------
Overpaid $61.6 Billion
Freddie Mac
Received 79.3
Paid 119.7
--------------------------
Overpaid $40.4 Billion
Total overpaid Fannie & Freddie 102 Billion, as of December 31, 2019
Then following items remain outstanding
- $19,7B FHFA settlements with 18 banks
- $1,5B~ in assessments FHFA made for operating itself
- $2B~ initial cost for the CSP/CSS and
- $110M~ yearly operating expense for the CSP
- Inflation relief
- Punitive relief
Fannie 10-K 2019
As of December 31, 2019, we had received an aggregate of $119.8 billion from Treasury under the senior preferred stock purchase agreement, none of which was received in 2019,
Through December 31, 2019, we had paid an aggregate of $181.4 billion to Treasury in dividends on the senior preferred stock, $5.6 billion of which was paid in 2019.
Freddie 10-K 2019
Our cumulative senior preferred stock dividend payments totaled $119.7 billion as of December 31, 2019.
The aggregate liquidation preference of the senior preferred stock owned by Treasury was $79.3 billion
2% annual inflation correction could make sense
That is roughly 25% for 10 years conservatorship, and since they paid 100B(60/40) back, that could be the 124B
Exactly, do you have any idea how the 124B is build up, I thought it was strange for Sweeney to mention a number, as she then has to separately mention an interest number too..
Judge Wheeler ruled the warrant is an illegal exaction, later this case was overruled because of lack of standing but not because illegal exaction was not found, and because AIG did not participate in the suit, later the supreme court refused to hear the case, but the initial argument of Judge Wheeler was not overruled, so it keeps applying to Fannie and Freddie
Don’t forget to mention your thesis is based on a total loss in Seila and Fairholme case and not preferable for pref plaintiffs demands filed
U.S. residential mortgage debt outstanding was estimated to be pproximately $12.6 trillion as of September 30, 2019 (the latest date for which information is available). We owned or guaranteed mortgage assets representing approximately 26% of total U.S. residential mortgage debt outstanding as of September 30, 2019.
(2019 fannie 10-K)
REPORTED ORDER granting [456/449] Motion to Certify Interlocutory Appeal in sweeney's court
461
03/09/2020 REPORTED ORDER granting [456] Motion to Certify Interlocutory Appeal and [457] Motion to Certify Interlocutory Appeal. Proceedings in this case are stayed pending the interlocutory appeal process. Joint status report regarding further proceedings due within 14 days of the completion of the interlocutory appeal process. Signed by Chief Judge Margaret M. Sweeney. (kb1)
462
03/09/2020 REPORTED OPINION reissuing [449] REPORTED OPINION and ORDER following order granting [456] MOTION to Certify Interlocutory Appeal and [457] MOTION to Certify Interlocutory Appeal. Signed by Chief Judge Margaret M. Sweeney. (kb1)
FHFA is bound by the regulations it put for the entities they control, and they cannot make different rules for same industry participants, so although it seems he can do whatever pleases him, the rules put out will be mandatory for all similar situated companies
The minimal capital cannot be altered as the CCF also says 2.5% is sufficient, and Ginnie only had 2% minimum, chances it can be lifted to 3% are near zero, the risk based is the only one that will be altered imo
Critical 1.25%..................is for Fannie .$42B for Freddie $28B
Minimal 2.5%..................is for Fannie .$84B for Freddie $56B
Risk-Based 2.8%..............is for Fannie .$94B for Freddie $63B
New Risk-Based 3.40%?.is for Fannie $114B for Freddie $77B
New Risk-Based 3.75%?.is for Fannie $126B for Freddie $85B
(Fannie 3.367498T)
(Freddie 2.265T)
In the lawsuits you start at the top of the latter, but the scope is different then you state, the 3th amendment will un-raffle the whole conservatorship, it is a very sophisticated demand and much more detail needs to be given to it, if the 3th is unlawful(and it already is until overruled) the contract needs to be altered and is voidable, and FHFA as world class regulator of course can only choose the side of Fannie and Freddie and void it completely as that is what the contract states, as by implementing the 3th amendment they breached contract, fiduciary duty, and good and fair dealing and Treasury’s Conduct Was Arbitrary and Capricious, and Conduct Exceeded Its Statutory Authority, and Conduct Exceeded Its Statutory Authority As Conservator, so the claim looks like a NWS sweep only claim, but in fact the claims is about the conservatorship misbehavior, that is why jones days plaintiffs and Washington Federal plaintiffs don’t want to loosen up on the direct claims and State that the interlocutory appeal does not set aside the direct claims, as they want to keep those claims and keep the door open to it, because other court outside Sweeney’s court sofar have proven they do not obey the law and it can be altered in the advance of the government, this of course is a no go, but Sweeney want to make sure there is no double recovery, so until there is a clear understanding between the direct claims and derivative claims, the lawsuits cannot proceed, ones Sweeney permits the direct will have standing after interlocutory appeal it can proceed, then if the other courts interpreted the law frivolously as they done before they can come back to Sweeney and ask for relief on constitutional grounds. So as of now both the FHFA and FHFA-C have fiduciary duty to void the contract as it is there obligation to the law to do so, unless of course overruled by court order, but those are the current hurdles FHFA faces, it ain’t pretty but that is the law, and when you cross that line those are the consequences, you can preach you don’t have fiduciary duty but in the end of the day you do, the FHFA is a conservator and if you do not do your job it is costly
Under dispute is the 3th amendment and it is already ruled illegal, so it needs to be overruled to become legal again, and that is not the only thing under dispute, I didn’t see the sealed second amended complaint of Fairholme, but it is sealed so it probably contains something the government want to hide
in HERA it states 4617(a)(1) “Notwithstanding any other provision of Federal or State law, the Director may appoint the Agency as conservator or receiver for a regulated entity”
then 4613 says
(a)Enterprises For purposes of this subchapter, the critical capital level for each enterprise shall be the sum of—
(1) 1.25 percent of the aggregate on-balance sheet assets of the enterprise, as determined in accordance with generally accepted accounting principles;
Then it means after 1.25% FHFA is out, 4613 is the “any other provision” and it nowhere in the laws says the exit of conservatorship is upon the wishes of the director, however if you find something in the law please let me know
the bank like capital is wishful for the FHFA and for stage crafting only, Fannie and Freddie are not banks so their capital is not going to be bank like either, but for public comparison reasons and stage crafting he wants it to be, so he will submit a less bank like capital rule and advertise it as bank like
The Supreme court can strike down or keep HERA in place, not a problem, only it would be more logical or cheaper to delete HERA in its entirety as the outcome either way will be the same when altered, it will be the OFHEO standard, you can call it HERA or OFHEO whatever pleases you, but it will have the same power only a different names
Legal is only what the constitution says and not what the court says, the constitution says
the separation of power has 3 branches:
1) Legislative Power (the power to pass laws) to Congress
2) Executive Power (the power to administer the laws) to the President
3) Judicial Power (the power to interpret and enforce the laws) to the Courts.
Any ruling that forbids actions between the 3 points is unconstitutional unless the constitution is changed of course, but don’t count on it it ever will, chances the court rules in favor of the constitution are 100% and thereby plaintiffs demands are granted
The fifth circuit changed the removal clause only and thereby HERA needs to be altered, it is not the job of the 5th circuit to alter HERA, they only concluded for cause is not constitutional, and when the director is removable it is no longer an independent agency but an executive agency and HERA accordingly needs to be changed in a way that it becomes OFHEO
Thank you, fully agree!
Indeed The FHFA will find as “World-Class regulator” a problem as to why they wanted to liquidate a perfect functioning company, that doesn’t sound cricket to a “World-Class regulator”
Will keep that in mind, Thanks !
And the 4 amendment to the SPSPA is not possible as the contract state:
6.7. Effect of Order; Injunction; Decree. If any order, injunction or decree is issued by any
court of competent jurisdiction that vacates, modifies, amends, conditions, enjoins, stays or otherwise affects the appointment of Conservator as conservator of Seller or otherwise curtails Conservator’s powers as such conservator, Purchaser may 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
shall immediately and automatically terminate.
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.
This is what the law says on 6.7 & 6.12 in the SPSPA :
https://www.investopedia.com/terms/v/voidable-contract.asp
A contract may be deemed void should the terms require one or both parties to participate in an illegal act
A voidable contract is a formal agreement between two parties that may be rendered unenforceable for a number of legal reasons. Reasons that can make a contract voidable include the following:
- Failure by one or both parties to disclose a material fact
- A mistake, misrepresentation or fraud
- Undue influence or duress
- One party's legal incapacity to enter a contract
- One or more terms that are unconscionable
- A breach of contract
In 2008 when FHFA-C took over they had the task and consent from the Board of directors of Fannie Mae and Freddie Mac to conserve and preserve and put the companies in sound and solvent condition, The Conservatorship Capital Framework(CCF) should have been released in 2011, but they decided to neglect their fiduciary duty as conservator and siphon off all the profits instead of making the companies healthy again
The CCF came into play almost 10 years into the conservatorship, after they discovered they did the opposite of what a conservator should do, the CCF is a view the FHFA has on what is needed, and not mandatory, it will disappear after they are forced to release Fannie and Freddie when they pass the 1.25% critical capital level, the view they expressed in the CCF is their opinion and is in-line with the regulatory demands for a minimum capital buffer, the risk-based rule is hard to say
IMO it is likely to be lower than 3.75% and when the CRT is deducted it will be 3.4%, so when FHFA re-proposes the rule it is likely to be in the range of 2.8%-3.4%(ex CRT 3.75%)
Current Mandatory capital for Fannie and Freddie:
Critical 1.25%........is for Fannie .$42B for Freddie $28B
Minimal 2.5%..........is for Fannie .$84B for Freddie $56B
Risk-Based 2.8%.......is for Fannie .$94B for Freddie $63B
New Risk-Based 3.40%?.is for Fannie $114B for Freddie $77B
New Risk-Based 3.75%?.is for Fannie $126B for Freddie $85B
(Fannie 3.367498T)
(Freddie 2.265T)
The minimal capital rules has everything to do with Ginnie, the same 1.25% makes it an industry standard, the minimal capital level is hard to re-propose as in other documentation (CCF) they argue 2.5% is sufficient, and since that was in 2018, it would be serious flip flopping to re-propose it now on the same details
The 1.25% of the 3.3T guarantee book of business is 42B
The 2.5% of the 3.3T guarantee book of business is 84B
The 2.8% of the 3.3T guarantee book of business is 94.B
The 3.75% of the 3.3T guarantee book of business is 126B
(3367498T)
The contracts the companies have are under severe dispute in dozens of lawsuits and nowhere legal even if they think they are, until decided they do not have negative capital, sure for stage crafting purposes, but in reality they done things that are outside the law and constitution
FHFA conservator power vanishes after the 1.25% critical capital is surpassed, as 4617(a)(1) says “Notwithstanding any other provision of Federal or State law, the Director may appoint the Agency as conservator or receiver for a regulated entity”
(However it still needs to submit a capital restoration plan)
So after Fannie has 42B in the books the conservatorship will end as the law is obeyed
MC more than ones said he wants bank like capital and that is Basel III with a max of 3.75%
The constitution:
1) Legislative Power (the power to pass laws) to Congress
2) Executive Power (the power to administer the laws) to the President
3) Judicial Power (the power to interpret and enforce the laws) to the Courts.
https://www.usa.gov/branches-of-government
in hera https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
you will find 718 times the word DIRECTOR, the director wants, orders, determines al sort of things ON PERSONAL WISHES(not by law), this is unlawful as FHFA has 1) Legislative Power but forbids 2) Executive Power and forbids 3) Judicial Power and then is it unconstitutional (separation of powers)
the re-writing of HERA will be an impossible task, it was written in a way to give more power to FHFA, so no matter what the court rules, when declared illegal because it is unconstitutional and the power is taken away it becomes OFHEO, then you can re-write HERA, but it is faster and more efficient to delete it in its entirety as the powers are the same as OFHEO so the need for HERA disappeared, and it can be abandoned or re-written but both with the same end result
4526 is unconstitutional as the Director
‘‘(a) AUTHORITY.—The Director shall issue any regulations,
guidelines, or orders necessary to carry out the duties of the Director
under this title or the authorizing statutes, and to ensure that
the purposes of this title and the authorizing statutes are accomplished.
This is clearly outside the scope of 2)Executive Power and cannot be challenged in 3) Judicial Power I do not see any reason why it would be legal, please explain
Capital requirements for Fannie Mae and Freddie Mac
Implication to Re-Propose the capital rule for Fannie Mae and Freddie Mac, currently the law says following on the Capital rule:
1) Critical capital Level 1.25%
https://www.law.cornell.edu/uscode/text/12/4613
https://www.fhfa.gov/SupervisionRegulation/FannieMaeandFreddieMac/Documents/critcap6908.pdf
2) Minimum capital level 2.5%
https://www.law.cornell.edu/uscode/text/12/4612
https://www.fhfa.gov/SupervisionRegulation/FannieMaeandFreddieMac/Documents/2Q2008MinCap.pdf
3) Risk-based capital level 2.8%
https://www.law.cornell.edu/uscode/text/12/4611
https://www.fhfa.gov/SupervisionRegulation/FannieMaeandFreddieMac/Documents/2Q2008RBC.pdf
https://www.fhfa.gov/SupervisionRegulation/FannieMaeandFreddieMac/Pages/Capital-Requirements.aspx
Critical capital level
Looking at this rule it looks like the Critical capital rule for Fannie and Freddie of 1.25% will stay and not be altered, because if it does, it will question Ginnie Mae’s capital rule too, so it is unlikely FHFA can re-propose the critical level on Fannie and Freddie, and leave Ginnie’s critical capital untouched
Minimum capital level
The Minimum capital level is 2.5% and might not be touched either as recently as 2018 they in their “Conservatorship Capital Framework” (CCF) also state 2.5% is sufficient, then if you state in 2018 with a lot of words 2.5% is sufficient, it will be hard based on the same fundamentals(history) to argue it needs to be altered.
Risk-based capital level
Then the Risk-based capital level currently is 2.8%, it will be re-proposed in the end of march and finalized by the end of 2020, according to the Directors latest statement, the 2.5% looks to be the magic number as all of FHFA conservator power vanishes when Fannie and Freddie surpass the 2.5% capital moment, the Risk based number is according to Basel III a 2.5% capital buffer on top of the critical buffer then the new rule varies from 2.5% to 3.75% excl. CRT (84B - 126B)
https://www.bis.org/fsi/fsisummaries/b3_capital.pdf
Profit
The companies “normal” expected profit is a “reasonable economic return” , then no matter what regulation or restriction is implemented, when it falls below “reasonable market conform”, the Gfees need to be increased accordingly, so it is reasonable again
https://www.law.cornell.edu/uscode/text/12/1716
1451 Note § 301(b)(3) authorizing the Enterprises to earn a “reasonable economic return”
https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/2019-Strategic-Plan.pdf (3/3)
Competitors
Fannie and Freddie basically only have one competitor, Ginnie mae, their statue requires a minimum capital level of 2% and FHFA/VA/Ginnie Mae have a critical capital ratio of 1.25%, the latest years the (FHA) Mutual Mortgage Insurance Fund (MMI) had in 2017 a capital ratio of 2.18% in 2018 it had 2.76% and as a complete surprise it suddenly in 2019 has a 4.84% capital ratio
https://www.law.cornell.edu/uscode/text/12/1711 (f)(1)(2)
https://www.hud.gov/sites/dfiles/Housing/documents/2019FHAAnnualReportMMIFund.pdf
Conservatorship Capital Framework (CCF)
The Conservatorship Capital Framework (CCF) was implemented on 7/17/2018, this rule had 5 scenarios between 2.2% and 2.8% and FHFA selected 2.5 percent as the midpoint of the estimates for this proposed leverage requirement alternative,
https://www.gpo.gov/fdsys/pkg/FR-2018-07-17/pdf/2018-14255.pdf
https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Enterprise-Capital-Requirements.aspx
Then in other documentation it states:
https://www.hud.gov/sites/dfiles/Housing/documents/2019FHAAnnualReportMMIFund.pdf
Table 5 of the CCF document suggests Net Credit Capital would be 2 percent before adjusting for Credit Risk Transfer (CRT) transactions22
FHFA Powers
The Director claims he wants to re-propose the capital rule, the power that allows him to re-prose this rule are vested in https://www.law.cornell.edu/uscode/text/12/4526, however this rule is in HERA and currently Seila Law is challenging indirectly this (4526*) rule, Seila is holding the CFPB independent structure is unconstitutional as it has a “for cause removal” and not “at will”, and since an independent structure does not allow a single director and must be controlled by a board, so no matter the outcome of Seila in SCOTUS, when the Single director is allowed it will lose the independent structure and it becomes an executive agency under another Federal agencies will and since all agencies only can act on regulation and not on independent personal wishes of a single Director the 4526 rule becomes unconstitutional, and when SCOTUS does not allow a single director it needs to be replaced by a board in order to keep its “independent” structure , then (HERA) regulation and 4526 needs to be modified to “lame duck” regulation.(and undesirable in the next downturn
FHFA Wishes
Does the FHFA have power to do what it wishes?, upto now it has, the delay in the capital rule is in my opinion due to the fact that if SCOTUS rules the independent structure is unconstitutional the rule might become unconstitutional too as HERA does not have a severability clause, so the delay is a logical consequence of the uncertainty surrounding the FHFA agency as independent, this also is seen in the recent request they made for another advisor https://beta.sam.gov/opp/ed6c9daad21c400c80ede0b105fd9feb/view
The tasks they ask the advisor to do are among others:
e. Identifying and assessing requirements, restrictions, and other issues under the terms of each Enterprise’s relevant contractual arrangements, including under the Treasury Senior Preferred Stock Purchase Agreements (PSPAs).
f. Providing legal advice related to potential amendments to the PSPAs.
g. Providing legal advice with respect to other outstanding obligations of the GSEs.
h. Providing other legal advice on capital raising options.
https://beta.sam.gov/api/prod/opps/v3/opportunities/resources/files/e403cc0a515d49ada53a4f7aa22ff0aa/download?api_key=null&token=
*4526 is an Example out of the dozens of unconstitutional implemented rules, see the full HERA transcript at: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
Update Fairholme MOTION TO CERTIFY INTERLOCUTORY APPEAL
Most plaintiff received a letter from the court if plaintiffs want to participate in an interlocutory appeal, or if they are willing to at least consider it, all of them do so far, except Washington federal does not want to participate, they state :
“As an initial matter, it should surprise no one that Plaintiffs will not stipulate to dismissing this action without a ruling on the Government’s motion since an amicus brief in a Fairholme appeal would not protect their distinct interests.”
13-465C FAIRHOLME FUNDS, INC. v. United States…………..Common & Preferred
Honorable: Margaret M. Sweeney
United States Court of Federal Claims
Claim: **SEALED**AMENDED COMPLAINT (Entered: 03/08/2018) probably False Narrative, Government coercion, Coercion by the White House and Treasury, FHFA Conflict of Interest, a Taking, Illegal Exaction Claims, Exceeded Statutory Authority, illegal Exaction, Breach of Fiduciary Duty. As stated in doc 428 https://www.courtlistener.com/recap/gov.uscourts.uscfc.28224/gov.uscourts.uscfc.28224.428.0.pdf
Court: United States Court of Federal Claims https://www.courtlistener.com/docket/4198608/fairholme-funds-inc-v-united-states/
On February 7, 2020, the parties filed a joint status report in which they proposed a
schedule for filing motions for an interlocutory appeal concerning the court’s decision on
defendant’s motion to dismiss. The court adopts the parties’ proposed schedule with a slight
modification to the response deadline. The parties shall file their respective motions for an
interlocutory appeal by no later than Friday, February 21, 2020, and file a response to that
motion by no later than Wednesday, March 4, 2020.
On Feb 21, 2020 – Jones Day Plaintiffs respectfully ask this Court to:
(1) lift the stay on consideration of the Government’s motion to dismiss this action;
(2) enter an order ruling on the motion to dismiss this action, and
(3) to the extent necessary depending on the disposition, set a briefing schedule in this action to address certification of its ruling in this action for interlocutory appeal, under 28 U.S.C. § 1292(b), on the same schedule as in Fairholme (March 4, 2020.)
1) 13-466C Joseph Cacciapalle ………..………… Preferred, Class Action, Direct
2) 13-496 C American European Insurance…. Preferred, Class Action, Direct
3) 13-542C Francis J. Dennis ………………….…. Preferred
4) 13-385C Washington Federal…………………. Common & Preferred, Class Action, Direct
5) 13-608C Bryndon Fisher (FNMA) .........….. Common Derivative
6) 13-672C Erick Shipmon……..…………………… Common Derivative
7) 13-698C Arrowood Indemnity Company . Preferred Direct
(have not yet decided they will seek to lift the stay as of Feb 25, 2020)
8) 14-152C Bruce Reid (FMCC) …………………… Common Derivative
9) 14-740C Louise Rafter .........…………………. Common Direct & Derivative
10) 18-1124C Wazee Street……………….………… Common, Class Action, Direct & Derivative
11) 18-1150C Highfields Capital………………….. Common & Preferred, Direct
12) 18-1155C CRS Master Fund LP…..…………… Preferred, Direct
13) 18-1226C Perry Capital LLC……………………. Common & Preferred, Direct &Derivative
14) 18-1240C Quinn Opportunities Master LP… Preferred, Direct
15) 18-281C Owl Creek Asia I L.P...........………. Preferred, Direct
16) 18-369C Akanthos Opportunity Master Fund .. Preferred, Direct
17) 18-370C Appaloosa Investment .........……. Preferred, Direct
18) 18-371C CSS LLC ……………………………………. Preferred, Direct
19) 18-529C Mason Capital L.P...........………….. Preferred, Direct
20) 18-711C 683 Capital Partners………..……….. Preferred, Direct
21) 18-712C Joseph S. Patt………………………..… Preferred, Direct
Excerpt Transcript Bloomberg interview Feb 25, 2020
Hey Action8101, looking into stuff...
If as you claim the FHFA has no fiduciary duty toward shareholders
how are the shareholders rights protected from FHFA abuse ?
The BOD has fiduciary duty as discussed in another post
if treasury pays a for a junior to pref conversion what is solved ? and what would commons get in return? And why is that preferable above a money settlement ?
FHFA doesn’t own Fannie and Freddie it needs to put the companies in sound and solvent condition, I don’t see how FHFA can direct Fannie and Freddie to give away shares?
The cost of conversion is a zero cost to FHFA(who committed the wrongdoings) but not to Fannie and Freddie as common holders are diluted, and a BOD would not except a voluntary dilution because of their duty, so why should FHFA not pay?
the documents that belong to Washington federal are from washintong federal and they can do with it as they please, the sealed documents only after resolution but only if the case is dismissed
some redacted copies contain the interest of the public, and it might be difficult not to make these public in the lawsuits are not settled
if coercion is not ruled on or no settlement will occur we need to see the documents as not all 8.000 shareholders are post conservatorship shareholders
the SPSPA’s warrant was enter into without any return on it, the amendment of first 100B and then 200B came later, nut the SPSPA was already in place
FHFA-C has fiduciary duty to plaintiffs as otherwise shareholders rights would not be protected from abuse, what you say indeed happened in the past but is nowhere near the current situation, up to now the direct (tort claim) of breach of fiduciary duty were not granted, but because it was not granted does not mean shareholder lost that right forever, and shareholders are now unprotected, when in Seila (CFPB) thus FHFA the for cause removal becomes “at will” as the constitution demands (because of the 3 branches), the agency becomes an executive (regulatory) agency who is no longer “independent” then it follows because 12 U.S.C. § 4617(b)(2)(J) & 12 U.S. Code §?4635(b) are deleted and FHFA has Fiduciary duty to shareholders as cases were denied on those grounds, and since they are no longer independent the ground to not grant the direct claims because of 12 U.S.C. § 4617(b)(2)(J) & 12 U.S. Code §?4635(b) are no longer present and relief is justified
A fiduciary duty is an obligation to act in the best interest of another party. For instance, a corporation's board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust's beneficiaries, and an attorney has a fiduciary duty to a client.
https://definitions.uslegal.com/b/breach-of-fiduciary-duty/
so it follows because the direct fiduciary claims are not granted(yet) the agency doesn’t have fiduciary duty: on the contrary the FHFA was given power by congress to conserve and preserve and put in sound and solvent condition, and that is something they did not do, so they breached their own statue and breached the fiduciary duty toward shareholders as we expect a conservator to act in the best interest of the company and shareholders, when the conservatorship started FHFA had the duty to put in sound and solvent condition, now years later the company is sound and solvent condition so it needs to release the company as they did their job, and now it is in FHFA interest to act in the best interest of the shareholders too, because the job is finished and the company needs to be released, and that can only be done by resolving the fiduciary duties they neglected in the past, and give relief to shareholders, so the company can function “normal” again
Then it would make no sense because the derivative direct claims are granted by Sweeney to deny the direct, as the duty is the same for both, the FHFA has duty to the company and shareholders to pursue a goal of rehabilitating, with at the end stage a sound and solvent company who can function without the control of a conservator, but they abandoned their own goals and put the companies in danger by handling the way they did, now in order to make up with the company and shareholders they are “re-capitalizing”, but the breach of fiduciary duty still stands as no relief is granted on the misbehavior yet
Sweeney’s court is concerned about double relief and therefore (my interpretation) she only granted the derivative claims in her court, and Judge Lamberth and Atlas should give relief to direct claims,
So you can say because the fiduciary duty FHFA has towards to company, and by breaching it, they also breached the fiduciary duty of the shareholders too, as shareholders otherwise would be unprotected against gross abuse
Sweent granted the Derivative Breach of Fiduciary Duty claim : (now in interlocutory appeal)
Count VIII
Breach of Fiduciary Duty
(Derivative Claim on Behalf of Fannie Mae by Plaintiff Barrett)
Count IX
Breach of Fiduciary Duty
(Derivative Claim on Behalf of Freddie Mac by Plaintiff Barrett)
Fairholme has following questions:
Those controlling questions of law include whether
(1) this Court lacks subject-matter jurisdiction over Plaintiffs’ direct claims for breach of fiduciary duty and breach of implied-in-fact contracts;
(2) whether Plaintiffs who purchased stock in Fannie Mae and Freddie Mac (together,
the “Enterprises” or the “GSEs”) after the third amendment to the Preferred Stock Purchase
1 This Court’s Opinion and Order granting in part and denying in part the Government’s
motion to dismiss was originally issued under seal on December 6, 2019, and was subsequently reissued for publication on December 13, 2019. Fairholme Funds, Inc. v. United States, 146 Fed. Cl. 17 (2019) (referred to herein as the “MTD Order”).Agreements (the “PSPAs”) lack standing to pursue their direct takings claims; and
(3) whether Plaintiffs lack standing to pursue the claims that have been pled as direct claims because those those claims are in substance derivative in nature.
Plaintiffs’ direct claims present controlling questions of law. Those questions include:
(1) whether Plaintiffs’ direct claims for breach of fiduciary duty sound in tort, and are thus outside this Court’s Tucker Act jurisdiction, MTD Order, 146 Fed. Cl. at 53–56;
(2) whether, for purposes of the Court’s jurisdiction, Plaintiffs are third-party beneficiaries of an implied-in-fact contract between the Government and the GSEs, id. at 57–58;
(3) whether Plaintiffs who purchased GSE stock after the Third Amendment have standing to litigate their direct takings claims, id. at 59–60; and
(4) whether Plaintiffs lack standing to litigate their “nominally” direct claims because those claims are substantively derivative in nature, id. at 61–63.
12 U.S.C. § 4617(b)(2)(J).
That statement reflects a clear intent: the FHFA-C does not owe a fiduciary duty to shareholders because the conservator is not required to consider shareholders’ interests.24 See id.; see also Collins, 938 F.3d at 580 (noting that HERA “may permit” the FHFA-C to pursue actions that are “inconsistent with fiduciary duties”). The plain language controls, and therefore the court does not consider the peripheral considerations urged by plaintiffs such as the implications of the word “conservator,” the FHFA-C’s control over the Enterprises, or the FHFA-C’s other powers. In sum, plaintiffs cannot establish jurisdiction for their direct fiduciary duty claim by relying on HERA.
12 U.S.C. § 4617(b)(2)(J)
(b)POWERS AND DUTIES OF THE AGENCY AS CONSERVATOR OR RECEIVER
(2)GENERAL POWERS
(J)Incidental powersThe Agency may, as conservator or receiver—
(i) exercise all powers and authorities specifically granted to conservators or receivers, respectively, under this section, and such incidental powers as shall be necessary to carry out such powers; and
(ii) take any action authorized by this section, which the Agency determines is in the best interests of the regulated entity or the Agency.
12 U.S. Code §?4635(b)
(b)Limitation on jurisdiction
Except as otherwise provided in this subchapter and sections 4619?[1] and 4623 of this title, no court shall have jurisdiction to affect, by injunction or otherwise, the issuance or enforcement of any notice or order under section 4631, 4632, 4513b, 4636, or 4636a of this title, or subchapter II, or to review, modify, suspend, terminate, or set aside any such notice or order.
Fairholme Plaintiffs discuss this at length in their latest filing
http://www.glenbradford.com/wp-content/uploads/2020/02/13-465-0457.pdf
Plaintiffs request that the Court “amend its order” of December 6, 2019,1 FED. R. APP. P. 5(a)(3), to include a statement finding that the Court’s decision dismissing Plaintiffs’ direct claims involves controlling questions of law with respect to which there are substantial grounds for difference of opinion, and finding that an immediate appeal from that order may materially advance the ultimate termination of this litigation.
CONCLUSION
For the foregoing reasons, Plaintiffs respectfully request that the Court enter an order,
pursuant to 28 U.S.C. § 1292(d)(2), certifying for immediate appeal the Court’s order dismissing Plaintiffs’ direct claims, including the subsidiary issues included in that ruling discussed in this motion, and that the Court reissue its December 6, 2019 Opinion and Order to include a statement finding that the Court’s decision dismissing those direct claims involves controlling questions of law with respect to which there are substantial grounds for difference of opinion, and further finding that an immediate appeal from that order may materially advance the ultimate termination of this litigation.
February 21, 2020 Respectfully submitted,
Me neither it looks like a lot of trouble, and besides that the opticals of it are not really what the market would expect and doesn’t really sound trustworthy to the average person in my belief
I already see the headline in the papers “government GIVES shares to shareholders!!”
I do not see a path to a junior to common conversion, kt tried to explain it to me, but it looks not plausible as relief to me, different minds, different conclusions, the problem is the structure itself FHFA-C needs to decide over Fannie and Freddie stock that will be granted to prefs while commons should pay for it or receive as result of the dilution money? What a fuss
Sweeney only granted the derivative claims and not the direct claims as those are in Lamberths court, because plaintiff otherwise would receive double recovery on their claims
So plaintiff receive derivitave relief in Sweeney’s court
And direct relief in Atlas and Lamberths court
in short:
direct= when you bring a lawsuit and if you win, you receive the money
derivitave= when you bring the lawsuit and if you win, the company gets the money
1) It is only constitutional when SCOTUS or atlas or Sweeney rules in Fannie and Freddie favor, as the constitution does not allow a single director to an independent agency although a ruling is needed we can be reassured 99,9% it will be ruled unconstitutional as those things are not allowed, The FHFA can become a multi member board but that would seriously impact the instant powers needed, and FHFA is better of being a single director in an executive agency that needs to obey FHA,
1a) All of 4617 needs to go as they talk about “The Agency”, Which is an independent agency, and since the only possibility is changing it to a multimember board that board can only make decisions on law not frivolous interpretations of the law or invented rules
2) Possibly I believe your calculation and sounds accurate, but it still is only 1 puzzle piece of the total calculation
3) Fannie and Freddie distributed to treasury of all their net worth because of the SPSPA, if duress is found the conservatorship is illegal, and the whol;e conservatorship is at stake, if the NWS funds are returned and later a ruling on duress will come it make no sense first step one Duress then step 2 the NWS (duress in Fairholme will be the first that needs to be answered)
Correct the liquidation pref is not repaid but the 300B is still returned to FnF as the SPSPA currently forbids being paid off
4) The BOD could not have agreed to anything other than a loan and payback scheme, we as shareholders do not allow the BOD to be philanthropists, by normal business operation it is not possible to enter into anything abusive
The consent was achieved on a implied-in-fact contract, back then the intent maybe was good, only when they entered into the SPSPA the abuse started and there could not have been any consent the SPSPA as it is totally against normal business practices
5) The difference between the consent decree and the settlement in real terms is different than is believed in the media, the consent comes from FHFA-C that party only is interested in maximizing the profits for shareholders ASAP and release(as that is their statue says putting in sound and solvent condition), so the consent on a consent decree is not an ongoing contract in the eyes of FHFA-C as much as Treasury would have liked that
Treasury hide behind FHFA as being it is filing is it not a party and does not want to produce documents etc,
the Supreme Court is under no obligation or mandate to strike down all of HERA, it can do whatever it pleases only as long as it stays within the constitutional boundaries, here in FHFA the boundary is: it is an independent agency with a single director, that is not how the constitution works so it needs to be deleted from HERA then HERA says “the director shall” NOT “the director shall upon law or regulation” so it is acting upon personal wishes with or without legal backup, then because the independent is not legal, HERA needs to chance the language it uses for the director, as this director (now under supervision of FHA) only can rule upon regulation law or established principals and no longer can do as it pleases, then we are back to the OFHEO regime, and whether HERA is adjusted or Deleted in its entirety doesn’t matter, the reason why OFHEO changed to FHFA is the “independent” nature of FHFA and when it is deleted (as it is unconstitutional) the reason for HERA and FHFA disappears
Collins only want the NWS and the “FOR CAUSE” and in seila the backward looking relief, not all actions need to be reviewed, only the important ones, is FHFA legal because of the “for cause” and “is the NWS legal so the contract is a voidable contract” problem solved
6) "the Enterprises will likely need to raise third-party capital". But because of the lawsuits not in this letter http://www.glenbradford.com/wp-content/uploads/2020/02/UST-FHFA-letter.pdf
It also states “If you have any further questions, please direct your staff to contact Treasury's and FHFA's LEGISLATIVE AFFAIRS OFFICES.
Yes they do have fiduciary duty as it otherwise breaches the consent of the implied-in-fact contract, everything they do they have to take into account the interest of the shareholders, they do not have a card blanche on 79.9% and can do whatever it pleases because the implied-in-fact contract would not allow that because of lack of consent
The FHFA-C has the duty to put the enterprises in sound and solvent condition and preserve and conserve, giving away anything that does not attribute to the overall breaches FHFA statue and the implied-in-fact contract that the FHFA-C has obtained or coerced from the BOD
FHFA is bounded by “normal” business practices and is not outside the law
12 U.S. Code §?4617(a)(2)
(a)APPOINTMENT OF THE AGENCY AS CONSERVATOR OR RECEIVER
(2)DISCRETIONARY APPOINTMENT
The Agency may, at the discretion of the Director, be appointed conservator or receiver for the purpose of reorganizing, rehabilitating, or winding up the affairs of a regulated entity.
So FHFA only has power for the purpose of reorganizing or rehabilitating, nether of these 2 contains it can do whatever it wants
8) TCCA fees are unconstitutional although not challenged yet because it confiscates money from a private property and allocates it for other purposes as housing, the next thing they say is we need to fix the roads to JFK, we need tcca3.0 TCCA will not stand in the test of time but we will see
congress cannot demand funds upon their wishes, it cannot put taxes on company A while it while same company B does not have to pay those taxes, it does not work that way all companies have the same legal basic rights, confiscating money from one company is not one of them
9) The critically capitalized rule is very hard to adjust, if FHFA want to adjust the critical capital it need to take into account
a) Gfee adjustment
b) The correct models this time that reflect Fnf were never undercapitalized
c) If the capital is higher why it is higher than the model from the 2008 crisis
d) Which banks support this theory
e) Which rating agencies are used for the models
f) What effect will it have on the average household(meaning how much should they pay more)
g) Why the previous model was not correct and what went wrong on that model
h) How long model will be relevant, and why so soon an adjustment is needed
10) It is in the interest of FHFA that Fannie and Freddie function well the FHFA must have said that under a different regime as that is not the statue of FHFA-C
As explained above it doesn’t matter what part in HERA is unconstitutional the “independent” needs to go and by that we have a full relief in “for cause”
4616 doen’t make feel good on intension
other actions taken by the Director
the Director shall carry out
the Director determines
to take any other action that the Director determines
all these thing have to leave ones it “for cause is ruled illegal
15) I’m withholding my opinion
18) discussed in prior section at length
19) the settlement/consent decree will be with all plaintiffs it will not be a candy store of which you can pick and choose the commons have demands and the pref have demand, the commons will demand some form of the 20.1% ownership dividend and prefs will demand missed dividends, and dividend on prefs and commons are restored, for commons the 0.075 will be the bare minimum but that is imo, the angel suit accuses the BOD that they should have declared dividends, and they did not so they breached their duty this direct related to declaring common dividend as the boards declares common and pref dividends simultaneously
21) this is doable but will take more than a hour to copy paste
https://corpgov.law.harvard.edu/2016/10/31/d-c-circuit-finds-single-director-structure-of-the-cfpb-unconstitutional/
1) Legislative Power (the power to pass laws) to Congress
2) Executive Power (the power to administer the laws) to the President
3) Judicial Power (the power to interpret and enforce the laws) to the Courts.
https://www.usa.gov/branches-of-government
the whole idea is 1)(hera), cannot prevent 2) for cause or 3) independant
so hera was established and the president and the court should have jurisdiction on it, that is how the constitution should work, and because HERA prevent by “for cause”and “independent” number 2),3) it is outside the constitution as declared in Seila and now in SCOTUS parties also agree
then this is the hard part to proof if unconstitutional the director no longer has the power to whitch he was entitled in the old unconstitutional HERA, but in order to make it legal it must be 2) and 3) and because of that Hera it wrecked
If FHFA-C agrees with Treasury it wants to unwind Treasury’s abusive contract, it can only be done if ALL wishes from all plaintiffs are fulfilled because there might be plaintiffs not agreeing and they could wait for resolution by the courts, FHFA-C is the one who makes the decisions as it replaces our BOD, so our BOD could never agree if not all wishes from all shareholders are granted as it could never drop its fiduciary duty towards their shareholders, small or large in or outside the lawsuits, the BOD (now FHFA-C) has a Huge responsibility towards all shareholders except treasury as it holds the abusive contract
The 5th circuit found the NWS was illegal this it what they say:
“Count I, to the extent it has merit, is a direct claim. The Shareholders suffered injury in fact—they were excluded from the GSEs’ profits. And they are within the zone of interests HERA protects.
Count I alleges that FHFA violated 12 U.S.C. § 4617(b)(2)(D)—the grant of conservator powers”.
Then IF the NWS was legal, the 5th circuit would not allow this claim pass the motion to dismiss, it passed, so it is illegal
12 U.S.C. § 4617(b)(2)(D)
(b)POWERS AND DUTIES OF THE AGENCY AS CONSERVATOR OR RECEIVER
(2)GENERAL POWERS
(D)Powers as conservator The Agency may, as conservator, take such action as may be—
(i)necessary to put the regulated entity in a sound and solvent condition; and
(ii)appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity.
And on the for cause removal the 5th circuit noted:
“The removal-protected FHFA Director is a new innovation…..
Granting both removal protection and full agency leadership to a single FHFA Director stretches the independent-agency pattern beyond what the Constitution allows.”
Changing HERA in the smallest way possible to cure the defect is meritless the 5th circuit could never opinion the law(HERA) needs to be compromised(maybe an individual judge but certainly not the opinion itself) if any eventual defect is found, the government needs to solve any problem that is found in court and compromising would be unconstitutional as the problem needs to be solved flawlessly without any consideration of whatsoever
The Parties (FHFA-C And Treasury) now have conflicting interests, FHFA-C has a super profitable company that it needs to release as soon as possible due to their statue, treasury on the other hand has an abusive contract that was implemented in a prior administration that is claimed by plaintiffs as void ab initio (coercion in Fairholme & Washington Federal) and unconstitutional on the NWS (most plaintiffs) then because the NWS is an illegal act the contract is a voidable contract and FHFA-C must because of their fiduciary duty towards the current shareholder declare the contract void as it would make no sense to go on with the contract as it is not in the best interest of the shareholders that FHFA-C represent, so when it enters into any form of settlement it will be FHFA-C who is agreeing on the settlement and not FHFA, so logically all demands will be fulfilled as FHFA-C and plaintiffs will negotiate the settlement with FHFA, what I would like to know who will represent FHFA-C and who will represent FHFA in any settlement
The 6.7 & 6.12 in the SPSPA, and the law:
“A contract may be deemed void should the terms require one or both parties to participate in an illegal act”
Require the FHFA-C to void the contract on behalf of the shareholders as it is holding/delegating all functions and powers of the BOD, so it is a mandatory obligation for FHFA-C to void the contract as any normal functioning BOD would do, the contract is a voidable contract, because of the NWS and that means the FHFA-C is making the best possible solution for shareholders and that is void the contract because the law says so, and it is in the best interest of FHFA-C and its shareholders to void it
Fannie and Freddie as long as they are a shareholder owned company always had implicit guaranty (on their MBS), the explicit guarantee treasury asked for is never going to happen, Fannie and Freddie were privatized because the government wanted them (Fannie) out of their balance sheet, so an explicit guarantee is never going to happen as it would require the government to add Trillion back to their books (Fannie and Freddie)
The thought on explicit/implicit is
1) Implicit the government has to rescue and receives no compensation
2) Explicit the government has to rescue and receives compensation fees for their backing
So of course it is in the mind of the government preferable to have explicit guarantee, while FnF and so their shareholders do not prefer an explicit guarantee as Fannie and Freddie would need to pay fees to the government for their backing, so absent of paying fees Fannie and Freddie (and so the shareholders) are better of with implicit
This whole thing is brought to the media as a necessity to the industry one could not live without, while the industry never had this guarantee and never needed it either
The junior to common conversion still doesn’t make any sense to me, prefs get a generous conversion and commons get cash, but who is going to pay for it, FHFA ? (as that is the defendant) and where do the breaches go and the interest punitive and rescissory and the wrongdoings and all the other claims?
And FHFA then has to buy shares from Fannie and FHFA will give them to FHFA-C, or FHFA gives in a lump sum and Fannie “gives?” the shares to plaintiffs
The problem is FHFA is the defendant, and because the Defendant acted outside their framework, plaintiff want compensation from the FHFA/United States/Treasury then the junior to common conversion is illogical why would a third party confiscate or buy securities to pay off for the wrongdoings while they can settle with a lump sum that would please common and pref?
When the conservatorship started the dividends on pref were suspended, this is legal in a conservatorship, in 2012 the NWS and the accompanying lawsuits came, because there was no recovery possible for dividents on prefs and commons, this is not legal by any means of the constitution so due to that fact the lawsuits started prefs wanted missed dividends or at least the company back so they could receive dividends again, now 12 year later the bill of this misbehavior did not shrink, and I agree with Glen Bradford that prefs are entitled to more than par, but only moneywise, par was the state before conservatorship, so par it is after conservatorship, plus the missed dividends and interest as it is on the commons, treasury holds a warrant for a max of 79.9% and due to that fact it is not entitled to 100% of the profits, then for stage crafting they invented the dilution theory so nobody would buy the stocks and the stock could keep trading on the pink sheets.
Then on the warrant the 79.9% treasury owns, if it sells them 100% will go to treasury itself and 0% to Fannie and Freddie, so it will not help in any recapitalization
An eventual SPO can only be done after all lawsuits are settled or finalized as Fannie and Freddie might receive hundreds of billions back from treasury and the need for a SPO might not be present
If Washington Federal is dismissed the documents will be released as it is public property and washington federal can do with their own documents what it wants because the case is dismissed.
the documents it obtained in discovery stay sealed until there is resolution, but ones there is resolution, Washington federal because it was dimissed can unseal the documents as it otherwise has no proof in it was dismissed, so I don’t think Washington federal will be dismissed
the coercion plays a huge role in releasing the documents, as long as it is in court or plaintiffs setlle they can keep the records, after any dismissed case it needs to proof why it was dismissed and the facts alleged must be proven wrong or right by the documents, Sweeney cannot send fairholme home without proving him to be wrong by documentation in which he specifically points out the wrongdoing that he cannot see himself
yes these documents need to released as shareholders like you and me need know if there was coercion, this is a serious accusation and shareholders have the right to know shareholders are in the public domain, so will any document that that takes rights away from this the public domain
the SPSPA cannot be left in place when Sweeney finds coercion/duress, our friends at FHFA-C will not allow that, as it is their fiduciary duty to protect the shareholders (and the constitution of course)
When the implied-in-fact contract is legal, the BOD was aware FHFA would give away 79.9% of the company in the SPSPA, otherwise the implied-in-fact contract is not legal and FHFA did other things then they said they would do
so the implied-in-fact contract is illegal because there was NO consent on the 79.9% they forced in the SPSPA, so the SPSPA is illegal too and needs to be voided because the BOD would never ever enter into a contract that gives away without any consideration 79.9% of the company without any return, it would not make any sense why they did that voluntary