Just asked, was denied.

I actually think we have a good shot in the 5th circuit, problem is scotus will ultimately have final say and they hate us.

I think there is a 1% chance scotus will ever side with shareholders, not their view.

Its not my opinion i speak with a couple of the funds who fund these lawsuits.

Too late.. accepted the investment advice thank you.

This is incorrect. The common shareholders are literally being tricked into thinking they have upside in the these separation of powers cases. I tried explaining this to you a dozen times by now but you refuse to understand / acknowledge something so basic.

ALL the separation of powers suits (Collins/Rop/Bhatti) are being funded purely by JPS holders (these are the guys paying Cooper & Kirks bills), and all these cases are asking for either conversion or writedown of snr pfds. Make NO mistake about it, the JPS holders funding these cases have reveled their hand and they are happy with conversion (they are literally asking for it as remedy option). So if they win and government offers a conversion option, they will not think twice to throw common shareholders under bus as they have ZERO fiduciary responsibility to protect the interest of any common shareholders. You are literally suspending belief that that the JPS shareholders that are funding the separation of powers suits will out of the goodness of their hearts stand up for common shareholders when they have nothing to gain from it. I've warned you about this before and you refuse to acknowledge this obvious conflict of interest that goes against common shareholders. Good luck

What do you believe is the most realistic path forward from here tor the Biden admin to effectively fix this mess?

PAR for the course

Would you look at that... Tim Howard agreed he made a mistake on his recommendation (like I pointed out in the previous post) and said I was correct. Maybe you can learn a thing or two from him after all.

Got it so I proved you wrong and you have no facts, sources, figures, links, etc to back yourself up or rebuttal with and instead just repeat the same nonsense over and over. Thanks for confirming.

Tim Howards recommendations are proof that you shouldn't blindly follow whatever he says. Take his first recommendation, "Eliminate the 1.5 percent prescribed leverage buffer in Fannie and Freddie’s minimum capital requirement, reducing it to the 2.5 percent in FHFA’s 2018 capital proposal", how did Tim Howard not know that Sandra Thompson ALREADY eliminated the 1.5% leverage buffer in march of 2022? Seems like a big oversight.

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Enterprise-Regulatory-Capital-Framework%e2%80%93-Prescribed-Leverage-Buffer-Amount-and-Credit-Risk-Transfer.aspx

As you can see, her updated rule “Replace(d) the fixed leverage buffer equal to 1.5 percent of an Enterprise’s adjusted total assets with a dynamic leverage buffer equal to 50 percent of the Enterprise’s stability capital buffer as calculated in accordance with 12 CFR 1240.400.” As a result, the PLBA buffer for Fannie is now 50bps, and the PLBA buffer for Freddie is now 30bps. In combination with the 2.5% minimum leverage requirement for both GSEs, the total minimum leverage requirement + buffer today for Fannie is 3.0%, and 2.8% for Freddie .

Again, these figures can be confirmed in the GSEs most recent Q filings.

For example here is Freddie's, proving the figures I gave you for the leverage requirement, 2.5% minimum + 0.3% buffer = 2.8% (where is the 1.5% fixed leverage buffer Howard wants removed?)

The letter agreement 3% requirement is separate from the ECRF requirements that are were discussing (neither I or Tim Howard even discussed the letter agreement, only the ECRF).

None of the figures I posted re: ECRF requirements are incorrect, you can check the ECRF rule finalized by Thompson in 2022 or the Q1 2023 GSE 10Q filings and you will see my figures match exactly as a % of total adjusted assets. So you are simply wrong in claiming my ECRF figures are incorrect, and unless you can provide figures (like I provided you direct from the GSEs Q filings themselves), you will stay incorrect. I provided the facts and figures, you can't.

Not exactly, see my post.
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172063356

You seem to a have a fundamental misunderstanding how the ERCF works. The GSEs reported in their Q1 '23 10-Q’s their capital metrics under the ERCF.

First, there are two capital requirements, leverage capital (LC) and risk-based capital (RBC). Additionally, there are two applicable buffers, PLBA for the LC requirement and PCCBA for the RBC requirement. To exit conservatorship, the GSEs would need to hit both their respective capital requirements (LC + RBC), while the buffers are in place strictly to restrict "PAYOUTS" to shareholders (dividends or buybacks) and executives (compensation) on a floating schedule dependent on how much of the buffer is filled (see table below). The buffers are NOT required to be filled for the GSEs exit conservatorship.

LC: As of Q1, Fannie has an LC requirement of 2.5% with a PLBA buffer of 0.5% (2.5% to exit conservatorship, 3% to be fully capitalized without any restrictions on payouts). Freddie has an LC requirement of 2.5% with a PCCBA buffer of 0.3 (2.5% to exit conservatorship, 2.8% to be fully capitalized without any restrictions on payouts).

RBC: As of Q1, Fannie has an RBC requirement of 2.3% with a PCCBA buffer of 1.7% (2.3% to exit conservatorship, 4% to be fully capitalized without any restrictions on payouts). Freddie has an RBC requirement of 2.0% with a PCCBA buffer of 1.3% (2% to exit conservatorship, 3.3% to be fully capitalized without any restrictions on payouts).

You can confirm the figures above in the GSEs more recent Q filings (all the % figures are as a % of total adjusted assets).

Dont get your hopes up. Here is why the Waze (and Fisher) en banc petition to court of appeals in federal circuit has 0.00% odds in my view. To win an en banc petition, you need to win a majority of the circuits judges. In all of the GSEs litigation history, not one democratic judge has ever sided with shareholders (about 15 conservative judges did). This circuit has 12 judges made up of 4 republicans and 8 democrats. Not only that, 2 of the republican judges already ruled against shareholders when they joined the majority 3-0 takings opinion written by a (now retired) obama judge. So that leaves 10 judges left, 8 being democratic appointed. Even if the remaining 2 conservative judges agree with shareholders, you need a total of 5 of the remaining 8 democratic appointed judges to break party lines and overturn their fellow obama appointed colleagues ruling. Its just not happening.

There is a reason shareholders decided to appeal straight to a conservative SCOTUS where they thought they had better odds than appealing en banc to a liberal circuit first. They knew it was a waste of time. So as you can see, yes the takings cases are dead.

The original takings cases have been defeated yes.

The bulk of the takings cases died (and were subsequently dropped) when the federal court of appeals ruled against plaintiffs 3-0 on takings, and SCOTUS declined plaintiffs petition to review that decision earlier this year.

The only two takings cases remaining are 1) Wazee (which is the same case plaintiffs already lost and SCOTUS declined to review, but they are asking for an en banc petition for the entire liberal federal appeals court to review their own 3-0 decision which is extremely unlikely) and 2) Kelly (which only really represents direct and derivative claims on behalf of JPS holders and their contractual rights at the time of 2008 cship as opposed to the 2012 NWS which is what the other takings cases were focusing on).

Good catch

"You are right that familymang is most right but why is he pushing the cramdown along with Glenn and Kthomp. What does it matter to them?"

This is where you misunderstand me (and i cant speak for the other users you mentioned), i am not "pushing" for a cramdown, of course i would prefer a full wipe down of the senior preferreds (who wouldn't), but i am simply calling a spade a spade. This is what I believe to be the most logical and likely outcome, regardless of how I truly feel about the situation. Do i think all shareholders (common and preferred shareholders alike) were screwed? Of course i do. But unfortunately when you approach this investment opportunity today you have to separate emotions/justice from reality.

Instead of asking how do old shareholders get fairy compensated/treated, you should be asking how do i get a seat at the restructuring table? And junior preferred shares are simply the safest and most attractive way to participate in any upcoming restructuring (if there even is one).

Ideally i hope the information i am sharing helps investors on this board in this decision making process and to avoid potentially losing money in an unfavorable resolution that favors preferred shares over the common but you can only lead a horse to water. We are all adults and everyone is free to make their own investment decisions. GLTA

P.S. at the very least i would hope if you dont listen to my point of view you would listen to Ackman. There is a reason 25% of his position is currently in JPS, as he stated in one of his previous annual letters, "it hedges our risk of a restructuring that disproportionately benefits the preferred versus the common shares." And he said this before the courts have ruled that a) the NWS was a legal act of a conservator and b) the NWS wasn't a takings, so its more true today than ever.

Trump 2024

It would be a positive development, but ultimately SCOTUS will still have to rule that not only FHFA violated the appointments clause but we are also entitled to remedy. Which they failed to do in Collins. (They sent us on a wild-goose chase for remedy there that will probably end up with nothing).

June 12th will be just another reminder that SCOTUS doesnt care about this. Hope im wrong.

All is all, all shareholders will be on equal ground once this cramdown takes place, as they will all own common equity after conversion and share equal priority in the cap table. The only difference as i explained is the % ownership. Thanks to cramdown dilution, common will be left with scraps, and 99.9% will be split up between SPS and JPS (with SPS owning 90-95%, JPS owning 5-10%, and common owning <.01%).

I'll stop you right there, these cases are 99% mostly all dead with no remedy in sight, i follow them bc im a masochist these days (arent all GSE sharholders?).

No, a writedown is very different than a conversion where you cant realize the full value of the LP. A writedown is what tsy called to be politically a non starter and not legal, a conversion to common where the ultimate value is determined by the market and may not ultimately recoup the full value of their LP, so a haircut. Treasury was ok taking a haircut via conversion, they were not ok doing a writedown, big difference. Calabria had to explain this dynamic to Warner, in a cramdown conversion, UST wouldnt recoup the full value of their LP. Very different than UST writing down its LP balance as they get no common shares in that scenario.


No I am not ASSUMING, Calabria literally clarifies what it means in the very next sentence. Because if you cared enough to read the next sentence right after that, he makes it very clear that "all equity holders" are in reference specifically to UST and JR PFDS converting over to common.

"Mnuchin was open to placing all the equity holders, including Treasury, in a similar spot. That is, he was willing to see treasury's senior preferred shares given the same seniority as the existing junior preferred." - In this scenario, now all the equity holders (sps,jps, and common) all own the same equity class, common. The only different is the % ownership. UST prob owns 90-95% of the common, JPS owns 5-10%, and common owns close to 0.01%.

When you put it together with all the other quotes I highlighted to you, its very clear he is talking about a cramdown where both classes of pfds (snr + jps) convert to common equally, and if you dont see that, its a reading mis-comprehension on your part.

I agree he means nothing (today, maybe he comes back if Trump wins), but the insight into how UST viewed this and what they thought was the only "acceptable" path forward is very important since they hold all the cards today. And the only acceptable path forward to them was a cramdown.

It's in this section of Calabria's book, which proves that Mnuchin/UST and Calabria/FHFA were on board with a "cramdown" as you call it.

https://imgur.com/a/OiYNR1S

"While Treasury was not willing to be behind other shareholders, Mnuchin was open to placing all the equity holders, including Treasury, in a similar spot. That is, he was willing to see treasury's senior preferred shares given the same seniority as the existing junior preferred" - Mnuchin/UST being ok with equal conversion for snr pfd + jr pfd +Cramdown

"I believed that, short of a receivership, the cleanest solution would be to convert all the preferred shares, even those held by Treasury, into common equity" - Calabria/FHFA being ok with equal conversion +Cramdown

"A conversion of all preferred equity was one of the only ways to fix the companies' balance sheets in a manner acceptable to Treasury." - Confirms above +Cramdown

"Treasury could be heavily diluted, and almost certaintly would have to be," Acknowledging UST would have to take a haircut on its LP

"A conversion would also allow a more accurate reflection of Treasury's claims without the political fallout of outright forgiveness. There had been some calls over the course of the conservatorship for Treasury to just forgive all or part of its claim. That was a nonstarter, politically, for Treasury. Moreover, Treasury claimed that it could not legally do so." - Acknowledges that UST believes a writedown to be a "nonstarter" for 2 separate and distinct reasons (politics and separately regardless of politics, they believed it wasn't legal).

You seem to not understand / cant grasp a) what the calabria/mnuchin proposal is and b) jps cant be bypassed/diluted without our consent.

It's not about trust, the JPS holders can simply not accept the conversion if its unfavorable. This is the only way JPS holders would be ok voluntarily accepting a conversion (which requires 2/3 of each series to agree). Or UST can go ahead and proceed w/o JPS holders and leave us in the capital structure as senior but Calabria claimed that was not acceptable to UST as they were not on board with that.

Rodney you are not understanding what Mnuchin/Calabria proposed/agreed on.

They were ok with EQUAL CONVERSION. Meaning both UST and JPS will have to take a haircut to full value in a conversion. Calabria even had a section discussing how he had to explain this dynamic to a congressman that the UST would not be able to recoup its full LP value in this scenario as both parties (UST and JPS) will take a haircut in equal conversion. The examples I provided you is exactly what UST/FHFA said was the only acceptable solution, equal conversion, where both UST LP and JPS LP take EQUAL conversion and therefore a EQUAL haircut. Which is the math i tried to highlight to you but you seemed to not grasp. This is also the only way JPS holders would be ok voluntarily accepting a conversion (which requires 2/3 of each series to agree). Or UST can go ahead and proceed w/o JPS holders and leave us in the capital structure as senior but UST was not on board with that.

o sweet summer child

Negligible/scraps. You're talking 99.9%+ dilution between conversion of UST LP, JPS LP, warrants, and possible new IPO investors.

I responded, he misunderstood that section of the book.

This isn't true, the value of the JPS recovery actually goes up as GSEs retain more equity bc it means less outside dilution needed. And GSEs themselves are getting more valuable every year as their books of business and earnings continue to grow.

I will give you an example using Fannie.

- Today UST's Fannie LP is $185b, JPS LP is $19b.
- Fannie is worth approx $175b today (17.5b net income x 10 P/E).
- Fannie have a net worth of $64b but needs a minimum leverage requirement of 2.5% ($114b) to exit cship, which means $50b needs to be raised today from outside investors
- So in this example IPO investors get 28% of Fannie ($50b/$175b), and the remaining $125b is split up between UST and JPS on equal conversion. UST gets 90% ($185b / $204b) and JPS get 10% ($19b / $204b).
- That works out to UST getting 90% of the remaining $125b equity value left ($112.5b) and JPS holders getting 10% ($12.5b).
- $12.5b works out to 65% recovery for JPS today.

Now fast forward 3-4 years, Fannie was able to earn $50b over 3-4 years and no longer needs to raise external capital.

- UST's Fannie LP is now $234b ($184b LP + $50b LP increase from retained earnings), JPS LP is still $19b.
- 3-4 years in future Fannie is prob worth approx $200b ($20b net income x 10 P/E). As earnings powers grow between now and then.
- So in this example $200b equity value is split up between UST and JPS on equal conversion. UST gets 92.5% ($234b / $253b) and JPS get 7.5% ($19b / $253b).
- That works out to UST getting $216b (92.5% * 200b equity value) in value and fannie JPS getting $15b (7.5% * 200b equity value which is ~80% recovery for fannie JPS).

So as you can see recovery actually increases as GSEs retain earnings because even though UST LP goes up, the need for ipo/cap raise dilution goes down. The more the GSEs retain the better the recovery for JPS.

My statement simply says the government cant force the JPS to convert to common without their 2/3 approval. That doesnt in anyway preclude the government from converting its SPS to common if it chooses to do so. But I think what happens is UST tells JPS, we convert together, which Calabrias book claims both FHFA and UST were ok with (not only ok with, they saw it as the only acceptable solution). So both UST and JPS get equal recovery via common conversion as explained by Calabria which isnt bad for JPS.

No one can force the JPS to convert, must be approved by 2/3 of each series.

Whoever this poster is needs to reread that section of the book. He totally misunderstood the section discussing this. Mnuchins position was that he didnt want to be junior to anyone (this means he didnt want to convert snr pfds to common and leave jr pfds intact as now they would become the senior security above UST), and at the very minimum UST would have to be on equal footing as other holders. Calabria claimed Mnuchins only acceptable solution to this dilemma was that he would be ok with both the Snr pfd and Jr pfd converting to common shares together, so they would be equal and treasury wouldnt be below anyone. So whatever % recovery snr pfds received, jr pfds would receive equal. While common gets crammed down. This is the plan both UST and FHFA were ok with.

UST also told FHFA they didnt believe they could write down the senior pfd balance bc of legal reasons and due to political optics even if they could do it.

Freddie common are (up to 12c of damages), Fannie arent.

Heads-up! The contracts claims GSEs re-trial starts on July 24th (in ~50 days), w/ ruling expected 2nd week of August. Last trial ended w/ hung jury.

Attached table showing worst case damages expected per share class (cash payment + keep your shares).$FNMA $FNMAS$FMCC $FMCKJ pic.twitter.com/kv13qF250J

— familymang (@familymang1) June 1, 2023

Additionally, plaintiffs are appealing the reliance damage model (worth ~PAR) that was dismissed by the judge the first time around because he claimed it was brought up too close to the first trial date. Should hear back shortly.$FNMA $FNMAS$FMCC $FMCKJ pic.twitter.com/hqwQBVKTgg

— familymang (@familymang1) June 1, 2023

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172018330

Irrelevant, but to answer your question the GSEs haven't paid back a single penny of the senior preferreds LP as per the letter of the law, it has all been dividend payments to date. GSEs owe uncle Sam close to $300b now since the LP just keeps increasing with every $ they get to retain. And no court has ruled otherwise.

FACT! AIG Senior Preferreds had same exact language and it didn't stop it from happening there.