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You mean Seeking Garbage. ?? ha
who in their right mind would pay to read it?
Thanks Guido, keep up the good work. These politicians speak out of both sides of their mouth.
After reading the last post it hits home hard to understand the FHFA gave away the company. GAVE IT AWAY!
The SCOTUS said it best...
JUSTICE BREYER Quote: “Thank you. I think in reading this you could, with trying to simplify as much as possible, do you -- the shareholders' claim as saying we bought into this corporation, it was supposed to be private as well as having a public side, and then the government nationalized it. That's what they did. If you look at their giving the net worth to Treasury, it's nationalizing the company. Now, whatever conservators do and receivers do, they don't nationalize companies. And when they nationalized this company, naturally they paid us nothing and our shares became worthless. And so what do you say?”
jog49, the Treasury did not pay any amount of money. The company recorded the Senior Preferred Stock was issued for free. The company gave the Treasury one million shares of Senior Preferred Shares for $1,000 per share or $1 billion dollars. In addition, gave to the Treasury 79.9% of warrants.
Quote: “We did not receive any cash proceeds from Treasury at the time the senior preferred stock or the warrant was issued.” End of Quote
page 25 Form 10K December 31, 2008
link: https://www.sec.gov/Archives/edgar/data/310522/000095013309000487/w72716e10vk.htm#304;;
Senior preferred 1,000
Page 143
Link: https://www.sec.gov/Archives/edgar/data/310522/000095013309000487/w72716e10vk.htm#127;;
On September 7, 2008, we, through FHFA, in its capacity as conservator, and Treasury entered into a senior preferred stock purchase agreement, which was subsequently amended and restated on September 26, 2008. We refer to this agreement as the “senior preferred stock purchase agreement.” Pursuant to the agreement, we agreed to issue to Treasury (1) one million shares of Variable Liquidation Preference Senior Preferred Stock, Series 2008-2, which we refer to as the “senior preferred stock,” with an initial liquidation preference equal to $1,000 per share (for an aggregate liquidation preference of $1.0 billion), and (2) a warrant to purchase, for a nominal price, shares of common stock equal to 79.9% of the total number of shares of our common stock outstanding on a fully diluted basis at the time the warrant is exercised, which we refer to as the “warrant.” The terms of the senior preferred stock and warrant are summarized in separate sections below. We did not receive any cash proceeds from Treasury at the time the senior preferred stock or the warrant was issued.
To anyone new to this discussion.
The Senior Preferred Stock Purchase Agreement is a contract between two government agencies which Fannie and Freddie had no say so. The only legal contract is the one with the U.S. Congress, called the Charter Act. The Senior Preferred Stocks are illegal because the Stocks have an illegal commitment fee attached to it.
The Federal statutes are the Charter Act, the Safety and Soundness Act of 1992, as amended by HERA, Administrative Procedures Act, and potentially the Chief Financial Officers Act.
None of the current litigation makes any claims of violation of these acts. They all challenge the actions of the Conservator and attempted to squeeze the APA and the 5th amendment takings into the Actions of the FHFA-C within the terms of the SPSPA. all have failed to this point.
SPSPA which is a contract. 4617f bars courts from questioning the actions of a conservator. The stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f).
The Plaintiffs have to prove the FHFA / Treasury broke the law. No mention of Federal Statute.
You ask why? First off the shareholders who hired these Lawyers should demand their money back!
All the lawsuits challenged the actions of the Conservator within the terms of the SPSPA... AND The Supreme Court basically said we will not rule or give Judgment are act as an arbitrator on the contract the SPSPA. So, the NWS was not validated as legal or illegal by the Court: The Court dismissed the lawsuit.
SPSPA which is a contract. 4617f bars courts from questioning the actions of a conservator.
THE PLAINTIFFS BROUGHT THE WRONG LAWSUIT.
We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f).
Millett and Ginsburg summarized the case and their 70-page opinion as follows:
Quote: “A number of Fannie Mae and Freddie Mac stockholders filed suit alleging that FHFA’s and Treasury’s alteration of the dividend formula through the Third Amendment exceeded their statutory authority under the Recovery Act, and constituted arbitrary and capricious agency action in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). They also claimed that FHFA, Treasury, and the Companies committed various common-law torts and breaches of contract by restructuring the dividend formula.
We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f). We also reject most of the stockholders’ common-law claims. Insofar as we have subject matter jurisdiction over the stockholders’ common-law claims against Treasury, and Congress has waived the agency’s immunity from suit, those claims, too, are barred by the Recovery Act’s limitation on judicial review. Id. As for the claims against FHFA and the Companies, some are barred because FHFA succeeded to all rights, powers, and privileges of the stockholders under the Recovery Act, id. § 4617(b)(2)(A); others fail to state a claim upon which relief can be granted. The remaining claims, which are contract-based claims regarding liquidation preferences and dividend rights, are remanded to the district court for further proceedings.“ End of Quote
Link: https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/02/21/d-c-circuit-concludes-recovery-act-bars-judicial-review-of-suits-against-fhfa-over-treatment-of-fannie-and-freddie-shareholders/
Viking61, you are absolutely right. The problem the Plaintiffs Attorneys did not address the Law. Ha
The Plaintiffs have to prove the FHFA / Treasury broke the law. The Plaintiffs made no mention of Federal Statute.
JUSTICE BREYER told the Plaintiffs how to win. Quote: “Thank you. I think in reading this you could, with trying to simplify as much as possible, do you -- the shareholders' claim as saying we bought into this corporation, it was supposed to be private as well as having a public side, and then the government nationalized it. That's what they did. If you look at their giving the net worth to Treasury, it's nationalizing the company. Now, whatever conservators do and receivers do, they don't nationalize companies. And when they nationalized this company, naturally they paid us nothing and our shares became worthless. And so what do you say?” End of Quote, page 12
The link may not work anymore, the above statement was made and recorded in the transcript.
Link: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2020/19-422_3e04.pdf
The CFO act requires the Treasury department based on published accounting standards to determine if their actions of funding through appropriations, ownership of 100% of the GSEs net worth and non-regulatory control of the GSEs through the SPSPA require the consolidation of the GSEs liabilities onto the nations balance sheet. Do the actions of Treasury under the SPSPA require such consolidation under the plain language of the Chief Financial Officers Act?
The Congressional Budget Office publication states, “Federal Government effective ownership of Fannie Mae and Freddie Mac.”
The Enterprises have been Nationalized by the Government according to the CBO: The liabilities have not been added to the National Debt nor have the Shareholders been compensated by U.S. Law of the 5th Amendment.
Congressional Budget Office
From: Estimates of the Cost of Federal Credit Programs in 2023
Page 1, Foot Note 1.
Quote: “Fannie Mae and Freddie Mac have been in federal conservatorship since September 2008. CBO treats the two GSEs as government entities in its budget estimates because, under the terms of the conservatorships, the federal government retains operational control and effective ownership of Fannie Mae and Freddie Mac. For more discussion, see Congressional Budget Office, Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions (August 2020), www.cbo.gov/publication/56496; and Congressional Budget Office, The Effects of Increasing Fannie Mae’s and Freddie Mac’s Capital (October 2016), www.cbo.gov/ publication/52089” End of Quote
Link: https://www.cbo.gov/system/files/2022-06/58031-Federal-Credit-Programs.pdf
The United States Treasury in violation of the Charter Act has failed to treat as public debt the transactions of the United States when the FHFA placed Fannie Mae and Freddie Mac into conservatorship. This obligation was never recorded as public debt as required by law.
The Charter Act the Law of the Land.
Charter Act SEC. 304. SECONDARY MARKET OPERATIONS
(c) Terms and Rates
Quote: “All redemptions, purchases, and sales by the Secretary of the Treasury of such obligations under this subsection SHALL BE TREATED AS PUBLIC DEBT TRANSACTIONS of the United States.” End of Quote Page 14
Link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
I need to make a correction. I was looking at Fannie’s single family guaranty book of business the company reported $3.6 Trillion. This is not the total of all mortgage loans that number $4.2 trillion. On page 61 of the most recent 10Q. Thanks to sortman for bringing that to my attention.
At 2.5% of $4.2 trillion is approximately $105 billion. Fannie has $86 billion in shareholder equity $19 billion short of the 2.5% of the capital if the Treasury would cancel the net worth sweep, deem the senior preferred stock paid, eliminate Treasury’s liquidation preference, and replace the excessive capital requirement with a true risk-based requirement that allows Fannie to price their credit guarantees on an economic basis. Fannie is not bank and should not be treated as a bank requiring bank like capital. Realist the company on the New York Stock Exchange. By doing this the Stock Price will soar. This is how huge returns on investment can be made even if the Treasury exercises the warrants.
With a multi trillion dollar portfolio $19 billion is a small number to reach to get us out of this prison.
Ace Quote: 2.5% and release and make the GSE pay a fee for the backstop”…
As I said, To get the price per share to reflect such value the Treasury must cancel the net worth sweep, deem the senior preferred stock paid, eliminate Treasury’s liquidation preference, and replace the excessive capital requirement.
At 2.5 % Fannie Mae looks to me the company has enough capital now to be released no need for a government explicit backstop which will require Congress to change the Charter Act I believe will not happen.
Correct me if I’m wrong calculating the capital requirement at 2.5% of Fannie’s guaranty book of business the company reported $3.6 Trillion 2.5% is approximately $90 billion dollars. Fannie reported in the same 2nd quarter of 2024 10Q Net Worth of $86 billion. I will venture to say by this time into this current quarter the company is over $90 billion to meet the capital requirement at $2.5%. If not this quarter the next quarter for sure. The company has the capital now.
Ace, to add comments to the last post.
The article by the Wall Street Journal published the government’s stake in the GSE’s could be maximized into several hundred billion. The below calculation is how it can happen with Fannie. Freddie Mac is an additional contributor.
Fully diluted by the warrants at 79.9 percent adds a total of 5,761,629,686 shares outstanding…
$18.8 billion net income per year / 5,761,629,686 = $3.26 per share of earnings,
PE Ratio of 14 x $3.26 = $45.64 per share intrinsic value.
5,761,629,686 multiplied by $45.64 = $262,960,778,869
This is how the Treasury maximizes interest by 2 hundred billion at 79.9% and the remaining $53 billion at 20.1 % to the existing shareholders.
Just to remind every investor the above is stealing!
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
Our ForeFathers never intended for our government to operate as for profit.
Ace, Fannie and Freddie are cash generators! Absolutely no question of the value of the Earnings Power of the two companies business. To get the price per share to reflect such value the Treasury must cancel the net worth sweep, deem the senior preferred stock paid, eliminate Treasury’s liquidation preference, and replace the excessive capital requirement with a true risk-based requirement that allows Fannie and Freddie to price their credit guarantees on an economic basis. By lowering the capital requirements both companies will have retained enough capital now with no need of a secondary IPO. The two companies are not banks and should not be treated as banks requiring bank like capital. Realist the companies on the New York Stock Exchange. By doing this the Stock Price will soar. This is how huge returns on investment can be made even if the Treasury exercises the warrants. Note: the below calculation is Earnings Power only, what is not included is the over payment of the $301 billion sent to the Treasury. This over payment should be repaid to the companies.
Fannie Mae’s common stock outstanding 1,158,087,567
$18.8 billion net income / 1,158,087,567 = $16.23 per share of earnings,
PE Ratio of 14 x $16.23 = $227.22 per share intrinsic value.
With the WARRANTS: Fannie Mae’s common stock outstanding 1,158,087,567 diluted by the warrants at 79.9 percent adds a total of 5,761,629,686 shares outstanding…
$18.8 billion net income / 5,761,629,686 = $3.26 per share of earnings,
PE Ratio of 14 x $3.26 = $45.64 per share intrinsic value.
Guido, will you ask Calabria where is "maximize profits for taxpayers" written in the Charter Act? Specifically, in this provision entitled Fee Limitation of the United States. Thanks
Yes, use all the money they can get just create it, money for nothing. Another notation on the balance sheet with double digit inflation.
When you tweet Sorkin ask Where is "maximize profits for taxpayers" written in the Charter Act? Specifically, in this provision entitled Fee Limitation of the United States:
It’s stealing!
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
I’m with you EternalPatience, prolonging conservatorship! Is all BS
Quote: “This was done just in time, since FHFA has acted not just as regulator, but also as conservator, for the last 16 years.” End of Quote
This is absolutely laughable, I do not understand how anyone could thumps up this article! The Regulator could have ended this years ago! My goodness people wake up!
16 years !!! And this article praises the FHFA, BS !!
The FHFA Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval to pay down the Senior Preferred Stock the Director has the authority from Congress written in HERA:
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
RESTRICTION ON CAPITAL DISTRIBUTIONS.— page 2731
‘‘(1) IN GENERAL.—A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized. The exception.
Quote: “Page 2732
EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.
NOTE: REPURCHASE, REDEEM, RETIRE...
WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
In essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full. The Treasury did not take a Perpetual Equity Investment in the enterprises, the Treasury stated a temporary investment period!
roketsurf, I encourage you to get familiar with the actual statutes that govern Fannie and Freddie. You reference Layton. Ha
Layton, government appointed CEO Quote: “It is the general expectation that, upon exit from conservatorship by administrative means, the PSPAs would continue to provide financial support to the companies and there would then be an ongoing fee to compensate taxpayers for this risk. This fee remains unknown, as it has yet to be developed or specified by Treasury.” End of Quote
Administrative means to provide financial support by ongoing fee is not authorized by Congress.
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172771127
PUBLIC LAW 110–289—JULY 30, 2008
HOUSING AND ECONOMIC RECOVERY ACT
HERA is public law not a contract, the Senior Preferred Stock Purchase Agreement is a contract not the law.
FHEFSSA
Federal Housing Enterprises Financial Safety and Soundness Act of 1992 was amended to establish the Federal Housing Finance Agency. HERA amended certain parts of both FHEFSSA and the Charter Act. AMENDED not to do away with. Safety and Soundness still exists just as the Charter Act still exists.
Federal Housing Enterprises Financial Safety and Soundness Act of 1992
https://www.congress.gov/bill/102nd-congress/house-bill/6094/subjects?overview=closed
Page 9 Title I
Establishment of the Federal Housing Finance Agency
FHFA is now the Regulator by reason of HERA.
Links:
FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT
As amended through July 25, 2019
link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
SENIOR PREFERRED STOCK PURCHASE AGREEMENT
Dated September 7, 2008.
link: https://www.fhfa.gov/sites/default/files/2023-07/FNM-SPSPA_09-07-2008.pdf
ALL THE AGREEMENTS
link: https://www.fhfa.gov/Conservatorship/Pages/Senior-Preferred-Stock-Purchase-Agreements.aspx
The Treasury has NO veto power over the FHFA.
The FHFA Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval to pay down the Senior Preferred Stock the Director has the authority from Congress written in HERA:
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
RESTRICTION ON CAPITAL DISTRIBUTIONS.— page 2731
‘‘(1) IN GENERAL.—A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized. The exception.
Quote: “Page 2732
EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.
NOTE: REPURCHASE, REDEEM, RETIRE...
WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
In essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full. The Treasury did not take a Perpetual Equity Investment in the enterprises, the Treasury stated a temporary investment period!
TightCoil, when calculating the Intrinsic Value of a company there are several tools we can use in order to measure such value. In the last post discussed Enterprise Value (EV) which can be thought of as a theoretical takeover price if a company were to be bought: A more accurate representation of a firm's value. Enterprise Value includes the debt; and in a buy out of a business the buyer gets all the cash the business holds.
The below I want to discuss Shareholders Equity and Earnings Power of the Business. The unknown is the future of what the Treasury will do with the Senior Preferred Stock.
The question was asked on this board.
Quote: “ what common share price do you believe is eventually conceivable with their release?” End of Quote
What you are asking for is the calculated value of the common stock if and when Fannie Mae is released out of prison. There are three types of Equity in play here, Senior Preferred Stock, Junior Preferred Stock and Common Stock. The fight is and always has been how much equity will each class of stock receive. That’s the million dollar question. It is not hard at all to calculate the Intrinsic Value of the Business. The unknown how much of that value will you receive.
EARNINGS POWER OF THE BUSINESSES:
The Value calculation should start with the number $436.1 billion. This is the Intrinsic Value of both companies businesses including the JPS, the estimated value of Fannie and Freddie.
$402.9 billion earnings power plus $33.2 billion JPS = $436.1 billion.
Fannie Mae
EARNINGS POWER OF THE BUSINESS
$263 Billion Intrinsic Value
Freddie Mac
EARNINGS POWER OF THE BUSINESS
$139.9 Billion Intrinsic Value
Fannie Mae JPS $19.1 billion par value
Freddie Mac JPS $14.1 billion par value
The amount of $402.9 billion is the calculated Intrinsic Value of the Earnings Power of both businesses combined using a Price to Earnings Ratio of 14.
THE FIGHT FOR THE EARNINGS POWER OF THE BUSINESS
Fannie Mae’s common stock outstanding 1,158,087,567
$18.8 billion net income / 1,158,087,567 = $16.23 per share of earnings,
PE Ratio of 14 x $16.23 = $227.22 per share intrinsic value.
With the WARRANTS: Fannie Mae’s common stock outstanding 1,158,087,567 diluted by the warrants at 79.9 percent adds a total of 5,761,629,686 shares outstanding…
$18.8 billion net income / 5,761,629,686 = $3.26 per share of earnings,
PE Ratio of 14 x $3.26 = $45.64 per share intrinsic value.
Transfer of Ownership Cram-Down
Explained,
Legacy Shareholders means, collectively, each person that owns common stock of the Company immediately prior to the closing of the Transaction (cram-down) which in no event shall include any of the Investors; or very few will remain afterwards maybe 1% or less.
A cram-down deal refers to a situation where an investor or creditor is forced into accepting undesirable terms in a transaction or bankruptcy proceedings.
In the case with Fannie Mae the Treasury's holding of senor preferred stock in the amount of $120.8 billion, with a liquidation preference of $199 billion.
If the Treasury converts this amount of SPS into common stock the Treasury in essence will own 99.9% of all the common stock outstanding. The number of shares outstanding depends on price per share at the time converted. The amount of shares outstanding after the cram-down does not matter at all, it's the percent ownership, a transfer of ownership from the legacy common shareholders to the Treasury. This transaction will cause the legacy common stock to vanish along with any short positions, naked short positions as well as any counterfeit common stock outstanding. Afterwards, the Treasury can do a reverse split reducing the amount in number of the new common stock outstanding to what ever amount desired.
SHAREHOLDERS EQUITY
As we look at the balance sheet total assets, minus total liabilities = total stockholders equity… the number provided on the companies financials is subject to change the unknown is the amount of equity the Treasury will take. The below should be considered in the calculation of shareholders equity.
In addition to the intrinsic value of the earnings power of the business the calculation of the pay down of the liquidation preference of the Senior Preferred Stock should be included and added to the share price. $301 billion sent to the Treasury is enough and the over payment should be returned to the companies.
Courtesy of Bryndon Fisher
https://drive.google.com/file/d/15978NWfDcTtuClMBnwgWFmoPnwK94vWn/view
The liquidation preference has been paid and the Senior Preferred Stock should be canceled.
TightCoil, your friend apparently doesn’t understand the type of debt Fannie Mae holds.
ENTERPRISE VALUE
Market Capitalization, plus debt, minus cash gives the Enterprise Value (EV);
Enterprise Value (EV) can be thought of as a theoretical takeover price if a company were to be bought: A more accurate representation of a firm's value. Enterprise Value includes the debt; and in a buy out of a business the buyer gets all the cash the business holds.
In Fannie and Freddie's situation the Enterprise Value is somewhat unique and the amount is in trillion’s of dollars. In my calculation I do not use the EV focus on shareholders equity and earnings power of the business and the reason why I do this investors need to understand that company debt is not always bad debt; there is good debt and bad debt. Fannie and Freddie's debt is backed by ‘REAL PROPERTY’ collateralized. Unlike, maybe a credit card company, no security of debt nothing tangible to back the debt. So, I will treat the two companies debt as somewhat ‘Negligible’...
By taking total assets, minus total liabilities = total stockholders equity; use this number when calculating the Intrinsic Value of Fannie and Freddie. The Shareholders equity is not the most important number; Earnings Power of the Business gives us the best calculated value.
To anyone new to this discussion.
The Senior Preferred Stock Purchase Agreement is a contract between two government agencies, FHFA / Treasury, which Fannie and Freddie had no say so. The only legal contract is the one with the U.S. Congress, called the Charter Act. The Senior Preferred Stocks are illegal because the Stocks have an illegal commitment fee attached to it. This commitment fee has been referenced as a dividend.
Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 304. SECONDARY MARKET OPERATION
Fee Limitation
Quote: “(f) PROHIBITION ON ASSESSMENT OR COLLECTION OF FEE OR CHARGE BY UNITED STATES.—Except for fees paid pursuant to section 309(g) of this Act and assessments pursuant to section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, no fee or charge may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any mortgage, asset, obligation, trust certificate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury pursuant to subsection (c) of this section.” End of Quote. Page 16
Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).
SEC. 309. GENERAL POWERS OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION
Federal Reserve Banks to Act as Fiscal Agents (Fannie Mae and GNMA)
Quote: “(g) DEPOSITARIES, CUSTODIANS, AND FISCAL AGENTS.—The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a)(2), for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.” End of Quote. Page 29
Link:
FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT
As amended through July 25, 2019
link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
The Federal statutes are the Charter Act, the Safety and Soundness Act of 1992, as amended by HERA, Administrative Procedures Act, and potentially the Chief Financial Officers Act.
None of the current litigation makes any claims of violation of these acts. They all challenge the actions of the Conservator and attempted to squeeze the APA and the 5th amendment takings into the Actions of the FHFA-C within the terms of the SPSPA. all have failed to this point.
SPSPA which is a contract. 4617f bars courts from questioning the actions of a conservator. The stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f).
The Plaintiffs have to prove the FHFA / Treasury broke the law. The Plaintiffs made no mention of Federal Statute.
JUSTICE BREYER told the Plaintiffs how to win. Quote: “Thank you. I think in reading this you could, with trying to simplify as much as possible, do you -- the shareholders' claim as saying we bought into this corporation, it was supposed to be private as well as having a public side, and then the government nationalized it. That's what they did. If you look at their giving the net worth to Treasury, it's nationalizing the company. Now, whatever conservators do and receivers do, they don't nationalize companies. And when they nationalized this company, naturally they paid us nothing and our shares became worthless. And so what do you say?” End of Quote, page 12
The link may not work anymore, the above statement was made and recorded in the transcript.
Link: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2020/19-422_3e04.pdf
Brad, do you have a conscience my friend? It was brought to your attention in your article you published an untruth. Did you correct it? It’s one thing to make a mistake in one’s understanding of the truth; continuing to allow the publication of misinformation to continue is a lie now. Trying to help you.
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=175003458
The Truth can set us free.
The Federal statutes are the Charter Act, the Safety and Soundness Act of 1992, as amended by HERA, Administrative Procedures Act, and potentially the Chief Financial Officers Act. None of the current litigation makes any claims of violation of these acts. They all challenge the actions of the Conservator and attempted to squeeze the APA and the 5th amendment takings into the Actions of the FHFA-C within the terms of the SPSPA.
As I said the SPSPA is a contract 4617f bars courts from questioning the actions of a conservator. SO! The plaintiffs gave the Justices no choice but to dismiss the lawsuit. Get it now?
JUSTICE BREYER TOLD THE PLAINTIFFS HOW TO WIN!
JUSTICE BREYER: Quote: “Thank you. I think in reading this you could, with trying to simplify as much as possible, do you -- the shareholders' claim as saying we bought into this corporation, it was supposed to be private as well as having a public side, and then the government nationalized it. That's what they did. If you look at their giving the net worth to Treasury, it's nationalizing the company. Now, whatever conservators do and receivers do, they don't nationalize companies. And when they nationalized this company, naturally they paid us nothing and our shares became worthless. And so what do you say?” End of Quote, page 12
The link may not work anymore, the above statement was made and recorded in the transcript.
Link: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2020/19-422_3e04.pdf
Bradford AGAIN Quote: "The Supreme Court in 2021 ruled that the net worth sweep was legal." THIS IS NOT TRUE correct your article If you do not correct it you are publishing a known lie now.
No, the Networth sweep was not ruled as legal or illegal... Need to get this straight!
All the lawsuits challenged the actions of the Conservator within the terms of the SPSPA... AND The Supreme Court basically said we will not rule or give Judgment are act as an arbitrator on the contract the SPSPA. So, the NWS was not validated as legal or illegal by the Court: The Court dismissed the lawsuit.
SPSPA which is a contract. 4617f bars courts from questioning the actions of a conservator.
THE PLAINTIFFS BROUGHT THE WRONG LAWSUIT.
We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f).
Millett and Ginsburg summarized the case and their 70-page opinion as follows:
Quote: “A number of Fannie Mae and Freddie Mac stockholders filed suit alleging that FHFA’s and Treasury’s alteration of the dividend formula through the Third Amendment exceeded their statutory authority under the Recovery Act, and constituted arbitrary and capricious agency action in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). They also claimed that FHFA, Treasury, and the Companies committed various common-law torts and breaches of contract by restructuring the dividend formula.
We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f). We also reject most of the stockholders’ common-law claims. Insofar as we have subject matter jurisdiction over the stockholders’ common-law claims against Treasury, and Congress has waived the agency’s immunity from suit, those claims, too, are barred by the Recovery Act’s limitation on judicial review. Id. As for the claims against FHFA and the Companies, some are barred because FHFA succeeded to all rights, powers, and privileges of the stockholders under the Recovery Act, id. § 4617(b)(2)(A); others fail to state a claim upon which relief can be granted. The remaining claims, which are contract-based claims regarding liquidation preferences and dividend rights, are remanded to the district court for further proceedings.“ End of Quote
Link: https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/02/21/d-c-circuit-concludes-recovery-act-bars-judicial-review-of-suits-against-fhfa-over-treatment-of-fannie-and-freddie-shareholders/
Quote: "The Supreme Court in 2021 ruled that the net worth sweep was legal." Wrong
Need to correct your article.
No, the Networth sweep was not ruled as legal or illegal... Need to get this straight!
The SCOTUS dismissed the lawsuit, 4617f bars courts from questioning the actions of a conservator.
All the lawsuits challenged the actions of the Conservator within the terms of the SPSPA... AND The Supreme Court basically said we will not rule or give Judgment are act as an arbitrator on the contract the SPSPA. So, the NWS was not validated as legal or illegal by the Court: The Court dismissed the lawsuit.
Barron4664
09/20/23 9:36 AM
Post #768746 on Fannie Mae (FNMA)
The problem is not with the rulings of the courts. The problem is and always has been that the plaintiffs attorneys have only challenged the “Actions of the Conservator” such as the NWS or other provisions of SPSPA which is a contract. 4617f bars courts from questioning the actions of a conservator. As it should. None of the 15 + years worth of court cases have challenged the action of the FHFA as regulator or Treasury with respect to the statutes that actually matter. The charter act, safety and soundness act, chief financial officer act, etc. To get a takings or an illegal exaction verdict, you have to show that the gov broke the laws. The actions of the conservator cant break a law. But if you go before a judge and say the SPSPA is bad and the gov stole our companies and limiting the argument to the specifics of the SPSPA agreement and the amendments you get 15 years of no results.“ End of Quote
Instead of speculating how Treasury will use the warrants and what their purpose was, posters should read and understand what the Government Officials actually said and discussed in their own words detailing what the purpose of the warrants were.
Quote: "Mr. Werfel then explained that it is important to understand the government’s intention. The intention was not to eliminate the ownership interests but to prevent current shareholder speculation resulting in speculators taking advantage of government intervention at the expense of others. Driving the stock market value to zero prevents this manipulation from happening. " End of Quote page 24
Link to page 24: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173695132
I appreciate you Guido. Appreciate all you are doing for our cause. Keep hammering on them.
Trunkmonk, this is a Non-Moderarted board! My post was removed. Ha
All the monies are sucked into the dark hole of the Treasury by the increase dollar for dollar of the Liquidation Preference.
NO MONIES ATTRIBUTED TO THE COMMON SHARES.
Fannie Mae Form 10-Q
For the quarterly period ended June 30, 2024
Page 62
Earnings per share:
Basic $ 0.00
Diluted 0.00
Link: https://www.fanniemae.com/media/52801/display
Freddie Mac Form 10-Q
For the quarterly period ended June 30, 2024
Page 48
Net income per common share $0.00
Link: https://www.freddiemac.com/search-results?query=10%20Q
FORM 10-Q quarterly period ended June 30, 2024
Amounts attributable to senior preferred stock (2,760) The company did not use the term dividend. Page 48
Net income per common share $0.00
INTRODUCTION: Net worth was $53.2 billion as of June 30, 2024, up from $42.0 billion as of June 30, 2023. The quarterly increases in net worth have been, or will be, added to the aggregate liquidation preference of the senior preferred stock. The liquidation preference of the senior preferred stock was $123.1 billion on June 30, 2024, and will increase to $125.9 billion on September 30, 2024, based on the increase in net worth in 2Q 2024.
https://otp.investis.com/clients/us/federal_homeloan/SEC/sec-show.aspx?FilingId=17716792&Cik=0001026214&Type=PDF&hasPdf=1
Barron Said Quote: "The 10% coupon was offered to Treasury, not agreed to in the SPSPA. Every one of the conditions in that fact sheet was agreed to and was signed by the Director of FHFA and the Secretary of Treasury with the exception of the coupon rate of 10% and or 12% in kind." End of Quote.
I just noticed something interesting. The coupon rate has been referenced a dividend, which we know is illegal. Net income recorded on page 62 the company used the wording "OR". I am not a lawyer but would venture to say "OR" would reference a different definition than "Dividends" attributable to the SPS. Money swept into the dark hole of the Treasury that legally belongs to the Shareholders.
"Dividends distributed OR amounts attributable to senior preferred stock." Page 62
Fannie Mae Q2 Form 10-Q
Link: https://www.fanniemae.com/media/52801/display
It is not hard to deduce our situation for anyone paying attention. Wise man thinks he is the genius and no one else has any understanding. The man is deceived. His separate account plan is none other than the Treasury stating the Senior Preferred Stock has been paid in full, therefore the SPS / Warrants will be canceled and the money collected will be returned to the Shareholders making the action of The Federal Housing Finance Agency (FHFA) legal according to the Charter Act, and the Federal Housing Enterprises Financial Safety and Soundness act of 1992 (FHEFSSA); Both as amended by the HOUSING AND ECONOMIC RECOVERY ACT OF 2008, (HERA).
Wise man has stated that the FHFA / Treasury has purposely lied to the Shareholders and the two government agencies will make everything legal in the end.
Wise Man Quote: "Their objective is to peddle the lie of "FnF continue to build capital through Retained Earnings." End of Quote
Link: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173861042
Our friend Barron brought it to our attention: Quote, "Instead of speculating how Treasury will use the warrants and what their purpose was, posters should read and understand what the Government Officials actually said and discussed in their own words detailing what the purpose of the warrants were." End of Quote
Quote: "Mr. Werfel then explained that it is important to understand the government’s intention. The intention was not to eliminate the ownership interests but to prevent current shareholder speculation resulting in speculators taking advantage of government intervention at the expense of others. Driving the stock market value to zero prevents this manipulation from happening. " End of Quote page 24
Link to page 24: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173695132
Then we have KT all the doom and gloom promoting the 'Transfer of Ownership by Cram-Down'. Was stated on this board he works for the gov. I do not know if that is true or not. I do know he is a Short Seller of the common stock; He freely admitted it. Is he the mouth of the Treasury spreading the lie which Wise man is referring to? To fulfill what Mr. Werfel explained not to eliminate ownership but to hold the stock price value down? We know the price per share is being manipulated on the OTC seemingly purposely being held down. Promoting a Treasury Cram-Down surly seems to be a tool being used to keep the share price low. I personally believe it would be a hard sale for the Treasury to wipe-out the Common Shareholders. So, here we are in prison for 16 years counting.
Cram-Down Explained,
Legacy Shareholders means, collectively, each person that owns common stock of the Company immediately prior to the closing of the Transaction (cram-down) which in no event shall include any of the Investors; or very few will remain afterwards maybe 1% or less.
A cram-down deal refers to a situation where an investor or creditor is forced into accepting undesirable terms in a transaction or bankruptcy proceedings.
In the case with Fannie Mae the Treasury's holding of senor preferred stock in the amount of $120.8 billion, with a liquidation preference of $199 billion.
If the Treasury converts this amount of SPS into common stock the Treasury in essence will own 99.9% of all the common stock outstanding. The number of shares outstanding depends on price per share at the time converted. The number of shares outstanding after the cram-down does not matter at all, it's the percent ownership, a transfer of ownership from the legacy common shareholders to the Treasury. This transaction will cause the legacy common stock to vanish along with any short positions, naked short positions as well as any counterfeit common stock outstanding. Afterwards, the Treasury can do a reverse split reducing the amount in number of the new common stock outstanding to whatever amount desired.
Quote: "Weren't dividends suspended until capitalized?" End of Quote
The Net Worth Sweep never ended the Liquidation Preference increase dollar for dollar. The actual earnings per share is -0-. The zero amount is reported on the same page.
The company also reports the common stock fully diluted as if the Treasury exercises the warrants.
Page 62 the foot note explains it.
Weighted-average common shares outstanding:
Basic 5,867
Diluted 5,893
NOTES: Page 66
Earnings per share (“EPS”) is presented for basic and diluted EPS. We include the shares of common stock that would be issuable upon full exercise of the common stock warrant in the weighted average shares outstanding for the computation of both basic and diluted earnings per share. Weighted average common shares include 4.7 billion shares for the periods ended June 30, 2024 and 2023 that would have been issued upon the full exercise of the warrant issued to Treasury from the date the warrant was issued through June 30, 2024 and 2023. For the calculation of diluted EPS, the weighted average shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. For the three and six months ended June 30, 2024, our diluted EPS weighted-average shares outstanding includes 26 million shares issuable upon the conversion of convertible preferred stock. For the three and six months ended June 30, 2023, convertible preferred stock is not included in the calculation because it would have an anti-dilutive effect due to the net losses attributable to common stockholders recognized in those periods. Earnings per share (“EPS”) is presented for basic and diluted EPS. We include the shares of common stock that would be issuable upon full exercise of the common stock warrant in the weighted average shares outstanding for the computation of both basic and diluted earnings per share. Weighted average common shares include 4.7 billion shares for the periods ended June 30, 2024 and 2023 that would have been issued upon the full exercise of the warrant issued to Treasury from the date the warrant was issued through June 30, 2024 and 2023. For the calculation of diluted EPS, the weighted average shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. For the three and six months ended June 30, 2024, our diluted EPS weighted-average shares outstanding includes 26 million shares issuable upon the conversion of convertible preferred stock. For the three and six months ended June 30, 2023, convertible preferred stock is not included in the calculation because it would have an anti-dilutive effect due to the net losses attributable to common stockholders recognized in those periods.
https://www.fanniemae.com/media/52801/display
You sound stupid. That's like saying it's okay for a bank to repo your vehicle because you may not be able to continue to make monthly payments.
The link below may not continue to work, the FHFA freely admitted the companies were adequately capitalized. You can't justify what these unelected bureaucrats did on an assumption the companies may run out of money.
SECOND QUARTER CAPITAL RESULTS
Minimum Capital
Fannie Mae’s FHFA-directed capital requirement on June 30, 2008, was $37.5 billion and its statutory minimum capital requirement was $32.6 billion. Fannie Mae’s core capital of $47.0 billion exceeded the FHFA-directed capital requirement by $9.4 billion.
Freddie Mac’s FHFA-directed capital requirement on June 30, 2008, was $34.5 billion and its statutory minimum capital requirement was $28.7 billion. Freddie Mac’s core capital of $37.1 billion exceeded the FHFA-directed minimum capital requirement by $2.7 billion.
Link: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Suspension-of-Capital-Classifications-During-Conservatorship-and-Discloses-Minimum-and-RiskBased-Cap.aspx#:~:text=During%20the%20conservatorship%2C%20FHFA%20will%20not%20issue%20a,submit%20capital%20reports%20to%20FHFA%20during%20the%20conservatorship.
You are a liar the author of a lie! Quote: "Chevron is irrelevant because FHFA has very limited powers."
Limited Powers?? The FHFA signed off on the deal.
When Paulson met with the directors of Fannie Mae and Freddie Mac to inform them of his intent to take over their companies, neither entity met any of the twelve conditions for conservatorship spelled out in the newly passed HERA legislation. Paulson since has admitted he took the companies over by threat.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008 Page 2734 Twelve Conditions
APPOINTMENT OF THE AGENCY AS CONSERVATOR OR RECEIVER
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
Yes, yes … I miss Robert, he is a valuable contributor to the board for our cause.
tutt1126 thanks for sharing. This is how the ruling can affect Fannie and Freddie in a positive way for the shareholders.
Quote: “ Chevron deference, Roberts explained in his opinion for the court on Friday, is inconsistent with the Administrative Procedure Act, a federal law that sets out the procedures that federal agencies must follow as well as instructions for courts to review actions by those agencies.” End of Quote
Quote: “ Roberts suggested, the Chevrondoctrine “allows agencies to change course even when Congress has given them no power to do so.” End of Quote
FHFA Director / Conservator Lockhart, this none elected bureaucrat took it upon himself to violate the law. What a Jacka$$
The Senior Preferred Stock, with a variable liquidation preference outlined in the SPSPA and its amendments and share certificates is a new product for the purposes of the Safety and Soundness Act of 1992 as amended by HERA.
Congress directed the Director of FHFA to apply the Administrative Procedures Act to the new products sold to Treasury. The FHFA did not follow the administrative procedures congress required in the plain language of the safety and soundness act.
The Director of FHFA as regulator violated the safety and soundness act and the administrative procedures act by not following the statutory duty to approve new products issued by the GSEs to Treasury for the purpose of stabilizing the secondary mortgage market.
The law required the publication in the federal register of the SPS with their variable rate liquidation preference tied to the commitment. It requires a public comment period, and a rule making process to make the SPS legal. It is the same law that required the capital rule. And the same law that required FHFA a year ago issue the new products law for MBS products. They have ignored this requirement for 15 years.
Director Lockhart Regulator, and Director Lockhart Conservator. Holding both positions as Regulator and Conservator; Conservator Lockhart is required by law to file notice to himself as Regulator.
The Safety and Soundness Act required Director Lockhart as regulator not conservator to approve a new product issued by Director Lockhart acting as conservator FHFA-C (SPS with variable liquidation Preference) to Treasury under the terms of the SPSPA for the purpose of carrying out the secondary mortgage market. He was required as regulator to file notice in the federal register, seek public comment and issue federal regulations for the new product we call the Senior Preferred shares sold to Treasury.
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Page 2689
SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf