Just because you don't "see" it doesn't mean it's not possible for those who can.

None of that addresses the constitutionality problem. You are just talking about "fair" without regard to how tax revenue is legally generated.

Let me ask you a hypothetical. If you get paid $10,000 and it's taxed at 10%, you take home $9000. That's spendable money. If you use that $9K to buy an asset, could be stocks, a Tiny Home, a baseball card, or a 1973 Corvette Stingray. Who cares if that asset appreciated or depreciated? Why would anyone in their right mind want to pay tax on an appreciating asset that they are holding?

Say in 10 years time, that Stingray sitting in your garage is valued at $100K. Do you really want to pay $XX thousands in tax to the government for the privilege of holding on to that appreciating asset? The car is not generating any income for you to pay the tax with. That's got to come out of your pocket. You were already taxed on the income you used to purchase the car. You now own it, it's yours. The value of the asset is not income until you sell it.

You would need to sell the asset or generate income from the asset in order to pay the tax on the asset. That money has to come from somewhere.

You really think there is no difference between holding an asset and selling an asset? Or are you thinking somehow Stocks are different than other types of assets and that you will magically have the money to pay the taxes?

There's a few issues - such as the definition of "income" as it relates to the 16th Amendment. Unrealized is not yet "income" earned by the taxpayer. The second issue is double-taxation. If the Corporation is paying tax when it's earned, the increase in corporate/shareholder value is post-tax. There are exceptions where the Corporation is not taxed and it's passed through directly to each shareholder. But it shouldn't be both.

I'd also be curious about what the plan is for Unrealized Losses. How does that fit into the tax code? For every person gaining, someone else is likely losing. If govt taxes me, oh say 28% on my unrealized FNMA gain, will they give me a tax credit of 28% on my unrealized FNMA loss? I think that will encourage more risk taking in the market. Gains are tempered, losses are tempered, may as well go hog-wild...

Wise-ass is no longer a moderator, so the mass deletions have subsided. Doesn't fix his lack of coherent thought however...

I misread the year on the date :)

Thanks Glen, that's the one I missed.

I think that's the one: DC Jury Decides GSE Shareholder Contracts Breached. Was that not a Bradford piece?

I don't know, I can't access the article because I'm not willing to sign up for a free SA account. I was hoping someone else could read it and summarize. Or if Bradford is around, he could enlighten us.

Speaking of articles, anyone have a synopsis of Bradford's SA article from 8/17? I don't have an account so I can't read it.

So people are not allowed to post news they think is relevant even if it's a whopping 5 months old? People should be allowed to discuss any relevant news that affects the FNMA stock. The Lamberth decision was a major piece of the puzzle, for the past 52 weeks.

That's not what this means. This just means that upon exercise, Treasury does not need to receive the actual shares. They can transfer the shares "upon such exercise" to another entity. That could be JPM, Pershing, or it could be FHFA or FNMA/FMCC. The warrants are not transferrable, but the receiving of the exercised shares are. Must be exercised to transfer.

Ask your dad to cover the loan for you? Move to the beach?

He's on a deleting spree. But of course his non-comprehensible nonsense is increasing and getting pinned. 🙄

Just when I thought the Moderated Board couldn't get worse.... Who thought making Wiseman a moderator was a good idea? Painful...

I would just like this Separate Account Plan to be unveiled already...

Sounds like you need to short this stock with that amount of confidence.

By that reasoning, both JPS and Common should be literally at zero right now. And the GSEs would no longer be a shareholder owned company. How do you explain that this is not the case?

You clearly don't understand that investor expectations are not written in the contract and do not take into account every minutia of what changes over time. It is based on general expectations as a shareholder and what that entails. The company cannot thwart that general expectation that a shareholder is a part owner of a company and entitled to a share of the profits, as dictated by business results.

Yes, and even with those expectations, the NWS was a BREACH of the shareholder agreement. Now that it is established that it was a breach, we don't suddenly expect more breaches to be "ok" since there was one in the past.

SMH. This isn't complicated.

Wait... So if Treasury is already making or has made a "boatload" of cash, they won't seek more cash just because they can? I think this is counter to every other argument you've made.

No. I'm arguing that you are a hypocrite for saying because Calabria memorialized that someone from Treasury Thinks™ the writedown would be illegal that is somehow evidence that it is illegal. It's clearly not.



Not difficult at all. This is a non-sequitur, a False Attribution, and an Argument from Authority.

Wow. A rare compliment by KThomp, I'll take it. :)

You really need to work on understanding humor and sarcasm better. I know this is a message board and it's hard to read context sometimes, but c'mon man...

Yah... that. I really wish the lawyers would get their heads out of their arse. This should be a layup for FNMA now.

Bro. The SPS, LP, repaid, or cancelled was not even addressed. There is nothing from the jury that says "those things are great, we legally bless them." The award is strictly damages as a result of the breach of good faith and fair dealing.

Of course, I'm suggesting it is in FHFA and Treasury's best interest to halt further actions that could also be deemed a breach of good faith and fair dealing with shareholders. But no, I'm not saying the jury is compelling this. This is also different than Takings. Continued breaches can yield further damages. My road through the yard is perhaps a bad example in this instance. How about toxic waste dumped in your neighborhood instead... Neighborhood gets upfront damages awarded when taken to court. If they decided to keep dumping crap in the future, then there could be additional damages. Just because they had to pay damages the first time they dumped waste, doesn't mean that your neighborhood should now expect it - and they can continue dumping. Better?

I'm not advocating anything. If anything, I'd want those profit dollars used to pay off the SPS as you hypothesize. The only thing I am advocating is a solution that works for everyone. I think this can be accomplished with a few pen swipes. JPS to par, Common to fair value. Taxpayers already compensated.

And no, I am not a "rogue litigant" nor do I have plans to file a lawsuit at this time. But feel free to lump me into whatever group you think is the same person using multiple aliases. Whatever makes you happy. :)

Great. We'll wake you back up when we get to the 60th floor restructuring conversation, if that ever happens here. Then your guidance would be prudent.

If the government decides to put a road through my yard and I take them to court, will the road get reversed or taken out? No, because that action is not illegal. However, I will get monetary damages. Did the NWS result in monetary damages granted to Shareholders? YEP.

Unlawful or not, the dividends happened. Now they could come out and say "just kidding" none of those were dividends, we didn't even classify them as dividends at the time and we were just lying to you, because we are from the government, and we can. Possible, but I just don't think that is as likely as - they were dividends at the time, and they can later reclassify them if they choose to be more compliant with the laws.



Unless you know what these sealed and hidden documents are, they are not evidence of your Separate Account Plan. As much as I hope you are right, I just don't see any hard evidence.



I totally agree with you here - the Net Worth Swipe has not ended, it just shifted from Cash to LP. This is why after the Lamberth ruling, I expect something needs to be changed or re-written. If the cash sweep was a breach of the Shareholder agreement, then so is the LP sweep. This needs to become more visible and obvious for FHFA and Treasury to be compelled to fix it.

Treasury may win. There may be no additional lawsuit wins. But that has nothing to do with the SCOTUS "blessing" the NWS. That is not what happened. If it had, the Lamberth jury decision would be overturned.

The SCOTUS did no such thing. They just said FHFA did not exceed it's power. The Lamberth trial said that the NWS was a breach of the shareholder agreement. Does that mean that the Lamberth verdict is in conflict with the SCOTUS decision? Of course not, because it is not as "blessed" as you think.

As for dividends not paying down equity. Yes, of course that's 100% accurate. We all know what HAS happened. The question is what WILL happen... It would take Treasury to reclassify the dividends it received into something else. Whether that's a separate account so that it doesn't violate the restriction on capital distributions, or whether it gets adjusted to 10% instead of Net Worth to prevent Shareholder agreement breaches, or if it gets reclassified as Return of Capital instead of a Dividend, or who knows what other dispositions Treasury may decide. It would only take the Govt agreeing with itself to make the accounting work. Or it can be an SPS cramdown, and/or Warrants exercised, and/or Congress making a new Charter, and/or the GSEs combining into a new company, and/or full receivership where everyone gets squat. There are lots of possibilities.

Rodney, I'd have to go back and read the ruling. But I believe you are correct, in that the SCOTUS is basically just saying the NWS was not ultra vires, therefore was within the power of the FHFA. That argument was dismissed. What I'm saying is that just because something was within their power to do, doesn't mean that there isn't harm done which must be compensated for, or can therefore be pursued in civil court. Which is exactly why we have the Lamberth decision. Just like the govt can put a road through your yard, it is within their power to do so. But they need to pay you fair value for what they took.

The FHFA can continue to breach the shareholder agreement, it is within their power to do so. However, they would still be on the hook for any damages as a result. Just because they breached the contract once and have to pay for it, doesn't mean that all subsequent breaches are "free".

Correct, in general - Breaching a contract itself is not a crime, meaning people don't go to jail unless the breach is due to fraud or an illegal activity. However, as the Lamberth trial has indicated, there can be civil liability as a result of a breached contract, hence the resulting monetary damages.

BTW - IF it can be established that the NWS was a violation of a restricted capital distribution, it may very well be a crime.

Don't worry, I'm on it! :)

Can't let his hypocrisy go unchecked! 😎

"The LP ratchet itself is in place as a return consideration to Treasury for allowing FnF to keep their net worth"

In consideration for keeping $1, you will owe us $1 in liquidation preference, and you will pay us 10% dividend on it at a time we determine, and until we say otherwise. Why not say in consideration of $1 you owe me $10. That's not really valid consideration either unless you are a loan shark.

Does that not sound like a breach of good faith and fair dealing? Sounds AWEFULLY similar to the last breach which was you make a $1 you owe us $1....

"The thing is, one result of the jury verdict is that FnF have now been essentially indemnified from any further frustrations of shareholders' ability to profit from their investment."

Wholly incorrect. One infraction of a contract does not entitle the breaching party to further violate the contract because now "the other party should expect it" as you seem to imply. There was no contract remedy, which means the language in the shareholder contract was not updated as a result of the Lamberth ruling. All expectations on both sides of the shareholder agreement remain intact.

"I highly doubt the lawyers who drafted the original SPSPAs would have included a commitment fee on the funding commitment if it were so obviously illegal."

In that case, why hasn't the commitment fee ever been decided or implemented? Would have been a heck of a lot easier to make the backstop official, charge the fee and move on years ago. The whole purpose of the SPS dividends is to circumvent the restriction on fees. Make it look like something else, so it can't be challenged as a fee. I'm not going to post a link to the Charter Act, I'm sure you are familiar enough to know better.

"I trust their judgment far more than the armchair lawyers on this board."

Ha! Does that include yourself? Or you are just above everyone else. LOL!!!

"Your unwillingness to take Treasury's words at face value doesn't extend to him"

Treasury's words? Treasury, nor any representation of Treasury has officially made any such claim. Or do you mean a specific person? Does that specific person have the legal knowledge to make the claim? And was the quote that they "think" it's illegal or are they stating that IT IS ILLEGAL? These are not equivalent statements. That's the problem with your hearsay argument. "Reporting' that someone told you what hey "think" does not in any way mean that what you were told has a legal basis.

You and I both know the logical fallacy you are making. But keep beating your chest on it, I'm sure someone will think you are right.

"It said that FHFA can use its power to act in its own interest to override other duties HERA imposes on FHFA, like their obligation to conserve and preserve FnF's assets."

SCOTUS said FHFA is legally entitled to that action, much like the Govt can run a highway through your yard. It is not illegal to do so. Did the SCOTUS also say that there is no repercussions? If so, the Lamberth verdict is in jeopardy.

"They took a downgrade in that deal because $1 of LP is worth less than $1 of cash, even if you don't take the time value of money into account."

This depends greatly on what happens later. If Treasury gets 10% dividend on the LP for an unknown amount of time, and they later get to redeem the original $1, then clearly they are getting more than the $1 in cash.

"The FnF situation does not even come close to applying to any other company out there. Stop acting as if it does."

Wait, what? I'm pretty sure I'm the one who keeps saying this is a unique situation. I'm not the one comparing it to AIG or Citi, or numerous meetings on the 60th floor somewhere irrelevant. I'm basing my opinions on the unusual circumstances that got us here.

Again, I must refer you to your own words "you are a hypocrite."

"Especially in the light of incentives: converting the SPS gives Treasury far more of what they want than writing them down does."

We are just going to disagree on this whole "it's illegal to write down the LP" issue. You see the above as a reason for them to be telling the truth. I see it as the reason they may be giving misinformation.

If you feel Calabria's statement of What Treasury Thinks™ is important, then good for you. I see it as a recollection of a statement in a conversation. A statement in a conversation is not the law.