JDsaid:April 29, 2015 at 12:29 am on www.timhoward717.com
I’ve been to court several times. Had judges do as usual exactly different than you’d expect more times than you’d figure. My experience is the judge be in a federal bankruptcy judge; a claims; magistrate are very unpredictable.
It was interesting that reading wheeler he cut off / questioned the defendant counsel repeatedly but let the plaintiff’s speak.
Here is my parallel;
Essentially, boies says that the language in the 13/3 loan prohibits the borrower from paying more than some board of governors rate that is commercial and of reasonable commerce or some such. Basically, the guidelines prohibit the extraction of a cost greater than what is allowed and that the borrower can not agree to more. The wisdom of this is it prevents the lender from extracting more, from being punitive and the borrower from being raped. It actually, forces reasonable business practices and encourages private lending because it moderates the rate. Its like having a right bestowed upon you that, you can not waive. Similar to employment law.
Further, it or in every case cited, collateral once the loan was repaid was released.
As for the argument; if not for this loan you go bankrupt and therefore you should be happy you got more than nothing. The 13/3 loan provision essentially, wipes that grin off the face of government because it disallows that premium from being agreed to; it removes that.
It compares the loans AIG got to jpmorgan, morgan stanely, etc. and says, wait a minute. They paid 3% we paid 14% and you took 80% of the entity. The government says, be happy you got anything at all. That they testified they could pick winners and losers; and be happy. My thought on this is simple, that’s not within the lines of the 13/3 loan. Sure, the government could have offered no loan, but once they did they were precluded from exacting a pain greater than 13/3 allowed.
Also, why would they have granted a loan they didn’t think would be repaid? See my question is circular; in other words, the loan was granted on terms the government expected to be recovered upon, if not which for the government could have denied. Two options; grant a loan on 13/3 terms or no loan.
Now, how does this apply to Fannie and Freddie; Well it would appear that 13/3 set the standard for recovery to the government of the provision of liquidity. Does Hera violate that long standing precedent? If it does then how can any right under it be valid? Afterall the provisions of 13/3 has apparently stood the test of time; such that anything more than that could be considered a taking or rather an exacting of “pound of flesh” that is not authorized; or allowed to be offered.
Also, it was noted that the board of directors had duties to shareholders, and when they acted not in consideration of shareholders their actions could be voided.
Lastly, it was clear from the arguments that the gravity of the situation as noted by the plaintiff didn’t give the government cart blanch to run all over it; just because it could; that’s like saying in Katrina, murder wasn’t murder even if it was expedient. Sure some rules get set aside in matters of need; but even in times of war due consideration is paid – ever hear of “war bonds”.
If AIG case goes to the plaintiffs; the fannie / freddie actions will fall. As the bridge from the 13/3 cases to fannie and freddie have to be paved with AIG.
To me its not a matter of if, its when. KTF. Thanks Tim.
