Fannie Mae-No Politics (FNMA)

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At bloggerheads: The latest #FannieGate rumor challenged by the media
Settlement rumors stir up fracas among analysts, investors and media
August 31, 2015Trey Garrison
So everyone is jawing about whether a settlement is in the air between the administration and the investors in Fannie Mae and Freddie Mac.

The latest round of discussion comes after the White House requested access to documents filed in the Fairholme vs U.S. case by defendants, and after a couple of research notes from Rafferty Capital’s Dick Bove, vice president of equity research, suggesting a putting green pow-wow between the President and a lawyer from the firm representing Perry Capital meant, yes, talks are on.

Bove, unafraid to go out on a limb, believes there’s increasing pressure for a negotiated settlement, and put together a suggestive timeline.

Pressure continues to build for a negotiated settlement. Retired Judge Myron Steele files suit in Delaware. President Obama golfs with Ron Kirk, a key hedge fund counsel. Judge Myron Steele was Chief Justice of the Delaware Supreme Court prior to his retirement. He had filed an amicus brief in the Fannie Mae lawsuits making two key claims. The first is that the 3rd Amendment on the company’s senior preferred stock is unenforceable. Second argues that the Amendment breaches Delaware law which explicitly states that preferred shareholders cannot take all the profits of a company leaving nothing for common shareholders.

Judge Steele has now gone one step further. He has filed a lawsuit under his own name in the Delaware court making the same arguments. Since Fannie Mae is a Delaware Corporation, if the courts in that state find for Judge Steele, the game is over for the Treasury. The other lawsuits will be moot since Delaware has claimed that Fannie Mae has broken the law. Todd Sullivan reported in Value Plays that President Obama played golf with ex-President Clinton and lawyer Ron Kirk a couple of weeks ago. Mr. Sullivan also published a photo of the threesome on the golf course.

Ron Kirk was mayor of Dallas and a special trade representative appointed by President Obama. Mr. Kirk now works for Gibson, Dunn, and Crutcher Perry Capital’s law firm. Perry is suing the FHFA and the Treasury seeking the redress of the Fannie Mae Third Amendment.

Mr. Kirk also had dinner with the President as one of a group of eight people including ex-Attorney General Eric Holder. Six days following the golf outing, the White House filed suit to get the Discovery documents in the Lamberth Appeal case. The timing may be a coincidence or it may suggest that the White House could possibly lose control of Fannie Mae. If the Delaware courts find that the Treasury has broken the law, then it must pay back all of the excess funds that it has taken from Fannie Mae.

Also, if the courts find against the FHFA and the Treasury, the President could possibly lose the right to make a unilateral decision as to how Fannie Mae should be run. The advisors might be telling him this.

If so, negotiations to solve the Fannie Mae issue may be near.

What’s said on the golf course usually stays on the golf course, but Wall Street Journal reporter Joe Light simply asked Kirk point blank if he discussed the GSE lawsuits with the President.

http://www.housingwire.com/blogs/1-rewired/post/34940-at-bloggerheads-the-latest-fanniegate-rumor-challenged-by-the-media