THERE IS ONE ABIDING REASON WHY MOELIS FAILS AND WILL NOT GO FORWARD AS ENVISIONED.
It is simple, really. Moelis is a plan drafted by non-litigating shareholders predominantly holding junior preferred shares of stock. A few parties got together and spent a lot of time, effort and money to prepare this plan to refinance and restore Fannie Mae and Freddie Mac as an administrative reform action that would require no Congressional action.
This "plan"would refinance the GSES with massive capital inflow involving a complex, interlocutory assemblage of multi-$ B actions that may or may not be feasible, be sustainable and may or may not sustain the GSE's ability to serve its mission or survive another Financial Crisis. Moreover, Moelis makes little to NO MENTION of preserving affordable housing goals, preserving loan originator's liquidity to facilitate an active housing sale and resale market and appears to be largely founded on the premise of excusing government for LOOTING public companies of all their capital, shareholder's equity and ability to function as going concerns. Meanwhile, Moelis promises more unjust rewards like $75 to $100 B MORE in ill-gotten gains to government as a bribe for Plan approval that rightfully should be restored to shareholders who have waited TEN YEARS for any positive vestige of reward as every other public company in history has been expected to deliver.
There are very few investors in FNMA and FMCC that would disagree with this summary. Just the few non-litigating shareholders (although only one, so far, is actually proven to be invested in either company in any form of equity) that ponied up and paid for a truly arcane Plan.
So why will Moelis not go forward? The simple preamble is that it is a pathetic dole of bread and water offered to a starving, dehydrated and too-long-imprisoned group of small private investors and small institutional investors that have been fed a ten year diet of promises that had no meat on their bones. In a nutshell, these investments to long-suffering bagholders have brought nothing but disappointment, heartache and abyssmal returns while the overall market has soared during the recovery from the Financial Crisis. Fannie Mae and Freddie Mac have become the poster children for financial decay and expulsion from the wealth-accumulation dream that drives all investors to own stock. And... so... the downtrodden jump on the Moelis bandwagon, even though most do not seem to understand its potentially devious and manipulative course fueled by potentially obscene amounts of dilution. They are so fed up that they just want the nightmare to be over.
I get it. I understand it. But I cannot in clear conscience embrace a plan that is little more than a patronage of government bad behavior that promises up to $100 B in additional rewards for additional bad behavior of government's part. Haven't the BASTARDS taken enough from you?
So here's the disqualifier that dooms Moelis to the dumpster of "coulda, shoulda, woulda" plans before it that perished on the fruition vine and disappeared. You guys know what I mean. That would be the plenary of plans puts forth over years of Congressional and Lobbyist and Think Tank and Academic wranglers that have gone nowhere. THERE IS NOT ONE LITIGATING SHAREHOLDER THAT HAS SPOKEN UP AND VOICED ENTHUSIASM FOR MOELIS AND HAS STATED THEY WOULD AGREE TO BECOME A NON-LITIGATING SHAREHOLDER TO JOIN IN THE EFFORT. NOT ONE !!!!!!!!!!!!!!!!!!!!!!!!!!!
Please, somebody. Cite me one major litigating shareholder that has expressed enthusiastic support for Moelis. ONE. Spare me the weak sister commentary from Maloni or Howard that seem more to lament the seeming inevitability of the Moelis "March into the Sea" than the innate goodness in the plan.
Where is Richard Perry with support? Bruce Berkowitz? Bill Ackman? Gary Hindes? Any of the lead plaintiffs in any of the pending suits that must be resolved for Moelis to go forward without a Sword of Damocles hanging over its head?
You pro-Moelis guys tell me.
YanksGhost out!
