Fannie Mae (FNMA)

[kthomp19]

When we start at the bottom we see now the BOD voluntary agreed to be put into conservatorship as they would preserve and conserve and put in sound and solvent condition, this implied-in-fact contract was given to the FHFA

Okay, I agree with this so far.

the FHFA made agreements with treasury that it could own a max of 79.9% in the companies(pending breach of fiduciary duty action) it left the common shareholders with 20.1% of the companies

No, two things are false here. There is nothing in the SPSPAs that prevents Treasury's common stake from ever exceeding 79.9% (a senior-to-common conversion is not prevented), and common shareholders actually retained (and still retain) 100% of the common stake right now.

then if the FHFA or treasury takes away any of the percentages pref and commons hold it takes property from current holders and uses it to recapitalize Fannie and Freddie, this is confiscating for public use

Wrong again. Neither a junior-to-common conversion nor an SPO violate the Fifth Amendment, and Treasury's liability for a takings/illegal exaction case involving the warrants is far less than they stand to gain by actually exercising the warrants and selling the shares.

the only power the FHFA has is to conserve and preserve because it needs to protect the current pref and common shareholders

False. FHFA has a mandate to conserve and preserve the assets of the companies. They have no fiduciary duty to any shareholders. Three judges have said this and none have said the opposite.

So to come back to the 20.1% this was agreed by treasury (beside of the breaches) the contract only allowed treasury to hold 79.9% as otherwise they would had to add Fannie and Freddie to their own balance sheet

The balance sheet consolidation would only happen if Treasury's stake went to 80% or more at any point. Treasury could convert its seniors to 99.9% of the commons and avoid this as long as they structure the transaction correctly (convert some seniors, sell the commons to stay below 80%, rinse and repeat).

while they are in distress on recapitalization because of the funds treasury illegal obtained

Here is the very heart of why your entire argument is wrong. No case seeks to change anything about the SPSPAs except the NWS. However, even if the NWS had never happened FnF's core capital would still be negative $45B. Thus a return of "the funds treasury illegal obtained" still leaves FnF greatly undercapitalized!

It is the 10% dividend rate on the seniors that drained the capital, and no plaintiff seeks to have this changed or overturned. It is far too late for anyone else to challenge this (and nobody has anyway), and no court is going to grant this type of relief (no plaintiff outside of WF has standing to do so, and Sweeney doesn't have the authority to do it anyway).

if 79.9% is the maximum amount they can hold and because they are the majority holder with fiduciary duty toward the minority holders

Another falsehood. Sweeney directly said that Treasury is not a controlling shareholder and that Treasury does not owe a fiduciary duty to shareholders. When you and her disagree, sorry, you lose.

it is established that current holders are entitled to 20.1% (the rest of the 79.9%)

Wrong again. There is nothing in the SPSPAs, or anywhere else for that matter, that says current common shareholders must retain 20.1% of the commons. They can (and will, according to Calabria) end up with much less because the equity raise will heavily dilute the commons (Calabria's words, because prefs can't be diluted).

but first it needs to be decided:
1)was the warrant obtained legally
2)was it legal to withhold the 20.1% from profit in perpetually
3)where statuary goals of FHFA breached

1) Only the WF case challenges the warrants, and even if WF wins they only get money damages for pre-conservatorship shareholders. The warrants remain even if WF wins! And of course, the warrants remain if WF loses.
2) This is the basis of the NWS cases, though they don't ever mention 20.1% (because it's a meaningless number that you continue to treat as if it has meaning).
3) Yes, this is a key part of all the lawsuits.

The FHFA is allowed to direct the companies to give out extra shares only on the basis if they had properly done their work and not because they siphoned of the profits, pref and common holders will bleed

Nope. FHFA is allowed to act in its own interests, even if it's to the detriment of shareholders. Again, this comes directly from Judge Sweeney.

if then maybe a SPO is necessary the extra shares issued will go to treasury 79.9% and common holders 20.1%

Laughably false. In an SPO, the newly-issued shares go to the investors that participate. None of them would go to Treasury or current common shareholders, or any other non-participant for that matter.

and from the new shares issued 20.1% will automatically go to current shareholders as they already hold this percentage of the company and the current shareholders cannot be blamed for the errors FHFA made in siphoning the profits

Blame and dilution are vastly different things. Current common shareholders bearing none of the blame for what happened (which is true) does not in any way spare them from later dilution. Just ask Calabria, who said that shareholders will be heavily diluted by the equity raise. That means current common shareholders will have much less than 20.1% of the commons when all is said and done.

A taking takes place ones a percentage change occurs in the 79.9/20.1% ratio

Huh? And anyway there will be four percentages that matter in the end: how much of the commons are eventually owned by Treasury (warrants and/or senior conversion), current common shareholders, current junior pref holders (via conversion), and SPO investors. Current common shareholders being diluted below 20.1% of the final total is in no way illegal.

FHFA only has authority from the BOD to put in sound and solvent condition. And as it is impossible for the FHFA to give away 79.9% of the company to Treasury without an explicit contract from the BOD that permits this action

Wrong again. FHFA gets its authority from HERA, not from the boards of directors.

so the FHFA breached their fiduciary duty towards the companies as the BOD could never voluntary give away 79.9%

Wrong yet again.

1) Including the warrants in the original SPSPAs does not violate FHFA's fiduciary duty to the companies because FHFA is only mandated to preserve and conserve assets. Common shares are not assets, they are equity, and FHFA has no fiduciary duty to shareholders. This argument has already been tried before on this board and shot down.
2) The boards of directors absolutely do have the authority to "give away" 79.9% of shares if the alternative is the companies going into receivership. ("Give away" is also the wrong term because FnF received consideration in return for the seniors and warrants. Both sides benefited from the original SPSPAs)

And the FHFA breached their statuary goals by entering into the SPSPA

Which plaintiff alleges this? If the answer is WF, then it doesn't matter because a victory by them doesn't change anything at all. And if none do, it will take a new lawsuit to try this angle of attack.

The if pref holders in a settlement demand a pref to common conversion it breaches all duties again as it is FHFA statuary duty to preserve and conserve and not give money (stock) to pref holders while common pay for it

Wrong for reasons stated above (FHFA has no fiduciary duty to shareholders, and FHFA only has to conserve and preserve assets; common shares are not assets).

as the FHFA currently breaches a lot of duties a pref to common conversion is not possible(it is possible but for current market value only)

The Citi conversion was done at market value, but it still ended up in a much greater return for the preferred shareholders than the commons. Thus this argument is irrelevant.

The ratio as explained above is the ratio that FHFA entered into on an illegal basis and is questioned in court by Fairholme and Washington Federal (breach of implied-in-fact contract on the 3th and the conservatorship itself)

Fairholme does not question the original SPSPAs, at least not in a way that can have any part of them changed. WF can't have any of them changed either due to the court they chose to sue in.

It bears the question when the breach of implied-in-fact contract is declared illegal, the contract is voidable and should be voided by FHFA-C and FnF as it is their fiduciary duty towards (minority)shareholders to do so, not voiding it would be a breach again by FHFA-C

Two more strikes:

1) Part of a contract being illegal does not mean the whole thing must be voided.
2) FHFA has no fiduciary duty to shareholders! None at all! Three different judges said so! (I'm getting deja vu here)

then to unleash the whole thing the 79.9/20.1 common and 100% prefs rights need to be re-established before any progress can be made

Okay, I can agree here. However, the "progress" involved (SPO, junior conversion) will heavily dilute the common shareholders to where they have much less than 20.1% in the end.

Then in order to do so you cannot change the ratio from pref to common if favor of prefs based on depressed post conservator share value while the real share value is unknown at this moment due to the accounting in EPS that already include the warrant while the warrant it not executed yet, the basis for an eventual conversion must be set on the losses that occurred and the FHFA maybe illegal made

Wrong again. FHFA can set the conversion ratio at whatever it darn well pleases, and it will be fully legal no matter what it is because FHFA has no fiduciary duty to shareholders.

the ownership of 20.1% common shareholders will be kept and all eventual dilution is to new holders because the old shareholders are always entitled to 20.1% of whatever is issued in the future until the release is final just like treasury is

Stating "commons have a right to 20.1% of the common shares at the end" over and over and over doesn't make it true. It is completely false.

The errors the FHFA made are to begin with breaching the BOD consent, the BOD only authorized and has consented to preserve and conserve and put in sound and solvent condition, and as we all know by now, the opposite happened, and because they did the opposite we all now have the dozens of lawsuits that are pending on resolution soon

What does "breaching the BOD consent" mean? I think I follow what you mean here, and I largely agree, though that depends on the meaning of the "breaching the BOD consent" phrase.

then the FHFA is in no position to establish a conversion rate

Wrong. FHFA is the only one in a position to establish this.

the courts will decide if the FHFA has the constitutional power to do whatever it pleases, but bases on the constitution the FHFA lacked those powers, but we will see what will be changed the constitution or the FHFA powers (my guess it probably is the FHFA)

You're confusing the Fifth Circuit en banc panel's finding that FHFA's leadership structure is unconstitutional with the idea that every action FHFA has ever taken is unconstitutional.

FHFA's leadership structure will likely be changed (so that the director is removable at will by the president) but the rest of HERA is quite likely to remain fully intact.

and because the Common shareholders rights are suspended it doesn’t mean the FHFA can do whatever it wants, as there is no consent on the actions to dilute common shareholders

FHFA doesn't need consent to dilute common shareholders, because, again (say it with me) FHFA has no fiduciary duty to shareholders.

If an SPO is necessary it can only happen after all funds are returned and the SPSPA is voided

The untrue cherry on the sundae of falsehoods. Only the NWS and seniors need to go for investors to be willing to participate in an SPO. The rest of the SPSPA can stay, and in fact it needs to (Treasury's funding commitment will be critical going forward, and they have to use the existing one in the SPSPAs because a new one would require Congress).

I'm glad that we have baseball back, even if only briefly. There are enough swings and misses made (commons get to retain 20.1%, FHFA has a fiduciary duty to shareholders) to get all the way to 27 outs.