Fannie Mae-No Politics (FNMA)

[kthomp19]

What happens to the warrants as September 08, 2028 approaches and there is still unresolved litigation? Can the UST and/or FHFA extend the exercise of the warrants?

Yes, the warrant deadline can be extended if FHFA and Treasury agree. There could be a straggler case or two left 7 years from now.

if the then majority of the board of directors totally dilute existing common to reward the jps they may find it difficult to get the votes needed to get reelected.

Do you have evidence that Citi's board in 2009, who chose to "dilute existing common to reward the jps", found it "difficult to get the votes needed to get reelected"? That would be the best case study.

Don't corporations that are about to issue more stock give existing shareholders an opportunity to participate?

Sometimes.

Do Board of Directors owe a fiduciary duty to the common voting shareholders or nonvoting jps?

Both.

MC said when he was the 'conservator' that he wanted recap decisions to be decided by the board not him.

Wrong. His actual quote was "My job is going to be, you have to raise capital, you figure out how to do it. And make sure, I'm going to have to approve how they do it, but it's really going to be on Fannie and Freddie to sell themselves to investors." That's at 14:52 of this interview with Gasparino.

The FHFA director has authority, by 12 USC 4616(b)(3) of HERA, to "Require the regulated entity to acquire new capital in a form and amount determined by the Director." This applies outside of conservatorship, so as long as FnF are below their regulatory core capital (leading to a designation of "significantly undercapitalized", which is where 4616 kicks in), it's the FHFA director that has control over the capital-raising process. The same FHFA director that has no fiduciary duty to any shareholders.

no matter what happens in the future, you believe that the fact that since the jps offering prospectus says non-convertible, that it is irrelevant.

What I said is that the "Non-Convertible" language in the juniors' contracts does not prevent them from being offered a conversion. It only means that neither side (the issuing company or the shareholder) can force a conversion to common without consent of the other.

Would it be relevant in a lawsuit against individual board of directors for breach of fiduciary duty to the common shareholders who were badly hurt at the expense of the 'fulcrum security' holders (i.e., the board favors one class of shareholders at the expense of the other)?

More empty lawsuit threats. Citi's board offered the pref conversion "at the expense of the commons" (which is a fallacious argument anyway) and never got sued.

Have any of the cases even gone to trial yet? IF the Plaintiffs can survive the governments motions to dismiss, I think the trials will be alot of fun as the government will need to convince the judge that the Plaintiffs are entitled to nothing.

Nope, no trials yet. The closest one is Lamberth scheduled for July 11 2022. I too look forward to actual trials.

Why would the unwinding of the nws be a problem? Judges have tremendous latitude in crafting remedies for wronged parties, they are not in the straight jacket you think they are in.

I said what I did in regards to the USCFC. That court doesn't have the authority to unwind the NWS, only to award money damages. The Supreme Court denied the Collins' plaintiffs APA claims anyway, so I don't see any NWS unwinding happening in a court at all.

One weakness to that sort of thinking is that the new capital rush may not materialize as sophisticated institutional investors see just how badly shareholders were treated by their partner in this private capital/social benefit, quasi-governmental partnership.

No, I have rejected this "new investors won't participate if current shareholders get screwed" argument for a long time now.

1) New investors would be stepping into the shoes of 2008 shareholders, not those in 2023 (or whenever the capital raise happens). If those new investors needed reassurance then it's the shareholders in 2008 that would have to be compensated, regardless of whether they had sold their shares since then.
2) The only thing giving money to 2023 shareholders would do is tell the new investors they would have to wait 15 years to be made whole if the government acts up again.
3) Such reassurance would take money directly out of their own pockets.
4) No administration can bind future administrations (except hopefully a consent order that a released FnF would have to agree to change), meaning the only reassurance new investors could get would be a lower re-IPO share price.

Does that mean that the shareholders cannot recover for damages from a Takings Case for example?

The takings cases are alive and well. The Supreme Court only closed off injunctive relief from what I understand.

The SPSPAs are easily changed, modified, amending, or most recently ignored by Yellen (where's her September plan to Congress?)

They will be changed modified or amended as dictated by the courts or if the executive branch decides to change the terms for its latest plans.

Not by the courts: the Supreme Court saw to that. Any amendments to the SPSPAs will have to be at the agreement of FHFA and Treasury, which now is basically by order of the President.

Perhaps a realization from some key decision makers in any branch of the federal government that Nationalization is bad public policy and that the shareholders property rights were violated and need to be rectified.

I'm not going to hold my breath on that one. If any administration, the current one included, truly cared about such things we wouldn't be in this situation.

Nationalization was anathema to George W. Bush. No president since then has seemed to care.