A favorable ruling means that the 3rd amendment to the PSPAs will be vacated and the GSEs will be put back under the GSE 2nd amendment PSPA agreements.
The following can occur:
* The net worth sweep and the diminishing capital reserve set at minus 600 milion per year till January 2018 will end.
* The effective nationalization of the GSEs will end.
* The privately owned shareholder company status will be maintained.
* The temporary status of the conservatorship will be upheld.
* Dividends to the US Treasury will be reduced to 10% per quarter.
* GSE capital will be rebuilt.
* Solvency will be guaranteed.
* Shareholder rights will be protected and restored intact post conservatorship
* The GSEs cannot be wound down in the conservatorship.
* Owned mortgage assets will have a higher cap
* Dividends may be ordered to be paid to preferred and common shareholders.
In summary, the GSEs will be far stronger than they are now on every issue and front.
There is no pending legislation at the moment.
The Corker-Warner Bill has not left committee and is not sponsored by the Democratic Chair of the Committee Johnson and the Republican Ranking Member Crapo. They have their own bill that they will propose.
The Hensarling bill passed committee but has not been slated to be voted on the House floor. It is considered finished because of lack of Democrat and moderate Republican support in the House and no significant support n the Senate
If there was pending legislation, that legislation would not complete in 2013 nor by the middle of 2014 because of mid-term election for the entire House and 33 lawmakers in the Senate. So, there is a rush to get legislation going. However, the legislation is legislative and not actual business operations with impact studies and so there are many things to work out with interest groups, industry players and associations, political agendas, intra- and inter- party divides and conflicts and so on. So out the door is highly unlikely given these existing conditions, a fractious, argumetative 113th Congress, and a very serious national issue that cannot be resolved quckly without creating serious economic problems.
Also, vacating the third amendment reasserts shareholder rights to dividends and share value. Eliminating the GSEs and doing so without compensation will not be as easy as Corker-Warner originally planned and not for that reason alone. There will be judicial resistance to cavalier treatment of the GSEs and shareholders. Even though the Perry Capital case does not focus on the takings clause of the 5th amendment to the Constitution, there will be precedents set if the case is won. There most likely will not be a settlement in the Perry Capital case since monetary damages are not sought. It is the rule of law that is being pressed and a win will have an effect on cases following the Perry Capital one.
AI
