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Sunday, November 17, 2013 1:33:21 AM
It seems unlikely that there will be much debate.
The deal cannot be executed because of HERA, the limiting conservatorship, the current APA and 5th amendment litigation, total lack of Congressional input, his creation of the new, streamlined Tom and Jane with enormous capital and operating assets that will out compete all other existing competitors creating a duopoly and no mention of helping with or preserving the 30 year fixed mortgage. He leaves the Congress out it and tries to strike a deal with the FHFA and the US Treasury. That is a no no.
These items and more may strongly prevent forward movement on this proposal. It may be DOA.
Berkowitz knows that he cannot make this move without sanction from the FHFA and US Treasury.
Berkowitz recognizes this legal fact and for that reason Berkowitz sent a letter to Edward DeMarco and Jacob Lew
In his letter to DeMarco with Jacob Lew cc'd. he states:
In the Discussion Terms Sheet he declares:
To calculate the return per share ina run-off, we need a professional accountant familiar with mortgage finance and the run-off of legacy assets and liabilities to determine and report what the expected revenues, expenses, net profits, stockholder's equity, dividends and distributions the GSEs will have each year over the next five years till conclusion. Then we need a liquidation and distribution plan for net cash assets to shareholders.
Of course, litigation must be concluded favorably, the third amendment must be vacated, the conservatorship ended and the senior preferred liquidation preference of 187.4 billion cleared with what has been and will be paid in so that dividends, distributions and equity can be distributed to the common shareholders.
Source: Fairholme Proposal Documents - Letters, Proposal, Questions and Answers, Discussion Terms Sheet - http://bit.ly/17vLeIg
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