You seem to have a very limited understanding of what you are talking about. Compensation still needs to be given when the government takes private property from its citizens. To your second point about the warrants not being unconstitutional, I would say that you are correct in determining that. The issuance of warrants is not uncommon in FDIC conservatorships. HERA conservatorship and receivership provisions were designed to virtually replicate the pre-existing model of the FDIA conservatorship and receivership provisions. This wasn’t done by accident, the Banking Committee consciously wished to incorporate the existing body of FDIC legal precedent into any conservatorship or receivership for the Companies. In Michael Krimminger and Mark Calabria’s White Paper Titled, The Conservatorships of Fannie Mae and Freddie Mac: Actions Violate HERA and Established Insolvency Principles, they state the following:
“In contrast, the FDIC resolutions – whether open bank assistance, conservatorships, or receiverships – limited the FDIC’s potential repayment to the amount of the assistance or funding provided to the bank or thrift plus interest calibrated closely to the FDIC’s cost of funds. Since the FDIC’s cost of funds was the investment it made in Treasury bills, the interest on the funds provided repayment typically was limited to a modest increase of the rate on Treasury bills. FDIC open bank transactions and receiverships typically charged only a rate a little in excess of the FDIC’s cost of funds, which was normally less than 100 basis points above the Treasury bill rate for comparable maturities. The costs imposed by the FDIC on assisted insured banks and thrifts were designed to recoup the FDIC’s costs of providing the assistance and allow the recovery of the institutions to fully capitalized and viable banking businesses. This shows that the Treasury ten percent quarterly cash dividend charged to the Companies was far above the normal rates charged by the FDIC for funding provided in open bank assistance, conservatorships, or receiverships. The Third Amendment simply dispenses with any pretense that Treasury is seeking repayment.”
Now considering that the government has already reaped in excess of nearly 70 billion over what was dispersed to the companies, another 200 hundred billion from the warrants would certainly lead to future takings lawsuits. Two government agencies signed a contract in which the US Treasury obtained a 79.9% equity stake in each company for which they will pay one one-thousandth of a cent per share to exercise. The ridiculousness of that is staggering. The US Treasury will pay virtually nothing to receive 79.9% of the companies, but will reap 200 billion plus in revenue from selling that stake. Decades long legal precedent of FDIC conservatorships establishes what should be considered a reasonable return on investment, and the warrants have no place in that discussion considering the loan has been repaid in full plus 70 billion.
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