Judge Wheeler ruled the warrant is an illegal exaction,(details below) later this case was overruled because of lack of standing and AIG did not participate in the suit, and then the supreme court refused to hear the case, but the initial order of Judge Wheeler was not overruled and keeps applying to FnF, so it is impossible for the government to even own, let alone execute the warrant, these legal texts cannot be misunderstood right?
yes, this opinion clearly states “the government” (doesn’t matter who specifically as all run under the same umbrella with more or less the same powers) in several paragraphs with a dozen of lawsuits as backup
It does matter ano. "Government" does not mean the entire US Government and all of its agencies. "Government" in the AIG litigation mainly refers to the Federal Reserve Bank of NY and to a specific statute: Section 13(3) of the Federal Reserve Act, 12 U.S.C. § 343 (2006).
, it is not allowed by statue to take ownership and or voting right of a company,
Does Section 13(3) of the Federal Reserve Act, 12 U.S.C. § 343 (2006) apply to all government agencies?
and indeed although broad powers are allowed a takeover is not allowed in HERA nor any other statue that I’m aware of, so it looks like the basics although overruled in this case, still apply to our case
Takeovers was not the question asked. What was asked was:
...the initial order of Judge Wheeler was not overruled and keeps applying to FnF, so it is impossible for the government to even own, let alone execute the warrant, these legal texts cannot be misunderstood right?
1. HERA specifically allows the US Treasury (not FHFA) to purchase and receive GSE issued securities (Senior Preferred Stock and Warrants to purchase common stock) from the GSEs as consideration for providing [initially] access to $200 billion in funding as detailed in the SPSPAs. The statute allowing purchase, receipt and use is: 12 USC 1719(g) - https://www.law.cornell.edu/uscode/text/12/1719 and 12 USC 1455(l) - https://www.law.cornell.edu/uscode/text/12/1455. -
2. An examination of the Certificate of Designation of the Senior Preferred Stock and the Warrants to purchase common stock clearly reveals that neither provide voting rights. See below.
3. Since the warrants to purchase common stock have not been exercised, Treasury neither owns nor is in control of 79.9% of the common stock or the companies. Speculative discussion of government takeovers by exercising warrants to purchase GSE common stock is rendered moot at this point.
With the past as a guide, Treasury (not FHFA) disposes of warrants for common stock without owning common stock or having voting rights in companies. The exercise of warrants for GSE common stock is not an actual issue at the moment.
FHFA did not receive congressional power to takeover FnF with voting power, it clearly is a steps outside conservatorship too as the only mandate would be to conserve and preserve
That is correct. Voting power is not mentioned among the general powers of the conservator. Neither the FHFA nor Treasury have common stock voting power.
HERA, did grant specific powers to FHFA, as conservator or receiver, that allow FHFA to "takeover" the GSEs and does not limit the FHFA to a single power to conserve and preserve:
Of course the government is in a difficult position but lack of standing doesn’t resolve the issue on hand, in our case we do have standing so the same basics apply to us here, the government cannot force a company to voluntary agree to a 79.9% giveaway of the company, as that is not the job of a conservator statue and as judge wheeler said “There is no law permitting the Federal Reserve to take over a company and run its business in the commercial world as consideration for a loan.”
Two points to consider:
1) As mentioned above it was the Federal Reserve Bank of NY that exercised warrants to obtain Senior C preferred shares with voting rights under Section 13(3) of the Federal Reserve Act, 12 U.S.C. § 343 (2006). Neither the statute nor the circumstance (exercising warrants) applies to FHFA or Treasury.
12 USC 1719(g) and 12 USC 1455(l) allow Treasury (not FHFA) to purchase and hold securities: Senior Preferred Stock and warrants to purchase common GSE common stock. The future disposition of the Senior Preferred Stock and warrants is unknown. Treasury's past actions reveal that Treasury disposes of warrants via public warrant auctions and private placement auctions.
There are no voting rights attached to either the Senior Preferred Stock or warrants to purchase common stock.
And so, 2) a 79.9% giveaway of the GSEs has not occurred. Shareholders, not Treasury or FHFA, own 100% of the GSEs. The uncertainty about the future disposition of the Senior Preferred Stock and Warrants is an investor concern and a factor among many that strangles share price increases.
so it is impossible for the government to even own, let alone execute the warrant, these legal texts cannot be misunderstood right?
The statue of a conservatorship does not allow (gave permission to) the treasury to own warrants that entitle them to more than the initial loan
Two facts:
1) 12 USC 1719(g) and 12 USC 1455(l) allow Treasury (not FHFA) to purchase and hold securities, equity or debt. Both Senior Preferred Stock and warrants to purchase common GSE common stock are securities.
2) Treasury did not make a loan to the GSEs. There is no principal amount, interest to be paid on the principal, a term, an amortization schedule, etc. A loan is not involved. The financial arrangements made were the Senior Preferred Stock Purchase Agreements (SPSPAs).
All various agencies are bound by the powers congress gave them, and nowhere it is allowed to takeover ownership of a company in conservatorship, conservatorship is about giving loans and payback, not ownership
The US Government has taken over and nationalized privately-owned companies in the past.
The GSEs are federally-chartered, 100% private shareholder-owned companies. The FHFA or Treasury do not own the GSEs. In the case of the GSEs, no loans have been granted by the FHFA or Treasury. The GSEs are private companies and are not part of the US Budget. See: https://www.govinfo.gov/content/pkg/BUDGET-2019-APP/pdf/BUDGET-2019-APP-2-4.pdf
The same rule applies in our case, HERA did not authorize the FHFA to demand equity or voting control as consideration in the SPSPA.
That statute does not apply to FHFA or the GSEs. FHFA did not demand equity or voting control as consideration in the SPSPAs. HERA specifically allows the US Treasury (not FHFA) to purchase and receive GSE issued securities (Senior Preferred Stock and Warrants to purchase common stock) from the GSEs as consideration for providing [initially] access to $200 billion in funding as detailed in the SPSPAs terms, conditions, and covenants. The statutes allowing the purchase, receipt, and use of these securities is: 12 USC 1719(g) and 12 USC 1455(l)
Maybe it does, maybe it doesn’t , but for sure the government did not authorize FHFA to takeover FnF
It does not apply. HERA governs FHFA. The Federal Reserve Act governs the Federal Reserve Bank of NY.
Concerning takeovers, see above on the General Powers granted by HERA to the FHFA.
So all in all, if you take the rule of law, it looks like FHFA cannot execute or even own in that matter, the warrant, it is illegal as conservator to own(force a company) and take the voluntary 79.9% warrant in consideration of a loan, Right?
No. FHFA has never owned and presently does not own warrants to purchase 79.9% of GSE common stock. FHFA, as conservator, does not own the GSEs and has not granted or administered a loan to the GSEs. Treasury legally holds Senior Preferred Stock and Warrants to purchase common stock and has done so through the Senior Preferred Stock Purchase Agreements (SPSPAs) that spell out the terms and conditions under which Treasury provides cash monies to the GSEs. No loans are involved.