Replies to post #589554 on Fannie Mae (FNMA)

[YanksGhost]

Absolutely, totally false statement regarding class action claims. EVERY class action covers shareholders in the manner put forth in their suit. A suit specifying shareholders of record covers only stockholders of record on the dates cited. This was precisely the case in earlier class actions that named Fannie Mae and Freddie Mac as defendants.

Any shareholder who purchased shares beyond the s[pecified dates must initiate their own litigation to seek remedy from the court.

[Guido2]

Wise words Wise Man.

[kthomp19]

Every shareholder as of today is entitled to damages for Washington Federal's Takings claim.

Wrong. I showed you the link; the plaintiffs want money damages only for shareholders as of September 5 2008.

because it filed a Class Action on behalf of the absent parties

Who are the "absent parties"? The class action suit clearly states "on behalf of all persons or entities who held shares of Freddie Mac common stock on or before September 5, 2008", with three other similar clauses to cover preferred shareholders and Fannie Mae shareholders.

the ability to get remedies travels with the shares, according to judge Lamberth.

The whole "rights travel with the shares" argument is irrelevant here because Washington Federal filed their lawsuit in 2013. If they wanted current shareholders, as opposed to those as of September 5 2008, to benefit, they would have said so.

And think of it this way: if Treasury really is liable for the drop in share price due to the events of 2008, it makes far more sense to reward people who actually held shares at the time, regardless of if they sold those shares. That's what Washington Federal seeks.

Other lawsuits seek damages for "successors in interest", i.e. current shareholders. That phrase is notable in its absence in the Washington Federal suit.

A warrant can't be deemed Takings and later allow the Govt to exercise it.

Wrong. If the warrants are never exercised, how can they be found to be a taking?

Primarily because HERA only authorized the purchase of the warrant (iii) to protect the taxpayer (from losses). Exercising the warrant today would be only for profits, unauthorized in HERA.

Wrong. You are clearly referring to 12 USC 1719(g)(1)(B):

(B) Emergency determination requiredIn connection with any use of this authority, the Secretary must determine that such actions are necessary to—
(i) provide stability to the financial markets;
(ii) prevent disruptions in the availability of mortgage finance; and
(iii) protect the taxpayer.

Note that the "(from losses)" part IS NOT THERE. You cannot add that interpretation in, act as if it is part of the law, and then claim that Treasury broke said law.

The whole "Treasury is not allowed to profit" argument is nonsense anyway. What law does it break? Treasury made a profit in other bailouts and, to my knowledge, was not sued solely due to such profit.

The warrant is a takings because the warrant is deemed Beneficial Ownership in regulation, regardless of having been exercised.

Provide proof for this claim, otherwise it cannot be taken as true. How can Treasury be said to have any ownership claim at all, let alone "Beneficial Ownership in regulation" (which you will need to define by citing the relevant law or regulation) if they haven't exercised the warrants?

The damage on the stock price occurred in 2008 through today.

How are you going to show what portion of that stock price decrease is attributable only to the warrants? The conservatorships themselves surely contributed, but more importantly so did the overall stock market meltdown.

The day before conservatorship started, Fannie Mae commons traded at $7.04 and Freddie Mac commons traded at $5.10. Those are the benchmarks for calculating shareholder losses due to the conservatorships and SPSPAs (including the warrants). That puts a cap on Treasury's liability at around $11.4B plus interest, and that's only if the commons go to zero.

We expect huge damages for the common shareholders.

Then your expectations are unfounded. As I showed in this post, the only thing that matters when calculating takings or illegal exaction damages is what the property owner (shareholder in this case) lost, not what the government gained.

If the commons trade at $4 the day the warrants are exercised and $2 the day after, Treasury's liability is limited to $3.6B (the $2 drop in share price times 1.8B shares), perhaps with interest. That's all, not a penny more. What the shares trade for later is irrelevant.