Replies to post #598743 on Fannie Mae-No Politics (FNMA)

[ano]

When we start at the bottom we see now the BOD voluntary agreed to be put into conservatorship as they would preserve and conserve and put in sound and solvent condition, this implied-in-fact contract was given to the FHFA, the FHFA made agreements with treasury that it could own a max of 79.9% in the companies(pending breach of fiduciary duty action) it left the common shareholders with 20.1% of the companies and all rights were suspended but the commons and prefs remained outstanding, then if the FHFA or treasury takes away any of the percentages pref and commons hold it takes property from current holders and uses it to recapitalize Fannie and Freddie, this is confiscating for public use, or beneficial to others than the legal owners of the pref and common stock, the only power the FHFA has is to conserve and preserve because it needs to protect the current pref and common shareholders, of course as we now know they did the opposite, but because they siphoned off all profits since 2012 it does not legalize these actions in any way or means, so they face

1) Breach of implied-in-fact contract https://www.law.cornell.edu/wex/contract_implied_in_fact
2) Breach of fiduciary duty https://www.law.cornell.edu/wex/fiduciary_duty
3) Illegal Exaction Under the Fifth Amendment https://www.law.cornell.edu/wex/takings
4) Just Compensation Under the Fifth Amendment https://www.law.cornell.edu/wex/takings

So to come back to the 20.1% this was agreed by treasury (beside of the breaches) the contract only allowed treasury to hold 79.9% as otherwise they would had to add Fannie and Freddie to their own balance sheet, but apart from that the 79.9% from treasury is solely for treasury and not for Fannie and Freddie’s recapitalization then treasury would give away their illegal received amount and use it to fund privately held companies that are in distress on recapitalization, while they are in distress on recapitalization because of the funds treasury illegal obtained, then if 79.9% is the maximum amount they can hold and because they are the majority holder with fiduciary duty toward the minority holders, as the accounting(the books) all profits are split in favor of the eventual future warrant execution it is established that current holders are entitled to 20.1% (the rest of the 79.9%), and if decided(thus) by court the 79.9% is legal they can keep it, but first it needs to be decided:
1)was the warrant obtained legally
2)was it legal to withhold the 20.1% from profit in perpetually
3)where statuary goals of FHFA breached

And since all of the above3 are a negative to treasury/FHFA it must be undone or corrected


The FHFA is allowed to direct the companies to give out extra shares only on the basis if they had properly done their work and not because they siphoned of the profits, pref and common holders will bleed, the funds transferred to treasury will need to come back with punitive damages, if then maybe a SPO is necessary the extra shares issued will go to treasury 79.9% and common holders 20.1% so only ones treasury voluntary or forced by court will drop the 79.9% claim the companies can make a SPO, and from the new shares issued 20.1% will automatically go to current shareholders as they already hold this percentage of the company and the current shareholders cannot be blamed for the errors FHFA made in siphoning the profits

A taking takes place ones a percentage change occurs in the 79.9/20.1% ratio, this ratio is important as FHFA only has authority from the BOD to put in sound and solvent condition
And as it is impossible for the FHFA to give away 79.9% of the company to Treasury without an explicit contract from the BOD that permits this action, so the FHFA breached their fiduciary duty towards the companies as the BOD could never voluntary give away 79.9%
So you can say the FHFA took private property by breaching the implied-in-fact contract
And the FHFA breached their statuary goals by entering into the SPSPA and treasury will breach fiduciary duty if they try to execute the warrant
The if pref holders in a settlement demand a pref to common conversion it breaches all duties again as it is FHFA statuary duty to preserve and conserve and not give money (stock) to pref holders while common pay for it, and even if commons receive 20.1% of all the new issued shares it breaches their duties again as the profits still go to treasury(now in liquidation preference no longer direct) and as the FHFA currently breaches a lot of duties a pref to common conversion is not possible(it is possible but for current market value only)

The ratio as explained above is the ratio that FHFA entered into on an illegal basis and is questioned in court by Fairholme and Washington Federal (breach of implied-in-fact contract on the 3th and the conservatorship itself) and as Sweeney said “For a contract to exist, “[s]omething more is necessary than just the agency exercising its powers.”
It bears the question when the breach of implied-in-fact contract is declared illegal, the contract is voidable and should be voided by FHFA-C and FnF as it is their fiduciary duty towards (minority)shareholders to do so, not voiding it would be a breach again by FHFA-C

The ratio before FHFA-C started was 100% common and 100% pref, this is the basis before conservatorship, after FHFA-C installed itself(on consent from the BOD to conserve and preserve) the Ratio was 79.9/20.1% common and 100% pref both with suspended rights, then to unleash the whole thing the 79.9/20.1 common and 100% prefs rights need to be re-established before any progress can be made

Then in order to do so you cannot change the ratio from pref to common if favor of prefs based on depressed post conservator share value while the real share value is unknown at this moment due to the accounting in EPS that already include the warrant while the warrant it not executed yet, the basis for an eventual conversion must be set on the losses that occurred and the FHFA maybe illegal made, then if you know the actual losses relief must be given, and maybe a positive conversion is justified, but not at the cost of commons, so whatever is decided, the ownership of 20.1% common shareholders will be kept and all eventual dilution is to new holders because the old shareholders are always entitled to 20.1% of whatever is issued in the future until the release is final just like treasury is


The errors the FHFA made are to begin with breaching the BOD consent, the BOD only authorized and has consented to preserve and conserve and put in sound and solvent condition, and as we all know by now, the opposite happened, and because they did the opposite we all now have the dozens of lawsuits that are pending on resolution soon, then the FHFA is in no position to establish a conversion rate to determine what is best for a resolution and the courts will decide if the FHFA has the constitutional power to do whatever it pleases, but bases on the constitution the FHFA lacked those powers, but we will see what will be changed the constitution or the FHFA powers (my guess it probably is the FHFA)

The BOD consented to conserve and preserve an put in sound and solvent condition, and because the Common shareholders rights are suspended it doesn’t mean the FHFA can do whatever it wants, as there is no consent on the actions to dilute common shareholders
If an SPO is necessary it can only happen after all funds are returned and the SPSPA is voided