Replies to post #690244 on Fannie Mae-No Politics (FNMA)

[Guido2]

Thanks Bryndon. Makes perfect sense. Saving this post.

Patswil - I believe this deserves a sticky.

[bradford86]

Yes. This i think is just this case

I did not expand the explanation to incorporate all cases

[bradford86]

Yes. This i think is just this case

I did not expand the explanation to incorporate all cases

[mrfence]

Two wrongs don't make a right either so asking the Court to steal more from the Companies to make up for what the Gooberment's already stolen is just plain asinine. If I were the JPS behind the Collins case I'd be hiring new lawyers to file suit against my old lawyer right about now...

[HappyAlways]

Thanks. Can I ask whether your calculation is based upon reducing balance ? In 2013, the DTA for Fannie was $50B which should immediately reduce the overall loan balance and subsequent interest payments by 45%.

[Ace Trader]

What about the $50 billion both companies had in cash before Gov did the greatest Train Robbery in history! They need to give that back also!!!

[Donotunderstand]

??

that 220B I assume includes the 10% --- as if the GOV had any reason on an equity investment with dividends (not a loan) - to reduce LT for all money received

From this Board - it seems confirmed - that during the NWS period - F and F (together as I understand it)

Paid $125B in dividends that reperesent the amount the NWS created - above 10%

so if you assume - do the math please with your excellent numbers - that the 10% did not reduce the LT or anything - but the > 10% did

how much was paid in just > 10%

and if that (now possibly called a NON dividend special payment in negotiations or next court) --- reduced the LT by that exact amount - where are we combined

and if you know - as Fannie

big thank you in advance

[Robert from yahoo bd]

I think the main issue in Collins on remand is HOW WHERE THE SHAREHOLDERS DAMAGED (IF ANY) BY POTUS NOT BEING ALLOWED TO INSTALL HIS GUY ON DAY 1.

I would imagine that the 5th Circuit would allow the Collins Plaintiffs some expanded Discovery to obtain intra governmental communications involving this issue OR they may try to stop the case in its tracks. Has the federal government responded to the Collins Plaintiffs briefs or do you know when?

[Bryndon]

I’ve had some questions regarding the process I used in calculating the unwinding of the net worth sweep. So, here’s what I did.
Starting with the first quarter of 2013, using the companies’ 10-ks and -Qs, I constructed a worksheet for each company, by quarter, showing how the senior preferred stock and retained earnings accounts were affected by the NWS, and how they would be affected by unwinding the NWS. The following link is an example of this process:

https://drive.google.com/file/d/1Cy24ExgcyiFWlNpr_A4CGOVHbkV50NgC/view?usp=sharing

Also, here’s what the consolidated statements of changes in equity would look like on January 1, 2021 if the NWS was unwound:

https://drive.google.com/file/d/1sMsVbjGxgyy6XKux4kRbQIaIy_cD8ERO/view?usp=sharing

[5bagger]

Bryndon's plan much like Moelis Plan

Second part is conversion of JPS, but pretty much handles it.

Third part is the timing.

Morgan Stanley and JPMorgan have been working on this for two years, right? I bet they have quite a few options lined up. The 'roadshow' that Craig Phillips said Mnuchin gave is also out there.

It is all set and ready, but someone has to pull the trigger and sign off.

Not if, but when, if you ask me.

[kthomp19]

“If the 5th Circuit converts the SPS to commons, I believe the claim will go up accordingly.”

Not if it's a derivative claim. Such a conversion would actually help the companies since it would instantly add $193B to all forms of regulatory capital (including core) and allow them to raise capital in the equity markets.

A takings claim based on a senior-to-common conversion could gain at most $2.1B for all common shareholders combined ($1.20 per share or so) if it were to happen today because the Supreme Court has said on several occasions that takings awards are based only on what the property owner lost, not on what the government subsequently gains.

For example, what would be the conversion ratio that would take a combined $2 million senior preferred shares with a stated value of approximately $193.5 billion and turn them into common shares worth the same amount?

Roughly eleventy billion to one.

And before anyone asks, it would be very easy for FHFA and Treasury to structure the conversion so that Treasury is never forced to consolidate FnF's books onto the government balance sheet. Piecemeal conversion, seniors become super-warrants, etc.

It’s impractical, and completely ignores the fact that the U.S. Treasury has been effectively repaid.

It is quite practical, actually. Very simple and clean. The takings liability would be minimal, and it wouldn't affect any of the derivative claims.

Treasury having been repaid means nothing anymore anyway. Treasury has no reason not to monetize the seniors, and billions of reasons ($$$) to do so.

Unwinding the net worth sweep is simply a return of approximately $26.9 billion to the companies and two journal entries to record the return of funds, the redemption of the senior preferred stock, and a corresponding credit to retained earnings.

So, at a minimum, we’re asking the court to order the return of approximately $220.4 billion in cash ($26.9 billion) and write-downs ($193.5 billion).

1) That's not a minimum, it's a maximum.
2) What makes you think the USCFC has the authority or jurisdiction to recharacterize past NWS payments as paying down the seniors, in contravention of the original SPSPAs (which your case does not challenge) which say that FnF never had the ability to pay down the seniors?