Replies to post #698172 on Fannie Mae (FNMA)

[Robert from yahoo bd]

And if Treasury does cancel the seniors I think there is a 100% chance they exercise the warrants. There is absolutely no reason to cancel both when they face such little liability from potential lawsuits.

Okay, if that's what you think. What happens to the warrants as September 08, 2028 approaches and there is still unresolved litigation? Can the UST and/or FHFA extend the exercise of the warrants?

That means even outside of conservatorship, Freddie's common shareholders would not have the right to vote on a junior-to-common conversion offer because it would involve a change in the capital structure.

As is the case with most Board of Directors facing many tough decisions on the strategic direction of the corporations they oversee. Here, I think a minority of directors are picked by the POTUS, and if the then majority of the board of directors totally dilute existing common to reward the jps they may find it difficult to get the votes needed to get reelected. Don't corporations that are about to issue more stock give existing shareholders an opportunity to participate?

Do Board of Directors owe a fiduciary duty to the common voting shareholders or nonvoting jps?

Are you talking about Citi? They didn't have a conservator.

. No, MC said when he was the 'conservator' that he wanted recap decisions to be decided by the board not him. Kinda seems more fair it would seem.

If "convertible" means "did not have Non-Convertible in its contract", the answer is irrelevant.

. So, no matter what happens in the future, you believe that the fact that since the jps offering prospectus says non-convertible, that it is irrelevant.

Would it be relevant in a lawsuit against individual board of directors for breach of fiduciary duty to the common shareholders who were badly hurt at the expense of the 'fulcrum security' holders (i.e., the board favors one class of shareholders at the expense of the other)?

What you and I think doesn't matter. It's up to the courts, the plaintiffs, and the government at this point.

Exactly! What do you think that a federal judge will think hearing things like, "The government is salting the earth with their carcasses", perjury by a prominent FHFA official, CFO of Fannie Mae informing the FHFA and UST that the golden years are ahead, etc. IF some of one of these cases goes to trial?

The SCOTUS just told us, "sure the FHFA can self deal", but a judge could decide that a taking occurred or provide some type of recovery.

Moralizing is a poor idea when it comes to this investment

. IF a federal judge believes that a Plaintiff has been wronged they usually find a legal or constitutional reason for a remedy. After all they have spent their entire careers at least trying to be fair and impartial and providing justice to both plaintiffs and defendants. But as we have seen they also give great deference to the Legislative and Executive branches of government.

We'll see what happens on that one.

Which judge, and in which case?

. Have any of the cases even gone to trial yet? IF the Plaintiffs can survive the governments motions to dismiss, I think the trials will be alot of fun as the government will need to convince the judge that the Plaintiffs are entitled to nothing.

The USCFC can't do this, and none of the other plaintiffs want anything more than an unwinding of the NWS, damages for current junior pref shareholders, and/or the seniors cancelled/converted to common

Why would the unwinding of the nws be a problem? Judges have tremendous latitude in crafting remedies for wronged parties, they are not in the straight jacket you think they are in.

Keep in mind that the contributors of this new capital will want the capital raise to be as dilutive as possible because that's to their own direct benefit.

. One weakness to that sort of thinking is that the new capital rush may not materialize as sophisticated institutional investors see just how badly shareholders were treated by their partner in this private capital/social benefit, quasi-governmental partnership.

The NWS has been upheld as valid by the Supreme Court.

. True. Does that mean that the shareholders cannot recover for damages from a Takings Case for example? In the Cedar Point Nursery case last term SCOTUS said that the California government can force property owners to allow Union organizers on their private property. But they said that the California government would have to pay damages for the intrusion to the private property owners.

No case at all, not even Kelly or Washington Federal, seeks injunctive relief against the original SPSPAs.

. The SPSPAs are easily changed, modified, amending, or most recently ignored by Yellen (where's her September plan to Congress?)

They will be changed modified or amended as dictated by the courts or if the executive branch decides to change the terms for its latest plans.

I don't know what you're expecting on this front.

. Perhaps a realization from some key decision makers in any branch of the federal government that Nationalization is bad public policy and that the shareholders property rights were violated and need to be rectified.