Replies to post #717670 on Fannie Mae-No Politics (FNMA)

[Guido2]

Another great post. Thanks FOFreddie.

For those interested, Bryndon has responded to his detractors:

Solving for P: A Commonsense Approach to Valuing the Common Shares of Fannie Mae and Freddie Mac Under a Recapitalization Plan that Actually Makes Sensehttps://t.co/KrS3lmiqwq

— Bryndon Fisher (@bryndonfisher) April 13, 2022

[kthomp19]

Bryndon Fisher and Bruce Reid are All American Patriots! They spent time and treasure in an effort to uphold the rule of law and protect shareholders who risked their investments in our market based system.

Exactly why I mentioned short skirts and pompoms.

You might notice that I did not attack Bryndon personally, only his paper. Propping him up with flattery does nothing to counter anything I said.

There's also the implicit idea that if the "rule of law" were to be followed, then existing FnF common shares would become far more valuable. This is false. The Supreme Court already upheld the NWS as legal, and the takings claims are currently on life support. If the Supreme Court denies cert on those claims then they truly would be dead, and it would be 100% legal. "Rule of law" is not the same thing as "justice": the former is objective while the latter is subjective.

Some questions:

1. Aren't you being hypocritical admonishing Mr. Fisher - he had a legal theory and brought several law suits - isnt this exactly what your tag line is?

No I am not being hypocritical. I didn't say that Bryndon should stop talking, only that his list was unreasonable wishful thinking. It's those who constantly threaten lawsuits and never file them (such as a pre-emptive lawsuit against the warrants that would do far, far more good than waiting until after they are exercised) who should shut up.

2. Aren't you being premature to make the determination that the takings claims are dead - isnt there still a possibility of an En Banc and Cert?

The derivative takings claims aren't dead, but they are on life support having been dismissed by the CAFC. So while Bryndon's lawsuit still has a chance of victory, the probability is rather low.

3. Didnt the DC Circuit rely on the 5th Circuit regarding whether or not there were retroactive damages for the separation of powers claim? Why dont you think the DC Circuit considered the Trump letter in their opinion?

4. Has the 5th Circuit determined the issue of retroactive damages on the Collins Remand? Isnt there still the All American v CFPB and the Collins Remand to the District Court outstanding?

5. Do you think there is a possibility that the 5th will rule for the shareholders and grant retroactive relief for the separation of powers which will result in a split between the 5th and DC Circuit ?

6. Isnt the retroactive damages cause of action being considered now in the Bhatti case at the District Court level

7. Doesnt the Rop Case also have a separation of powers retroactive damages claim that needs to be resolved?

None of these pertain to Bryndon's letter, because his list includes only things he thinks the government and companies should do. Further, his list includes more than the courts can grant in any of these cases, which further proves that his list is wishful thinking.

8. Are you really saying that the common will get 10 cents or are you just assuming Glen really believes that will be so?

I think both that Treasury cramming down all but $1B of the senior pref liquidation preference into common would push the per-share price to $0.10 or lower, and that the probability of this happening is at least 15% at this point. That alone makes the commons uninvestable to me, even if their upside is greater than I estimate ($4-7 or so).

You should note that both the takings cases and the constitutional/appointments clause cases, which comprise basically all the ones outstanding other than Lamberth, allow for the possibility that the plaintiffs win but Treasury gets to keep the seniors anyway, so the cramdown remains on the table even if all the cases are victories for the plaintiffs.