Replies to post #734049 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Was the unredacted document made public from Lamberth, and if so, did you glean anything meaningful from it?

Yes, here is a link to Lamberth's opinion on the summary judgment filings.

It appears that my Twitter thread about summary judgment ended up being spot on.

Lamberth denied SJ to the plaintiffs on the first two counts (trying to kill the case due to the Supreme Court's Collins ruling). He granted it on the fourth count (restitution/recission damages), and partially granted it on the third count (expectancy damages).

Any damage model that the plaintiffs get to present at trial will not be able to make the assumption that FnF would have paid off the seniors. There's too much to quote here, but the relevant section (i) starts on page 16.

It's not clear what damage model remains. One plausible model is to say that the plaintiffs' reasonable expectation was that shares would, at some point in the (probably distant) future, return to where they traded before conservatorship started. That value, calculated as of 2028-2030 or so (when FnF would have reached their base 2.5% capital requirements, even with the seniors on the books, had the NWS never happened) can be discounted back to 2012 when the NWS was signed, and then brought forward to 2022 with the statutory 6% interest rate in Section 28-3302(a) of the Code of the District of Columbia.

I think the plaintiffs can make a strong case for par+ for the juniors using this model, and around $12 per share for FMCC (~$60 pre-conservatorship divided by 5 for the warrants). The plaintiffs are almost certainly not going to get more than they ask for from the jury, and can easily get less, so it's important that they ask for as much as they can plausibly support.

The last part of page 21 of Lamberth's opinion released today supports the idea that the plaintiffs did include a damage model that was based only on lost share value, as opposed to lost dividend value. This would be good in that it wouldn't delay the trial (which Lamberth said is set for October), but could be bad in that the plaintiffs didn't include it in their pretrial statement and so it must somehow be worse than the ones they did include.