Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3233375 times)

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10330 on: August 07, 2018, 09:18:00 AM »
"The Collins Plaintiffs have asked the Fifth Circuit for a larger number of judges to review the three-judge panelís decision finding that FHFA is unconstitutionally structured and upholding the Net Worth Sweep." (http://www.glenbradford.com/wp-content/uploads/2018/08/17-20364-00514582948.pdf)

That's a darn good read. One reference was to McAllister vs RTC, found at http://www.ca5.uscourts.gov/opinions/pub/98/98-50471.CV0.wpd.pdf. The top of page 18 has the money quote.

Quote
  In their reading of the relevant statute, however, appellants fail to acknowledge 12 U.S.C. ß1821(d)(2)(D), which states explicitly that a conservator only has the power to take actions necessary to restore a financially troubled institution to solvency.

This was a prior 5th Circuit opinion. Isn't that binding on the court? Or did the Collins plaintiffs just bark up the wrong tree at the beginning?

saw that Midas.

this is the predecessor statute on which HERA was based, and it says: 

(D) Powers as conservator
The Corporation may, as conservator, take such action as may beó
(i) necessary to put the insured depository institution in a sound and solvent condition; and
(ii) appropriate to carry on the business of the institution and preserve and conserve the assets and property of the institution.

you will notice that the word "only" is not in the statute, although a fair reading of the statute would assume so.  McAllister court inserts the word only into its opinion, per your page 18 quote.

wonder why this case was central to Ps argument?

Good catch, I hadn't noticed the court adding "only" in its interpretation. I just saw that the FIRREA and HERA wordings were essentially identical (only changing "corporation" to "agency" and "insured depository institution" to "regulated entity").

If the 5th Circuit interpreted the "may" as exclusionary in the past, i.e. that FHFA as conservator can't do anything other than those two things, why would they not be bound to continue doing so? Under that interpretation the NWS is clearly ultra vires since it does the opposite of both (i) and (ii).

I'm just afraid that I have my wires crossed: the different cases and the arguments in them are mixing together in my mind, so I don't remember if the Collins plaintiffs tried to challenge the NWS on these grounds at all.


cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10331 on: August 07, 2018, 10:00:25 AM »
"The Collins Plaintiffs have asked the Fifth Circuit for a larger number of judges to review the three-judge panelís decision finding that FHFA is unconstitutionally structured and upholding the Net Worth Sweep." (http://www.glenbradford.com/wp-content/uploads/2018/08/17-20364-00514582948.pdf)

That's a darn good read. One reference was to McAllister vs RTC, found at http://www.ca5.uscourts.gov/opinions/pub/98/98-50471.CV0.wpd.pdf. The top of page 18 has the money quote.

Quote
  In their reading of the relevant statute, however, appellants fail to acknowledge 12 U.S.C. ß1821(d)(2)(D), which states explicitly that a conservator only has the power to take actions necessary to restore a financially troubled institution to solvency.

This was a prior 5th Circuit opinion. Isn't that binding on the court? Or did the Collins plaintiffs just bark up the wrong tree at the beginning?

saw that Midas.

this is the predecessor statute on which HERA was based, and it says: 

(D) Powers as conservator
The Corporation may, as conservator, take such action as may beó
(i) necessary to put the insured depository institution in a sound and solvent condition; and
(ii) appropriate to carry on the business of the institution and preserve and conserve the assets and property of the institution.

you will notice that the word "only" is not in the statute, although a fair reading of the statute would assume so.  McAllister court inserts the word only into its opinion, per your page 18 quote.

wonder why this case was central to Ps argument?

Good catch, I hadn't noticed the court adding "only" in its interpretation. I just saw that the FIRREA and HERA wordings were essentially identical (only changing "corporation" to "agency" and "insured depository institution" to "regulated entity").

If the 5th Circuit interpreted the "may" as exclusionary in the past, i.e. that FHFA as conservator can't do anything other than those two things, why would they not be bound to continue doing so? Under that interpretation the NWS is clearly ultra vires since it does the opposite of both (i) and (ii).

I'm just afraid that I have my wires crossed: the different cases and the arguments in them are mixing together in my mind, so I don't remember if the Collins plaintiffs tried to challenge the NWS on these grounds at all.

midas, you are onto the core issue in collins, which is that in the 5th circuit, the Mcallister case interpreted "may" as "only may".  McAllister for the 5th circuit is even stronger than CedarMinn for the 8th circuit.

I don't know why Cooper & Kirk aren't making a big stink about this in their motion for rehearing.  they mention Mcallister, but only in passing.

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10332 on: August 07, 2018, 10:05:41 AM »
"The Collins Plaintiffs have asked the Fifth Circuit for a larger number of judges to review the three-judge panelís decision finding that FHFA is unconstitutionally structured and upholding the Net Worth Sweep." (http://www.glenbradford.com/wp-content/uploads/2018/08/17-20364-00514582948.pdf)

That's a darn good read. One reference was to McAllister vs RTC, found at http://www.ca5.uscourts.gov/opinions/pub/98/98-50471.CV0.wpd.pdf. The top of page 18 has the money quote.

Quote
  In their reading of the relevant statute, however, appellants fail to acknowledge 12 U.S.C. ß1821(d)(2)(D), which states explicitly that a conservator only has the power to take actions necessary to restore a financially troubled institution to solvency.

This was a prior 5th Circuit opinion. Isn't that binding on the court? Or did the Collins plaintiffs just bark up the wrong tree at the beginning?

saw that Midas.

this is the predecessor statute on which HERA was based, and it says: 

(D) Powers as conservator
The Corporation may, as conservator, take such action as may beó
(i) necessary to put the insured depository institution in a sound and solvent condition; and
(ii) appropriate to carry on the business of the institution and preserve and conserve the assets and property of the institution.

you will notice that the word "only" is not in the statute, although a fair reading of the statute would assume so.  McAllister court inserts the word only into its opinion, per your page 18 quote.

wonder why this case was central to Ps argument?

Good catch, I hadn't noticed the court adding "only" in its interpretation. I just saw that the FIRREA and HERA wordings were essentially identical (only changing "corporation" to "agency" and "insured depository institution" to "regulated entity").

If the 5th Circuit interpreted the "may" as exclusionary in the past, i.e. that FHFA as conservator can't do anything other than those two things, why would they not be bound to continue doing so? Under that interpretation the NWS is clearly ultra vires since it does the opposite of both (i) and (ii).

I'm just afraid that I have my wires crossed: the different cases and the arguments in them are mixing together in my mind, so I don't remember if the Collins plaintiffs tried to challenge the NWS on these grounds at all.
I am not sure the nws does the opposite of ii). At least, not completely. That has been one of the winning arguments by Howard Cayne who said both Fannie and Freddie are operating just fine, carrying on their businesses and extrapolating that to a stable real estate market. Giving away their earnings and depleting their net worth is more akin to a nationalization than to not preserving/conserving their assets. Here, in ii), we may depend on Cooper's best effort to explain the unexplainable.

Obama issue. I was thinking more in terms of letting courts -specially SCOTUS- decide whether or not the action taken by the Obama administration has been confiscatory. One thing is for Trump -always politically motivated- to say Obama is a communist. A very different one, with a more profound effect, would be for the supreme court to rule on it. But perhaps you are right. Trump may have become guilty "by continuation" eliminating the possibility of him taking our side on a nws defeat in court.

In Saxton's oral argument Cooper made the point that Agencies are like a blank paper. And that Congress provides them with specific powers. Thus, the word "may" becomes exclusionary. As any power that hasn't been "may'ed", it does not exist. The 5th must have reasoned exactly this to have used the word "only" in Mcallister's.

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10333 on: August 07, 2018, 10:22:51 AM »
I am not sure the nws does the opposite of ii). At least, not completely. That has been one of the winning arguments by Howard Cayne who said both Fannie and Freddie are operating just fine, carrying on their businesses and extrapolating that to a stable real estate market. Giving away their earnings and depleting their net worth is more akin to a nationalization than to not preserving/conserving their assets. Here, in ii), we may depend on Cooper's best effort to explain the unexplainable.

Obama issue. I was thinking more in terms of letting courts -specially SCOTUS- decide whether or not the action taken by the Obama administration has been confiscatory. One thing is for Trump -always politically motivated- to say Obama is a communist. A very different one, with a more profound effect, would be for the supreme court to rule on it. But perhaps you are right. Trump may have become guilty "by continuation" eliminating the possibility of him taking our side on a nws defeat in court.

In Saxton's oral argument Cooper made the point that Agencies are like a blank paper. And that Congress provides them with specific powers. Thus, the word "may" becomes exclusionary. As any power that hasn't been "may'ed", it does not exist. The 5th must have reasoned exactly this to have used the word "only" in Mcallister's.

I would rebut as follows:

1) The statute has "and", not "or", so actions taken by a conservator must conform to both (i) and (ii).
2) The argument for the companies continuing as going concerns can justify the original SPSPA, but the NWS makes it more difficult for the companies going foward due to the inability to build capital. Treasury's funding commitment, while large, is finite.

I fully agree with the last part, and Willett's dissent (if I am remembering the correct source) said the same, that agencies formed by Congress can only do what Congress specifically allowed. Like the Constitution, you don't start with the assumption of unlimited power and subtract from there, you start with the assumption of no power and only what's specifically added is allowed.

midas, you are onto the core issue in collins, which is that in the 5th circuit, the Mcallister case interpreted "may" as "only may".  McAllister for the 5th circuit is even stronger than CedarMinn for the 8th circuit.

I don't know why Cooper & Kirk aren't making a big stink about this in their motion for rehearing.  they mention Mcallister, but only in passing.

I agree. The CedarMinn argument seemed a bit flimsy on closer inspection actually.

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10334 on: August 07, 2018, 11:11:46 AM »
Midas, I agree with most of what you've written.

But in my mind, it has become an impossibility to analyze the nws in terms of the statute. A logical impossibility. Because the nws does neither receive nor it conserves. Yet, the companies are functioning. So depending on which judge reads it, it does i) but not ii) or vice versa and any analysis becomes a moot point.

What is not in the statute is what really happened: companies changed owners. On paper, we are. HERA says it (so it must be true). But when it comes to markets, Treasury is the owner. It owns their earnings and their net worth.

Because nationalization is not in the statute, and really nowhere to be found within our borders, the government created the illusion of companies continuing to operate as private entities and this has confused judges all along. What aggravates issues even more is that Judges are trained to read the statutes. And this particular one says there is conservation and there is receiving. And there is shareholder's owned entities. And they stop there. That is their observable universe. Whatever is absent in the law, like a nationalization, does not exist. Thus, it becomes an unassailable, unreachable conclusion.

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Wiggins

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10336 on: August 07, 2018, 04:29:53 PM »
And I just found this... J. Willet was on Trump's Supreme Court list. Did not know but members here perhaps already did.
https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-supreme-court-list/

And related...
https://www.finregreform.com/single-post/2018/07/18/fifth-circuit-holds-fhfa-unconstitutionally-structured/

Hello fine folks! I've been lurking here for a while reading the many fine thoughts of the posters here. Thought I'd say hi and also add to rros' post above that Judge Stras is also on the Trump short-list for SCOTUS and he is one of the 3 judges in the Saxton 8th circuit court. Like many I have been following the court cases with rapt attention and hope that the rule of law prevails in the end. Best to all!

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10337 on: August 07, 2018, 05:43:49 PM »
And I just found this... J. Willet was on Trump's Supreme Court list. Did not know but members here perhaps already did.
https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-supreme-court-list/

And related...
https://www.finregreform.com/single-post/2018/07/18/fifth-circuit-holds-fhfa-unconstitutionally-structured/

Hello fine folks! I've been lurking here for a while reading the many fine thoughts of the posters here. Thought I'd say hi and also add to rros' post above that Judge Stras is also on the Trump short-list for SCOTUS and he is one of the 3 judges in the Saxton 8th circuit court. Like many I have been following the court cases with rapt attention and hope that the rule of law prevails in the end. Best to all!
Thank you! Maybe we get lucky and get 1 more dissent.
« Last Edit: August 07, 2018, 06:39:46 PM by rros »

Eye4Valu

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10338 on: August 07, 2018, 07:00:14 PM »
And I just found this... J. Willet was on Trump's Supreme Court list. Did not know but members here perhaps already did.
https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-supreme-court-list/

And related...
https://www.finregreform.com/single-post/2018/07/18/fifth-circuit-holds-fhfa-unconstitutionally-structured/

Hello fine folks! I've been lurking here for a while reading the many fine thoughts of the posters here. Thought I'd say hi and also add to rros' post above that Judge Stras is also on the Trump short-list for SCOTUS and he is one of the 3 judges in the Saxton 8th circuit court. Like many I have been following the court cases with rapt attention and hope that the rule of law prevails in the end. Best to all!
Thank you! Maybe we get lucky and get 1 more dissent.

Exactly. A dissent in support of the Lamberth/DC Circuit/5th Circuit Opinions on the APA Claim.

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10339 on: August 07, 2018, 07:18:00 PM »
Lol