Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 2742412 times)

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10250 on: July 20, 2018, 12:34:46 PM »
All American filed its brief in 5th circuit re cfpb.  same principle different agency.  I am thinking collins my ask for rehearing en banc to not only fix the remedy granted, but also pave the way for All American.

https://www.dropbox.com/s/nf9y1i6c0cuhc72/all%20american%20th%20cir%20P%20brief.pdf?dl=0


Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10251 on: July 20, 2018, 12:40:37 PM »
TY for the clarity.

I found the case here https://casetext.com/case/resolution-trust-v-cedarminn-bldg-ltd

Thanks. That what I get for just using Google!

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10252 on: July 20, 2018, 01:33:57 PM »
All American filed its brief in 5th circuit re cfpb.  same principle different agency.  I am thinking collins my ask for rehearing en banc to not only fix the remedy granted, but also pave the way for All American.

https://www.dropbox.com/s/nf9y1i6c0cuhc72/all%20american%20th%20cir%20P%20brief.pdf?dl=0

I am not seeing the similarities here. The Collins Ps just want the NWS struck down, but All American wants the entirety of CFPA gone. The Ps can't, at this point, up the ante and ask for all of HERA (relating to the creation and function of FHFA) to be struck down too, can they? Or perhaps a new case would be filed against FHFA if the All American Ps actually get what they want?


rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10254 on: July 20, 2018, 04:04:17 PM »
It is not in our best interest for any lawsuit to try to have HERA struck down. Cayne mentioned the mandate of 'protecting taxpayers' from the law itself. But down that same list at the bottom of that section of the law there's the 'companies must remain shareholders owned'. HERA protects us.

The way courts are getting around your #1  is by Cayne convincing judges the companies are operational, therefore going concern. So the conservator *must be conserving*. And since markets are functioning fine this reinforces the notion of conserving. The conclusion of 'nothing to see here' helps courts get to the promised land: "Conservator authority has not been exceeded so we are barred from review" .

The going concern issue can fool the untrained eye.

What courts don't see is that the trick used to keep the companies as going concern has been nationalization. Just when both were about to achieve that same status on their own. Replacing own capital for government capital is key to understanding where the confusion lies.

Nowhere the word nationalization shows up because HERA mandates the GSEs to remain private and because nowhere any law says a conservator is allowed to nationalize a company. The government is getting away with this because it has left the shares intact and can always go back to the reasoning the Treasury lady offered: that the shares continue to trade and may have residual value, thus no nationalization. Or, more correctly, no expropriation.

Growing up in a country where everything has been nationalized by Peron I am more than familiar with how this works.

Unfortunately, living in America, citizens cannot recognize what they have never seen before and remain confused. Ted Olson got it right when he told the judges on Perry's appeal: the government is running an empty shell. That's what we have. Treasury knows it and is doing an outstanding job in fooling the judges.

Nationalization in our saga is the most important invisible actor. Nobody can see it. It is a threat to nobody. Except to us who have suffered its devastating consequences. It seems to me all 3 judges of the Saxton appeal panel are sensing that something is not right.

DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10255 on: July 21, 2018, 01:57:11 AM »
It is not in our best interest for any lawsuit to try to have HERA struck down. Cayne mentioned the mandate of 'protecting taxpayers' from the law itself. But down that same list at the bottom of that section of the law there's the 'companies must remain shareholders owned'. HERA protects us.

The way courts are getting around your #1  is by Cayne convincing judges the companies are operational, therefore going concern. So the conservator *must be conserving*. And since markets are functioning fine this reinforces the notion of conserving. The conclusion of 'nothing to see here' helps courts get to the promised land: "Conservator authority has not been exceeded so we are barred from review" .

The going concern issue can fool the untrained eye.

What courts don't see is that the trick used to keep the companies as going concern has been nationalization. Just when both were about to achieve that same status on their own. Replacing own capital for government capital is key to understanding where the confusion lies.

Nowhere the word nationalization shows up because HERA mandates the GSEs to remain private and because nowhere any law says a conservator is allowed to nationalize a company. The government is getting away with this because it has left the shares intact and can always go back to the reasoning the Treasury lady offered: that the shares continue to trade and may have residual value, thus no nationalization. Or, more correctly, no expropriation.

Growing up in a country where everything has been nationalized by Peron I am more than familiar with how this works.

Unfortunately, living in America, citizens cannot recognize what they have never seen before and remain confused. Ted Olson got it right when he told the judges on Perry's appeal: the government is running an empty shell. That's what we have. Treasury knows it and is doing an outstanding job in fooling the judges.

Nationalization in our saga is the most important invisible actor. Nobody can see it. It is a threat to nobody. Except to us who have suffered its devastating consequences. It seems to me all 3 judges of the Saxton appeal panel are sensing that something is not right.

Good post.
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cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10256 on: July 21, 2018, 07:08:17 AM »
@rros

I appreciate your take on this.  seen in this light, the nationalization questions in saxton are more interesting.

locutusoftexas

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10257 on: July 21, 2018, 08:04:12 AM »
It is not in our best interest for any lawsuit to try to have HERA struck down. Cayne mentioned the mandate of 'protecting taxpayers' from the law itself. But down that same list at the bottom of that section of the law there's the 'companies must remain shareholders owned'. HERA protects us.

The way courts are getting around your #1  is by Cayne convincing judges the companies are operational, therefore going concern. So the conservator *must be conserving*. And since markets are functioning fine this reinforces the notion of conserving. The conclusion of 'nothing to see here' helps courts get to the promised land: "Conservator authority has not been exceeded so we are barred from review" .


As you know, my few posts have focused on nationalization as the key to shareholders being remunerated properly.

Although probably obvious to everyone on the board, the courts/judges have shown a distressing ignorance of simple rules of logic - hence your use of the word "convincing" in the quote. I thought that lawyers were supposed to understand high-school logic. Being a going concern is a necessary condition that the conservator is doing its job, i.e., "If a conservator is doing its job, then the company is a 'going concern.' " However, this is not a sufficient condition, i.e., it is not necessarily true that, "If a company is a going concern, then the conservator is doing its job." In the case of FnF, we have going concerns almost in spite of the conservator and certainly not because of the conservator.

Rather, since the courts have ruled that the NWS is "legal," all of the elements of a nationalization are in place. Here I define nationalization to be the legal (i.e., via the use of laws, even certified by courts, if necessary) seizure of private property (i.e., a company) by government. In this case the owners (shareholders) have not been properly remunerated for this seizure (i.e., nationalization) in violation of the Constitution.

Note that contrary to the reasoning highlighted by (but not attributed to) rros, if the conservator is taking entirely legal actions, this does not negate the fact the government has taken the property - legally (by definition) - as far as government is concerned. It is the failure to remunerate the owners for this property that violates the Constitution, which equates such ostensibly legal action with robbery. In this regard, the nationalization or property seizure is defined by the Constitution (Amendment 5) as a type of government purchase of property, which involves not only delivery of the property to the government but proper payment of the owners.

So the missing link in court action so far is the connection between nationalization, a legal action that is an element of a type of government purchase (legal, since the government and the Constitution defines this type of legal purchase) and a category of theft, in which a legal purchase has resulted in delivery of private property (i.e., the nationalization), but has not been completed by proper payment of the owners.

We can always hope that the courts will eventually see the logical error that has been overlooked by judges thus far and declare the NWS to be evidence that the conservator has usurped its duties and most importantly has purposefully failed to fulfill its duties. However, allowing the NWS to stand strengthens the argument that the companies have been nationalized without proper remuneration in violation of the definition by the Constitution of this type of "government purchase."
« Last Edit: July 21, 2018, 08:06:39 AM by locutusoftexas »

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10258 on: July 21, 2018, 11:40:25 AM »
"So the missing link in court action so far is the connection between nationalization, a legal action that is an element of a type of government purchase (legal, since the government and the Constitution defines this type of legal purchase) and a category of theft, in which a legal purchase has resulted in delivery of private property (i.e., the nationalization), but has not been completed by proper payment of the owners."

this is the case in the court of claims.  govt says it didn't do a taking; it was just busy being a conservator. all of the other cases argue that govt didn't have authority that it claims it had to do the action taken, or was unconstitutionally acting as an agency.

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10259 on: July 21, 2018, 11:43:27 AM »
Locus, yes, I remember you brought up nationalization... my question to you: say, Congress comes up with a NWS bill that does what the nws does but also offers remedy/compensation to the injured, would you as an American be fine with this because it complies with the takings clause of the 5th? While compensation may remedy a taking, should a taking have its scope enlarged so much as to validate nationalization? Or should a taking be only an exceptional measure, narrow in its scope, so as to validate property rights?

Here, the government has carefully extracted the inside of an egg for itself leaving the outter shell intact and eggshell is what is left (for us). The difference between a takings and a nationalization lies in the magnitude of the action and the size of the damage inflicted. While in a taking the remedy may simply be the $2 the preferreds were valued at, at the time of the nws, a full nationalization removes the whole property and any upside from you forever. Future value is gone and the Judge in Saxton who asked several times "what about future value?" understood the damage has been enormous. Not takings size, but nationalization size. Please note, Treasury used the words "all future earnings" and "sweeping going forward". And while the Treasury lady can say the conservatorship is indefinite (no timing), the structure of the nws (not the original PSPAs) has made the conservatorship eternal (timing expressed as forever). The nws not only altered compensation, it altered time from "some day" to "never". From possibly retaining earnings one day to never be allowed to do so.

FHFA was not a receiver but neither it was a conservator. It acted as a nationalizer disguised as conserving. Judges trying to understand FHFA's actions in terms of the law equates to trying to fit a round peg in a square hole. Which may magically lead to concluding FHFA did something it was not allowed to. 

And a question to the board (and I am humbled by the great minds here reading).

Did Cayne get this one wrong? He said Firrea did not even apply to Cedarminn. However, the history is this:
Quote
Congress passed the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) in August of 1989. Under FIRREA, RTC statutorily succeeded FSLIC as conservator of Midwest Savings. After negotiations aimed at selling Midwest Savings in its entirety failed, the conservator sold Midwest Savings' deposits to other institutions in October of 1990. On October 5, 1990, RTC was appointed receiver of Midwest Savings. Shortly thereafter, on October 29, 1990, RTC repudiated the CedarMinn leases.

Why does he disregard FIRREA? It's been in effect for more than 1 year when the lawsuit hit.