Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3733414 times)

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10380 on: August 20, 2018, 07:34:51 AM »
Although i'm holding out hope, I'm not sure Judge Stras is our man in Saxton. He was the one who thought NWS was a nationalization and that plaintiffs best argument was that FHFA was at the will of the Treasury. He didn't appear to bite on APA violation as he seemed to conclude that a conservator under HERA is a different beast than common law conservatorship, and was the one who pointed out that shall was used in other parts of HERA, so why not here. Unless Willet's dissent is enough to persuade him, his mind might already be made up on APA.

I thought Judge Benton was better for us as he highlighted multiple times that the Cedarminn case was plaintiffs best argument and the defendants really had no response to him. Judge Kelly is the wild card I believe. She kept probing at what the outer-limits of the FHFA's powers was, and is there no situation where courts may question the business judgment of the FHFA? But she was appointed by Obama in 2013 and we know how politically driven our justice system is.

the other thing I noticed about the collins/saxton willett/stas pas de deux is the effect of the nationalization theme raised prominently in the saxton oral argument.  there is a whole different argument that, apart from considerations of "may" authority re conserve/preserve, congress couldn't have authorized fhfa to nationalize FnF unless it did so explicitly.  this is a nuanced argument that goes beyond the standard conserve/preserve argument.

and collins counsel (same as saxton) picked up on this "nationalization" nuance in their notice of appeal for rehearing en banc in 5th circuit.
« Last Edit: August 20, 2018, 09:54:35 AM by cherzeca »


blackcoffee

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10381 on: August 20, 2018, 02:00:29 PM »
Do you know what remedy the All American case is seeking exactly? Is it similar to undoing a previous action while under a unconstitutional regime like the plaintiffs want with the NWS? If so that is indeed positive, assuming the 5th circuit takes up the issue.

Good point. If I understand (relevant part of) the SCOTUS Lucia case correctly, plaintiffs have the right to expect some sort of remedy on top of the courts just fixing the agency's structure to make it consitutional. If All American's desires are taken into account, hopefully Collins's wish for the NWS to be unwound is as well.

https://howardonmortgagefinance.com/2018/07/10/some-pre-comment-comments/#comment-7492

why do we care about the gov't getting paid back on a deal that they negotiated between itself and itself based on lies to everyone?

I have a hard time caring.

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10382 on: August 20, 2018, 02:11:14 PM »
Do you know what remedy the All American case is seeking exactly? Is it similar to undoing a previous action while under a unconstitutional regime like the plaintiffs want with the NWS? If so that is indeed positive, assuming the 5th circuit takes up the issue.

Good point. If I understand (relevant part of) the SCOTUS Lucia case correctly, plaintiffs have the right to expect some sort of remedy on top of the courts just fixing the agency's structure to make it consitutional. If All American's desires are taken into account, hopefully Collins's wish for the NWS to be unwound is as well.

https://howardonmortgagefinance.com/2018/07/10/some-pre-comment-comments/#comment-7492

why do we care about the gov't getting paid back on a deal that they negotiated between itself and itself based on lies to everyone?

I have a hard time caring.

Because Treasury basically holds all the cards here. They have to approve a release from conservatorship and would be the ones that would be giving up the senior liquidation preference and NWS dividends in any administrative reform scenario. Treasury being able to claim victory per the original bailout terms (10%) could be an important point from a political optics perspective.

It seems grossly unfair that Treasury has collected over $280B in dividends (almost $100B more than they advanced to FnF), has $193B in liquidation preference, and the right to buy 79.9% of common shares for a pittance. But that's where we stand. Treasury is negotiating from a position of extreme strength, so making it seem like they're winning is the only way to get them to the table. That or a court victory that has so far eluded us.

undervalued

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Wiggins

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10384 on: August 21, 2018, 09:32:25 PM »
re: http://www.glenbradford.com/wp-content/uploads/2018/08/17-3794-0026.pdf

Isn't asking whether an award of compensatory damages could restrain the agency's powers as conservator and thus be barred under 12 U.S.C. 4617(f) like asking whether putting a man in jail for robbing a liquor store deprives him of "life, liberty, and the pursuit of happiness" and is thus barred under the U.S. Constitution? I think if the agencies are liable for compensatory damages then it was their prior (illegal) behavior that restrained their powers as conservator, not the subsequent compensatory damages.  Unless I am misunderstanding this then the court is really off here. Of course, that would not be a great surprise.
« Last Edit: August 21, 2018, 09:36:30 PM by Wiggins »

allnatural

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10385 on: August 22, 2018, 04:14:14 AM »
Wiggins... you are spot on. This is a bizarre/hilarious twist. I believe most judges are on the same page, IF (big if) FHFA acts ultra-vires, it violates the statute and plaintiffs are entitled to relief. This question says that any relief might actually prevent FHFA from accomplishing its duties so it could be barred as well. Unbelievable and I don't expect this to stand in any court as crazy as the logic has been to date.

I believe Cooper said it best during the Saxton oral argument... to paraphrase, he said of course i have standing because HERA authorized you to hear my plea today IF FHFA acted ultra-vires.
« Last Edit: August 22, 2018, 04:17:25 AM by allnatural »

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10386 on: August 22, 2018, 05:38:11 AM »
re: http://www.glenbradford.com/wp-content/uploads/2018/08/17-3794-0026.pdf

Isn't asking whether an award of compensatory damages could restrain the agency's powers as conservator and thus be barred under 12 U.S.C. 4617(f) like asking whether putting a man in jail for robbing a liquor store deprives him of "life, liberty, and the pursuit of happiness" and is thus barred under the U.S. Constitution? I think if the agencies are liable for compensatory damages then it was their prior (illegal) behavior that restrained their powers as conservator, not the subsequent compensatory damages.  Unless I am misunderstanding this then the court is really off here. Of course, that would not be a great surprise.
Maybe the court is saying awarding damages is a form of judgment -admitting a violation implicitly- and 4617 prevents the court getting there. So the charade goes on.
« Last Edit: August 22, 2018, 05:42:28 AM by rros »

Wiggins

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10387 on: August 22, 2018, 07:31:08 AM »
allnatural and rros, then the way we are interpreting this would truly put FHFA outside the law, because of course any settlement could be construed to restrain their powers, either monetarily or to use rros' point via a constraining judgment. And if so, whether this court meant it or not this ridiculous legal Catch-22 could be another avenue toward declaring the agency unconstitutional. And while I do not think that was the court's intention here, I think some other savvy judges like Willet (or SCOTUS) would be able to run with the bizarre nature of this type of logic.
I'm really hoping that Collins was the inflection point and that Saxton is the first that goes our way. With the CedarMinn precedent they should be poised to rule correctly. Or, if that doesn't go our way then Saxton is at least split with another robust dissent and is another chink in the government armor which results in victory for us down the road. In addition to either compensatory damages or preferably RRR, methinks SCOTUS and/or other courts will have to eventually rule to fix the damaging precedents set here. But what do I know...
« Last Edit: August 22, 2018, 07:33:05 AM by Wiggins »

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10388 on: August 22, 2018, 08:39:56 AM »
allnatural and rros, then the way we are interpreting this would truly put FHFA outside the law, because of course any settlement could be construed to restrain their powers, either monetarily or to use rros' point via a constraining judgment. And if so, whether this court meant it or not this ridiculous legal Catch-22 could be another avenue toward declaring the agency unconstitutional. And while I do not think that was the court's intention here, I think some other savvy judges like Willet (or SCOTUS) would be able to run with the bizarre nature of this type of logic.
I'm really hoping that Collins was the inflection point and that Saxton is the first that goes our way. With the CedarMinn precedent they should be poised to rule correctly. Or, if that doesn't go our way then Saxton is at least split with another robust dissent and is another chink in the government armor which results in victory for us down the road. In addition to either compensatory damages or preferably RRR, methinks SCOTUS and/or other courts will have to eventually rule to fix the damaging precedents set here. But what do I know...
It appears this court already answered their own question and wants counsel to arrive to the same conclusion. So this, Jacobs, would be a negative chink.

blackcoffee

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10389 on: August 22, 2018, 08:45:57 AM »
allnatural and rros, then the way we are interpreting this would truly put FHFA outside the law, because of course any settlement could be construed to restrain their powers, either monetarily or to use rros' point via a constraining judgment. And if so, whether this court meant it or not this ridiculous legal Catch-22 could be another avenue toward declaring the agency unconstitutional. And while I do not think that was the court's intention here, I think some other savvy judges like Willet (or SCOTUS) would be able to run with the bizarre nature of this type of logic.
I'm really hoping that Collins was the inflection point and that Saxton is the first that goes our way. With the CedarMinn precedent they should be poised to rule correctly. Or, if that doesn't go our way then Saxton is at least split with another robust dissent and is another chink in the government armor which results in victory for us down the road. In addition to either compensatory damages or preferably RRR, methinks SCOTUS and/or other courts will have to eventually rule to fix the damaging precedents set here. But what do I know...
It appears this court already answered their own question and wants counsel to arrive to the same conclusion. So this, Jacobs, would be a negative chink.

So the courts want to fully remove themselves from ever having to enforce anything against the FHFA for any reason? See their backward logic to get to the conclusion that the gov't gets to keep the money, now makes the FHFA the most powerful entity in all the land... ultimate impunity.