FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[Luke 532]

BofA sees end to Fannie, Freddie conservatorships

http://www.reuters.com/article/us-mortgages-fhfa-bank-of-america-idUSKCN0VX2PB

[merkhet]

From Jon Prior's twitter:

 

 

New details on Fannie,Freddie shareholder settlement 'talks': Treasury, DOJ made no offer last fall, asked for terms http://politico.pro/1WJpu08

 

They got back a "conceptual framework" on what to do w/: sr. preferred shares, payments above bailout total, and affordable housing pitch

 

Talks didn't really evolve beyond that. But connect the dots if you want: Lew (3:50) http://cnb.cx/1XNjTqF  Weiss http://bv.ms/1LjU6RB

[doughishere]

....the fact that they asked for terms.

 

 

Tell Hirohito we want unconditional surrender.

[Guest cherzeca]

....the fact that they asked for terms.

 

 

Tell Hirohito we want unconditional surrender.

 

my question is who did they ask? perry, berky, acky, or wash federal etc etc.  if they want to settle they should find a big table first

[merkhet]

....the fact that they asked for terms.

 

 

Tell Hirohito we want unconditional surrender.

 

my question is who did they ask? perry, berky, acky, or wash federal etc etc.  if they want to settle they should find a big table first

 

Sadly, unclear. Anyone have access to the article?

[doughishere]

....the fact that they asked for terms.

 

 

Tell Hirohito we want unconditional surrender.

 

my question is who did they ask? perry, berky, acky, or wash federal etc etc.  if they want to settle they should find a big table first

 

The answering of one question only leads to two more.....somethings dirty.

[doughishere]

I nominate cherzeca and Merk for the Delegate from COBF.

 

 

Edit: Ehh...we've been though the rumor mill though so time will tell.

[orthopa]

It sounds like more people including those in the govt are beginning to realize FnF need to build more capital. Is there a scenario where they are allow to build more capital but shareholders are still shut out? I would think not correct as its the 3rd amendment that prevented shareholders from any part of profits?

 

I'm just leery that there is going to be a catch if FnF are allowed to start building capital again

[orthopa]

Does anyone have a link saved to Ackmans valuation for the common? I cant find anything readily available other then just videos on him commenting on fannie.

 

Thanks

[PLynchJr]

Here is what I have.  It's from May of 2014.

Fannie__Freddie_-_Ackman.pdf

[Picasso]

I attached what I have from the Pershing presentation on FNMA. 

[muscleman]

I attached what I have from the Pershing presentation on FNMA.

 

Platform value again? Come'on. He admitted this is phantom value in his recent letter.  ;D

[Guest cherzeca]

It sounds like more people including those in the govt are beginning to realize FnF need to build more capital. Is there a scenario where they are allow to build more capital but shareholders are still shut out? I would think not correct as its the 3rd amendment that prevented shareholders from any part of profits?

 

I'm just leery that there is going to be a catch if FnF are allowed to start building capital again

so orthopa, this scenario would be upsetting. NWS stays intact, but treasury allows fhfa to defer making dividend transfers. dividends cumulate, shareholders still wiped out, and treasury calls itself a hero.

 

now would this be an acknowledgement that NWS is bad conservatorship policy, which the plaintiffs will point out to courts? yes. will it adversely affect the litigation for govt? not likely

[doughishere]

Does anyone have a link saved to Ackmans valuation for the common? I cant find anything readily available other then just videos on him commenting on fannie.

 

Thanks

 

Ackamn, Bruce and Tilson are at a conference coming up soon in NYC. I bet they talk about F&F there. Next week or so. I think

 

 

http://theharborinvestmentconference.org/

[orthopa]

I attached what I have from the Pershing presentation on FNMA.

 

Thanks, just wanted to see how Ackman got his common price projections.

[orthopa]

It sounds like more people including those in the govt are beginning to realize FnF need to build more capital. Is there a scenario where they are allow to build more capital but shareholders are still shut out? I would think not correct as its the 3rd amendment that prevented shareholders from any part of profits?

 

I'm just leery that there is going to be a catch if FnF are allowed to start building capital again

so orthopa, this scenario would be upsetting. NWS stays intact, but treasury allows fhfa to defer making dividend transfers. dividends cumulate, shareholders still wiped out, and treasury calls itself a hero.

 

now would this be an acknowledgement that NWS is bad conservatorship policy, which the plaintiffs will point out to courts? yes. will it adversely affect the litigation for govt? not likely

 

That would be a nightmare. Im by no means a legal expert but I would have to image the Delaware case would have to deal with this scenario right? A majority shareholder confiscating all of the profits at the detriment of others.

[Guest cherzeca]

It sounds like more people including those in the govt are beginning to realize FnF need to build more capital. Is there a scenario where they are allow to build more capital but shareholders are still shut out? I would think not correct as its the 3rd amendment that prevented shareholders from any part of profits?

 

I'm just leery that there is going to be a catch if FnF are allowed to start building capital again

so orthopa, this scenario would be upsetting. NWS stays intact, but treasury allows fhfa to defer making dividend transfers. dividends cumulate, shareholders still wiped out, and treasury calls itself a hero.

 

now would this be an acknowledgement that NWS is bad conservatorship policy, which the plaintiffs will point out to courts? yes. will it adversely affect the litigation for govt? not likely

 

That would be a nightmare. Im by no means a legal expert but I would have to image the Delaware case would have to deal with this scenario right? A majority shareholder confiscating all of the profits at the detriment of others.

 

absolutely, and i think litigation will prevail.  but i was just coming up with a doomsday scenario that was at least plausible

[merkhet]

Guys, I think Picasso is joking.

[doughishere]

Guys, I think Picasso is joking.

 

we all signed the terms when we created our accounts.  Section 3, subsection 34, paragraph 12, part d, clauses (a) and (g) said "no joking allowed"....strictly forbidden.

 

[orthopa]

I havent been able to read the politico piece but it seems to me the treasury/DOJ has "shown their cards" to a certain degree. Maybe I don't have enough law exposure (nil honestly) to know if asking for terms is a common thing to just feel out the other side per say?

 

If this is at all true is this common in the legal arena? I would think it would be the last thing the gov would do but maybe they are covering thier ass with an out in case things go bad.

 

I would have bet my kids life that any settlement talks/proposals/terms etc would never happen but this looks like a big crack in the governments guise.

[Guest cherzeca]

pershing slide deck on fnma presented at sohn 5/14

pershing_sohn_fnma_slide_deck.pdf

[muscleman]

10k to have lunch with both bill and Bruce? What a bargain! A lot cheaper than having lunch with Buffet!

[Guest cherzeca]

perry institutional plaintiffs redacted initial reply brief

perry_redacted_inst_appellants_reply_brief.pdf

[doughishere]

Since were posting shit. Current as of 2/11

gselitigationsummary201602.pdf

[colinwalt]

4617(f) is pretty short. Am i in the right place?

 

 

https://www.law.cornell.edu/uscode/text/12/4617

 

(f) Limitation on court action

Except as provided in this section or at the request of the Director, no court may take any action to restrain or affect the exercise of powers or functions of the Agency as a conservator or a receiver.

 

 

My answer would be that the FHFH isnt acting like a conservator........Mel said that the other day.

 

 

Yes, that's the right place, and while I agree with you, the court could still find that the HERA powers are so broad that there's nothing that isn't within the power of FHFA to do. (Much like in the Lamberth case.)

 

Not a lawyer but in relation to  4617(f), this is what I picked up from the "perry redacted inst appellants reply brief"

 

P11

 

Seeking to perpetuate its windfall, Treasury—but not FHFA—argues that

Section 4617(b)(2)(A) of HERA bars derivative claims and therefore precludes

Institutional Plaintiffs’ APA claims. But the Net Worth Sweep’s elimination of

Plaintiffs’ ability to receive dividends and recover on their liquidation preferences

are injuries Plaintiffs suffer directly as holders of the Companies’ preferred stock;

they are not injuries suffered by the Companies. And HERA does not—because it

could not — provide that FHFA as conservator “succeeds to” shareholders’ direct

claims against the government that authored their injuries; that would be a taking.

 

 

Section 4617(f) of HERA also does not preclude this lawsuit. That provision

prohibits only suits that would restrain FHFA’s exercise of its conservatorship

powers. Plaintiffs’ APA claim against FHFA turns on whether the Net Worth

Sweep was a valid act of conservatorship or, if not, was void ab initio. That question

does not implicate Section 4617(f). As FHFA recognizes in its regulations, HERA

requires a conservator to preserve and conserve the Companies’ assets and to work

to rehabilitate the Companies to a sound and solvent condition. Contrary to FHFA’s

newly minted position (contradicting those regulations), these are not merely suggestions from

Capitol Hill that FHFA is free to ignore. Decades of FDIC practice and centuries of common law

demonstrate that these obligations define what a conservator is.

 

 

P16

Under Section 4617(b)(2)(A), the conservator succeeds to shareholders’

rights only “with respect to the [Companies]”; it does not succeed to shareholders’

own rights under their stock certificates. This provision thus bars (at most) only

shareholder derivative claims on the Companies’ behalf; it does not prohibit

shareholders from seeking relief for direct injuries.

 

P17

That the Net Worth Sweep also harmed the Companies is irrelevant because shareholders

with direct injuries may sue “even if the corporation’s rights are also implicated.”

 

P19

A. HERA Does Not Prohibit Suits Against FHFA Alleging That FHFA Exceeded Its Powers As

Conservator. As Treasury concedes (at 26), Section 4617(f) “is inapplicable when FHFA

acts beyond the scope of its conservator power,” Cnty. of Sonoma v. FHFA, 710 F.3d

987, 992 (9th Cir. 2013).