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

[merkhet]

Anybody looked at the government's filing today in MDL? Please share with me your brilliant thoughts!  :)

 

http://gselinks.com/Court_Filings/Judicial_Panel/MDL-2713-0008.pdf

The government said this:

"Actions may be transferred to any district

for coordinated or consolidated pretrial proceedings where civil actions pending in different

districts involve “one or more common questions of fact”

"

 

 

Well, this is outright wrong. I googled and found this:

http://www.pretzel-stouffer.com/profiles/pdf/Multidistrict%20Litigation%20to%20authors.pdf

 

"if only one question of fact is common to two or three cases pending in different

districts there probably will be no order for transfer, since it is doubtful that

transfer would enhance the convenience of the parties and witnesses, or promote

judicial efficiency"

 

Confirmation bias in action.

 

https://www.law.cornell.edu/uscode/text/28/1407

 

(a) When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings. Such transfers shall be made by the judicial panel on multidistrict litigation authorized by this section upon its determination that transfers for such proceedings will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions. Each action so transferred shall be remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated:

Provided, however, That the panel may separate any claim, cross-claim, counter-claim, or third-party claim and remand any of such claims before the remainder of the action is remanded.

 

The actual statute allows for transfer if one or more common questions of fact exist. In fact, the thing you googled states exactly the same thing a paragraph before the quote you pulled out:

 

Cases pending in different districts will not be transferred to multidistrict litigation unless they have at least one question of fact in common.

 

So one common question of fact is enough to allow transfer. Whether, in practice, the courts require two or more common questions of fact is an entirely different question.

[Guest cherzeca]

in my view, the best argument against consolidation is that there is already effective formal coordination going on.  plaintiffs are sharing discovery under seal from fairholme, so that there is no risk of judicial inefficiency, at least at this motion to dismiss stage.

 

if you go to the panel orders, http://www.jpml.uscourts.gov/panel-orders , you will see that when consolidation is denied, it is often because there is already effective coordination going on.  from the credit union overdraft litigation denial order:  "In sum, there appears to be little or no risk of duplicative discovery or conflicting pretrial rulings on discovery disputes.  To the extent, if any, that discovery in these actions may overlap, informal coordination

appears practicable, especially given that all plaintiffs are represented by the same two law firms..."

 

so we will see what the plaintiffs arguments against are in their submissions, but i would think that would predominate.  also, on 3/28, there is a CC among hindes/jacobs Ps, Ds and judge sleet.  that may have a result that we can not anticipate.

 

don't forget, fhfa moved for consolidation before the perry merits panel was decided, and if fhfa had the ability to do a do over with hindsight, i think their decision to move to DC may have been different.  the perry merits panel is not a slam dunk in favor of Ps, but it is as good as we could have hoped for.

 

[spits 3 times]

[muscleman]

in my view, the best argument against consolidation is that there is already effective formal coordination going on.  plaintiffs are sharing discovery under seal from fairholme, so that there is no risk of judicial inefficiency, at least at this motion to dismiss stage.

 

if you go to the panel orders, http://www.jpml.uscourts.gov/panel-orders , you will see that when consolidation is denied, it is often because there is already effective coordination going on.  from the credit union overdraft litigation denial order:  "In sum, there appears to be little or no risk of duplicative discovery or conflicting pretrial rulings on discovery disputes.  To the extent, if any, that discovery in these actions may overlap, informal coordination

appears practicable, especially given that all plaintiffs are represented by the same two law firms..."

 

so we will see what the plaintiffs arguments against are in their submissions, but i would think that would predominate.  also, on 3/28, there is a CC among hindes/jacobs Ps, Ds and judge sleet.  that may have a result that we can not anticipate.

 

don't forget, fhfa moved for consolidation before the perry merits panel was decided, and if fhfa had the ability to do a do over with hindsight, i think their decision to move to DC may have been different.  the perry merits panel is not a slam dunk in favor of Ps, but it is as good as we could have hoped for.

 

[spits 3 times]

 

Please excuse my ignorance. But my understanding is that they are trying to consolidate the four cases into one in DC's district court, but that does not include consolidating the Perry Appeal.

 

http://gselinks.com/Court_Filings/Jacobs_Hindes/15-00708-0039-A.pdf

=====================

The Federal Housing Finance Agency (“FHFA” or the “Conservator”) respectfully moves the Judicial Panel on Multidistrict Litigation (the “Panel”) for an order, pursuant to 28 U.S.C.

§ 1407, transferring four pending actions concerning the Conservator’s and the U.S. Department of the Treasury’s (“Treasury”) entry into the Third Amendment to the Senior Preferred Stock Agreements, as well as any subsequent actions, to the U.S. District Court for the District of Columbia for coordinated or consolidated pretrial proceedings.

=====================

However, if Perry Appeal turns out in favor of us, I am sure it will impact the District Court's review of the consolidated four cases, should that be granted by MDL.

 

[Guest cherzeca]

@MM

 

my point is that if perry is reversed, then dc may not be as felicitous a venue for fhfa as it may have previously thought, as the reversal of perry by dc circuit court would be binding on all dc district courts

[merkhet]

@cherzeca,

 

I wasn't saying that the MDL would necessarily be successful in consolidating the Jacobs case w/ the rest of the cases. I was merely saying that there is no requirement that a case have two or more common questions of fact. For some reason, there is an idea floating around out there that two or more common questions of fact are required, but that's just not true from a statutory standpoint. I haven't a clue whether in practice the courts don't consolidate unless there are two or more common questions of fact.

 

@mm

 

The reason @cherzeca said that FHFA might have reconsidered trying to consolidate the cases into DC is that if the Perry Appeal is favorable towards plaintiffs, then they have basically checkmated themselves because a win in Perry would be binding on all the pending cases before the DC district-level courts.

[Guest cherzeca]

@merkhet

 

i understand. while i am not knowledgeable about multi-district consolidation standards, it seems to me that even if there are common fact(s), the panel may choose not to consolidate if there is effective coordination already going on, or that could go on, and i believe the former is the case here.

 

now, perhaps the fed govt will get special deference here, ad perhaps there will be consolidation even though there doesn't seem to be the possibility for discovery inefficiency.  but i will look forward to the Ps submissions in this regard.

[Luke 532]

Jon Prior tweet from about an hour ago...

"White House housing adviser Michael Stegman, long-time point man on Fannie, Freddie reform, to leave Friday" http://politico.pro/1PqOYKf

[muscleman]

Jon Prior tweet from about an hour ago...

"White House housing adviser Michael Stegman, long-time point man on Fannie, Freddie reform, to leave Friday" http://politico.pro/1PqOYKf

 

Might be a typical politician exodus during an administration's final year. Nothing too exciting. He may be heading toward Wall Street I guess.  :)

[Luke 532]

Forbes opinion article...

Government Privacy Protection Needs To Stop At Financial Market Door

http://www.forbes.com/sites/jeffreydorfman/2016/03/23/government-privacy-protection-needs-to-stop-at-financial-market-door/#e86e475d8ad0

[Luke 532]

Reform article from Parrot, Zandi, Ranieri, Sperling and Zigas: https://www.economy.com/mark-zandi/documents/2016-03-22-A-More-Promising-Road-To-GSE-Reform.pdf

[merkhet]

Reform article from Parrot, Zandi, Ranieri, Sperling and Zigas: https://www.economy.com/mark-zandi/documents/2016-03-22-A-More-Promising-Road-To-GSE-Reform.pdf

 

Footnote 4: There are quite a few issues that we have not addressed here that would need to be in converting this general model into legislation: the details of the charter creating the NMRC, how to address Fannie and Freddie’s shareholders, and details on how this model would function in the multifamily market, to name but a few.

 

Interesting that they bothered to call out the shareholder issue at all.

[Guest cherzeca]

Reform article from Parrot, Zandi, Ranieri, Sperling and Zigas: https://www.economy.com/mark-zandi/documents/2016-03-22-A-More-Promising-Road-To-GSE-Reform.pdf

 

" ...providing an explicit federal guarantee on mortgage-backed securities while syndicating all noncatastrophic credit risk into the private market."

 

why would congress want the US to retain any credit risk? and why wouldn't the syndication/guarantee entity not retain that risk and retain capital to bear that risk?  i dont understand why it is a solution to try to transfer risk to private entities when they dont want to bear that risk, they just want to own the guaranteed securities?  lew ranieri should know better, but he is just a figurehead at this point.

[Luke 532]

Courts taking government enterprises to task, good to see...

 

Court rebukes IRS for tea party targeting, orders release of secret list

 

http://www.washingtontimes.com/news/2016/mar/22/irs-rebuked-tea-party-targeting-ordered-release-se/

 

Here's one interesting quote from the article:

 

“The lawyers in the Department of Justice have a long and storied tradition of defending the nation’s interests and enforcing its laws — all of them, not just selective ones — in a manner worthy of the Department’s name. The conduct of the IRS’s attorneys in the district court falls outside that tradition,” Judge Raymond Kethledge wrote in a unanimous opinion for a three-judge panel of the Sixth Circuit Court of Appeals. “We expect that the IRS will do better going forward.”

[Guest cherzeca]

Courts taking government enterprises to task, good to see...

 

Court rebukes IRS for tea party targeting, orders release of secret list

 

http://www.washingtontimes.com/news/2016/mar/22/irs-rebuked-tea-party-targeting-ordered-release-se/

 

Here's one interesting quote from the article:

 

“The lawyers in the Department of Justice have a long and storied tradition of defending the nation’s interests and enforcing its laws — all of them, not just selective ones — in a manner worthy of the Department’s name. The conduct of the IRS’s attorneys in the district court falls outside that tradition,” Judge Raymond Kethledge wrote in a unanimous opinion for a three-judge panel of the Sixth Circuit Court of Appeals. “We expect that the IRS will do better going forward.”

 

this is good to see, thanks luke.

 

this rebuke strikes a deep nerve with me.  i am of a certain age where i remember working at the justice dept was a great honor that called attorneys to their highest natures.  while justice was still an advocate, justice was above the "low class" lawyering that prevailed among private litigants.

 

clearly in the irs situation as well as ours, there is no honor among thieves

 

 

[Luke 532]

Why in the world does Mel Watt want to talk about the conservatorship with a Harvard Law professor?  The same Harvard Law attended by Ally Coll Steele, the author of a shareholder friendly GSE piece in the recent past.  There's no reason for Watt to not blindly trust the endless stream of government lawyers, which I'm sure are being 100% honest with him, right?

 

Ally Coll Steele @allycollsteele

Interesting! Mel Watt coming to @Harvard_Law to talk with Prof. Hal Scott about the conservatorship of #FannieMae and #FreddieMac on Apr. 4

[orthopa]

http://www.marketwatch.com/story/this-plan-to-overhaul-fannie-mae-and-freddie-mac-just-might-pass-congress-2016-03-24

[doughishere]

Why in the world does Mel Watt want to talk about the conservatorship with a Harvard Law professor?  The same Harvard Law attended by Ally Coll Steele, the author of a shareholder friendly GSE piece in the recent past.  There's no reason for Watt to not blindly trust the endless stream of government lawyers, which I'm sure are being 100% honest with him, right?

 

Ally Coll Steele @allycollsteele

Interesting! Mel Watt coming to @Harvard_Law to talk with Prof. Hal Scott about the conservatorship of #FannieMae and #FreddieMac on Apr. 4

 

Probably going to be disappointed but....http://reactiongifs.us/wp-content/uploads/2013/02/popcorn_stephen_colbert.gif

[Luke 532]

Why in the world does Mel Watt want to talk about the conservatorship with a Harvard Law professor?  The same Harvard Law attended by Ally Coll Steele, the author of a shareholder friendly GSE piece in the recent past.  There's no reason for Watt to not blindly trust the endless stream of government lawyers, which I'm sure are being 100% honest with him, right?

 

Ally Coll Steele @allycollsteele

Interesting! Mel Watt coming to @Harvard_Law to talk with Prof. Hal Scott about the conservatorship of #FannieMae and #FreddieMac on Apr. 4

 

Probably going to be disappointed but....http://reactiongifs.us/wp-content/uploads/2013/02/popcorn_stephen_colbert.gif

 

I'm not saying Watt/Scott amounts to anything, but at the very least he's entertaining the opinions of lawyers that are pro-shareholder.  I'm pointing it out because it builds upon, however slightly, his public and scripted comments awhile back where he was very clear the conservatorship needs to end.

[doughishere]

Why in the world does Mel Watt want to talk about the conservatorship with a Harvard Law professor?  The same Harvard Law attended by Ally Coll Steele, the author of a shareholder friendly GSE piece in the recent past.  There's no reason for Watt to not blindly trust the endless stream of government lawyers, which I'm sure are being 100% honest with him, right?

 

Ally Coll Steele @allycollsteele

Interesting! Mel Watt coming to @Harvard_Law to talk with Prof. Hal Scott about the conservatorship of #FannieMae and #FreddieMac on Apr. 4

 

Probably going to be disappointed but....http://reactiongifs.us/wp-content/uploads/2013/02/popcorn_stephen_colbert.gif

 

I'm not saying Watt/Scott amounts to anything, but at the very least he's entertaining the opinions of lawyers that are pro-shareholder.  I'm pointing it out because it builds upon, however slightly, his public and scripted comments awhile back where he was very clear the conservatorship needs to end.

 

Honestly, Im growing weary of the proceedings.

[Luke 532]

Honestly, Im growing weary of the proceedings.

 

That is to be expected in this investment or any other heavily litigated situation.  The real question is whether or not you let the fact that you are weary impact your decision making.

[Guest cherzeca]

http://www.marketwatch.com/story/this-plan-to-overhaul-fannie-mae-and-freddie-mac-just-might-pass-congress-2016-03-24

 

author states:  "There are some pitfalls, though. For one, current investors in Fannie and Freddie, many of whom have mounted vigorous legal challenges to the government sweeps, would probably be out of luck"

 

obviously she doesnt understand that if NWS invalidated, govt will have to buy shareholders out...which is why this plan will go nowhere.  govt only wanted to set stage for reform by paying zip to public shareholders through NWS.  when govt goes to plan B, i dont think it will want to pay the price...especially to greedy hedge funds (like you and me...ha!)

[doughishere]

Honestly, Im growing weary of the proceedings.

 

That is to be expected in this investment or any other heavily litigated situation.  The real question is whether or not you let the fact that you are weary impact your decision making.

 

But its more than just investment decisions. I have a very poor opinion of people. High bureaucracy. High self interest. Seems silly at moments.

 

But, Im still here...so it cant be that bad....Such is life. 

 

Edit: this board is excluded. Yall are much better than I am. Thats for sure.

[orthopa]

http://www.marketwatch.com/story/this-plan-to-overhaul-fannie-mae-and-freddie-mac-just-might-pass-congress-2016-03-24

 

author states:  "There are some pitfalls, though. For one, current investors in Fannie and Freddie, many of whom have mounted vigorous legal challenges to the government sweeps, would probably be out of luck"

 

obviously she doesnt understand that if NWS invalidated, govt will have to buy shareholders out...which is why this plan will go nowhere.  govt only wanted to set stage for reform by paying zip to public shareholders through NWS.  when govt goes to plan B, i dont think it will want to pay the price...especially to greedy hedge funds (like you and me...ha!)

 

Yep thats what I was thinking.

[doughishere]

Ole Billy, inheritor of a brand new 11.3B mess, has some words.

 

See attachment.

[colinwalt]

http://www.marketwatch.com/story/this-plan-to-overhaul-fannie-mae-and-freddie-mac-just-might-pass-congress-2016-03-24

 

author states:  "There are some pitfalls, though. For one, current investors in Fannie and Freddie, many of whom have mounted vigorous legal challenges to the government sweeps, would probably be out of luck"

 

obviously she doesnt understand that if NWS invalidated, govt will have to buy shareholders out...which is why this plan will go nowhere.  govt only wanted to set stage for reform by paying zip to public shareholders through NWS.  when govt goes to plan B, i dont think it will want to pay the price...especially to greedy hedge funds (like you and me...ha!)

 

Yep thats what I was thinking.

 

Timothy Howard doesn't think much of it....

 

http://howardonmortgagefinance.com/2016/03/25/a-risk-sharing-postscript/

 

"We just now are crawling out from under the ruins of our last experiment with securitized risk sharing—the collateralized debt obligations (CDOs) that were supposed to be the answer for how to finance the riskier tranches of private-label securities (PLS)—and already we see a proposal to give a variation on that theme another try."