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

[doughishere]

http://csen.tumblr.com/post/145455151989/why-housing-is-about-to-eat-the-us-economy

 

Why Housing is About to Eat the US Economy

[TonyG]

what gets me is why are these members of congress now writing to watt? the nws has been in place for almost 4 years. what took so long? or is it because this is now coming out of the shadows and they don't want to look bad? or those damn hedge fund lobbyists?

[doughishere]

what gets me is why are these members of congress now writing to watt? the nws has been in place for almost 4 years. what took so long? or is it because this is now coming out of the shadows and they don't want to look bad? or those damn hedge fund lobbyists?

 

Election year baby! I think theres starting to be some serious pressure by watch dog groups...even corker is feeling it.

 

 

"(Corker) charges complaints filed against him by a self-styled Washington watchdog group are part of a smear spurred by angry hedge fund billionaires fearful his stance on the future of mortgage giants Fannie Mae and Freddie Mac would torpedo their considerable investments."

[Sunrider]

I'm sorry if this is a rather ignorant question - assume shareholders win one or more of the cases and the NWS gets reversed. Just as congress passed an act that established the FHFA as a regulator and then conservator of the GSEs, could it not then pass a law that makes the conservatorship permanent (i.e. no release), or that otherwise disadvantages GSEs free of government control (or with a 70% government shareholder) such that the victory becomes pyhrric ?

 

Thanks!

C.

 

[Guest cherzeca]

Great question actually. Yes congress could pass law validating a continual conservatorship. But the economics of a post nws invalidation to the pref and common would still be more favorable than current prices imply. Plus depending upon terms of that legislation there may be grounds for further litigation (takings). Plus unlikely to get passed imo. Debate is between how to replace GSEs and how to keep them and reform them. No one is saying status quo is acceptable

 

Edit:  to take analysis one step farther, if nws is invalidated imo proposals to replace GSEs become too expensive and the convo turns to how best to reform. The whole underlying theory to nws was to eliminate private shareholders in order to make replacement cost less.

[hardincap]

I've been thinking about that as well. agree its low risk but not zero. fwiw, th717:

 

there are still many pitfalls to navigate once the net worth sweep is deemed illegal. We are researching this issue heavily but to think we are home free after the NWS is voided would be a mistake. Our enemies in congress will undoubtedly rush to blunt the positive effects and also it will likely spur a renews push for overall housing finance reform. We must be ready for this as it will likely be where the final battle is waged and it will be a gargantuan battle at that.

[TonyG]

if delawre rules illegal, I assume gov't can't appeal that right? because they plan on submitting it to supreme court of delaware?

[Sunrider]

Thanks Chris. I would think/hope that the playing field for shenanigans would be somewhat limited - depending on how/which plaintiffs win. Clearly the conservator should conserve and rehabilitate. If the NWS is reversed, it seems to me that the GSEs are a short way from not needing a conservator/having been rehabilitated - or how much leeway do you think exists entrenching the conservator status? (Presume plays such as legislating higher capital standards would have to apply across all financial institutions so the lobbying by big banks alone would kill it.)

C.

Great question actually. Yes congress could pass law validating a continual conservatorship. But the economics of a post nws invalidation to the pref and common would still be more favorable than current prices imply. Plus depending upon terms of that legislation there may be grounds for further litigation (takings). Plus unlikely to get passed imo. Debate is between how to replace GSEs and how to keep them and reform them. No one is saying status quo is acceptable

 

Edit:  to take analysis one step farther, if nws is invalidated imo proposals to replace GSEs become too expensive and the convo turns to how best to reform. The whole underlying theory to nws was to eliminate private shareholders in order to make replacement cost less.

[merkhet]

if delawre rules illegal, I assume gov't can't appeal that right? because they plan on submitting it to supreme court of delaware?

 

No, they can still appeal. While they're certifying the question of the preferreds to the Delaware state Supreme Court, the case is being tried in the federal District Court of Delaware. There is a federal court of appeals to which the government could submit an appeal.

[Guest cherzeca]

if delawre rules illegal, I assume gov't can't appeal that right? because they plan on submitting it to supreme court of delaware?

 

No, they can still appeal. While they're certifying the question of the preferreds to the Delaware state Supreme Court, the case is being tried in the federal District Court of Delaware. There is a federal court of appeals to which the government could submit an appeal.

 

The question on appeal would relate to whether federal or Delaware applies. If app ct agreed that del law applies then end of appeal as it would have to respect del s ct re Delaware law

[Guest cherzeca]

Usually federal district court judges look to appeals court opinions for guidance. It seems that the Robinson case judge will likely rule before the perry appeals court. Hopefully he will provide a well reasoned opinion

[Mephistopheles]

Just had this thought yesterday. Trump wants Icahn as his Treasury secretary. Icahn doesn't want the job apparently but I'm sure he'd have the former's attention for financial matters. Icahn also owns shares in the GSEs. This could be good I think if Trump wins.

 

Edit: but I'm biased and if Corker gets VP then perhaps not so good lol

[doughishere]

War of the letters. Bankers, Realtors, home builders ask Watt, Lew to leave Fannie, Freddie agreements to Congress

 

 

https://www.politicopro.com/financial-services/whiteboard/2016/06/bankers-realtors-ask-that-fannie-freddie-agreements-remain-unchanged-073000

 

 

 

My comment: didnt congress already say what they wanted to do with fannie and freddie?

[Guest cherzeca]

looks like judge thapar has scheduled oral argument in robinson for 7/14 on motion to dismiss:

 

ORDER (1) The dfts SHALL FILE their supplemental brief by Thursday, June 16, 2016. The plaf SHALL RESPOND by Thursday, June 30, 2016. The dfts indicated that they do not intend to file a reply. If the dfts wish to reply, however, they may file a supplemental reply by Thursday, July 7, 2016. (2) Oral argument on the motion to dismiss, R. 23 , is SCHEDULED for Thursday, July 14, 2016, at 1:00 p.m. at the US Courthouse in Covington, Ky. Signed by Judge Amul R. Thapar on 6/8/16.(MJY)cc: COR, CovCD (Entered: 06/08/2016)

 

no decision in june as previously led to believe

[hardincap]

so thapur indicated that he's ready to rule on the mtd and then orders an oral arg? did he change his mind? 

[Guest cherzeca]

so thapur indicated that he's ready to rule on the mtd and then orders an oral arg? did he change his mind?

 

I was wondering too. Could be that govt wanted to file supplemental brief containing Ginsburg's regulatory capital argument that govt hadn't thought of. While I don't think it will fly with perry appeals court it would be legal malpractice not to ask thapar for leave to brief it. As for oral argument not clear if his prior one month reaction time included oral argument

[Guest cherzeca]

If I were repping Robinson I would move in reply brief for summary judgment! Why not?

[Guest cherzeca]

looking more carerfully at thapar's prior order re the 30 day after MDP decision, it is clear that he allowed parties to ask for oral arg and that he contemplated that this would move the 30 day period:

 

MINUTE ENTRY ORDER FOR TELEPHONIC STATUS CONFERENCE held on 4/20/2016 before Judge Amul R. Thapar: (1) dfts' joint motion to stay, R. 40 , is GRANTED IN PART. (2) This case is STAYED until Friday, July 1, 2016. (3) The parties SHALL FILE a joint status report updating Court on status of motion to transfer, see R. 39 -1, by Wednesday, June 29, 2016. This report should inform Court whether MDL Panel has granted motion to transfer, denied motion to transfer, or taken no action on motion to transfer. (4) If MDL Panel does not act on motion to transfer by July 1, 2016, the stay will automatically lift on Friday, July 1, 2016. In this case, Court will rule on motions to dismiss by Friday, July 29, 2016. (5) If MDL Panel grants or denies motion to transfer prior to July 1, 2016, parties SHALL INFORM Court of this action. If MDL Panel denies motion to transfer, Court will rule on motions to dismiss within 30 days of receiving notice of MDL Panel's decision from parties. (6) If parties would like to schedule oral argument on underlying motions to dismiss, they SHALL SUBMIT a mutually agreeable date to Court. The parties' chosen date must be within 14 days of July 1, 2016. Signed by Judge Amul R. Thapar on 4/21/2016. (Court Reporter Joan Averdick) (RCB)cc: COR Modified text on 5/13/2016 (RCB). (Entered: 04/21/2016)

[merkhet]

I don't think the oral arguments are signaling anything one way or the other. He just wants to give them the chance to make oral arguments if they so choose.

[hardincap]

so it seems to me thapur has pretty much made up his mind but is allowing for oral arguments anyway. is it standard procedure to allow for oral even if judge has made up his/her mind?

[Mephistopheles]

so it seems to me thapur has pretty much made up his mind but is allowing for oral arguments anyway. is it standard procedure to allow for oral even if judge has made up his/her mind?

 

I'm sure most intelligent lawyers that are paying attention have made up their mind on this issue: Richard Epstein, merkhet, cherzeca :D. It's hard not to when the facts are this obvious. I can see Thapur keenly reading the arguments from the other courts and shaking his head at the madness that the Govt is presenting.

 

I was also confused by Thapur's words. He said within 30 days of MDL ruling, but then also allowed for oral arguments. So does that mean it'll be within 30 days of the oral arguments?

[Guest cherzeca]

it is interesting that thapar said that he would rule w/in 30 days of being notified that MDL declined to consolidate.  assuming that he would rule and issue opinion within that period, i would agree with @hardincap that thapar had pretty much made up his mind.  we can be wrong and he is just a fast judge. but ending stay if no MDL decision before 7/1/16 also indicates that he was ready to go. 

 

allowing oral arg is a courtesy (denied by lamberth) that should be a no brainer for a judge since no judge (other than lamberth) can conclude that oral arg might not be helpful. 

[Guest cherzeca]

so it seems to me thapur has pretty much made up his mind but is allowing for oral arguments anyway. is it standard procedure to allow for oral even if judge has made up his/her mind?

 

I'm sure most intelligent lawyers that are paying attention have made up their mind on this issue: Richard Epstein, merkhet, cherzeca :D. It's hard not to when the facts are this obvious. I can see Thapur keenly reading the arguments from the other courts and shaking his head at the madness that the Govt is presenting.

 

I was also confused by Thapur's words. He said within 30 days of MDL ruling, but then also allowed for oral arguments. So does that mean it'll be within 30 days of the oral arguments?

 

this is my best guess, but when thapar said he would rule by 7/29 even if MDL panel hadn't decided by 7/1, and that oral arg could not be later than 7/14, this would imply that he is still expecting to rule by 7/29...of course, even if this is right, he could change his mind

[Mephistopheles]

I know it's unhealthy to be speculating, but given he's so eager and ready to rule, I think it means that he must feel strongly about the issue one way or another.

 

So the question is, is it possible to feel strongly in favor of the Govt? I suppose so - John Carney does. Lamberth did, but then Lamberth didn't have the benefit of the unsealed documents from Sweeney which obviously favor the plaintiffs. And like you said, cherzeca, Lamberth refused to have oral arguments whereas Thapur is willing to.

 

Again just speculation but it seems to me that he's leaning towards us.

[Guest cherzeca]

I know it's unhealthy to be speculating, but given he's so eager and ready to rule, I think it means that he must feel strongly about the issue one way or another.

 

So the question is, is it possible to feel strongly in favor of the Govt? I suppose so - John Carney does. Lamberth did, but then Lamberth didn't have the benefit of the unsealed documents from Sweeney which obviously favor the plaintiffs. And like you said, cherzeca, Lamberth refused to have oral arguments whereas Thapur is willing to.

 

Again just speculation but it seems to me that he's leaning towards us.

 

i would agree with you.  however, what i think it really means is that he had already done his research (or read his clerk's) and did not see that it would take long to write opinion.  but yes, if i had to guess, i would say he would deny MTD.  after all, i have a bias...:>)