muscleman Posted April 8, 2015 Share Posted April 8, 2015 It's strangely early for them to bring in a damages consultant. Does this imply anything? Link to comment Share on other sites More sharing options...
merkhet Posted April 9, 2015 Share Posted April 9, 2015 No idea. I'm trying not to engage in idle speculation. It's a net positive, IMO. Link to comment Share on other sites More sharing options...
merkhet Posted April 16, 2015 Share Posted April 16, 2015 http://www.bloomberg.com/news/videos/2015-04-16/has-senator-grassley-been-co-opted-by-hedge-funds- Grassley interview on Bloomberg. Link to comment Share on other sites More sharing options...
doughishere Posted April 17, 2015 Share Posted April 17, 2015 Gaining Traction: Fannie and Freddie Flirt with Re-privatization Proff Susan Wachter. Wharton School of Business. http://knowledge.wharton.upenn.edu/article/gaining-traction-fannie-and-freddie-flirt-with-re-privatization/ Link to comment Share on other sites More sharing options...
doughishere Posted April 21, 2015 Share Posted April 21, 2015 http://www.npr.org/blogs/money/2015/04/21/401259676/who-owns-fannie-mae-and-freddie-mac Who Owns Fannie Mae And Freddie Mac? APRIL 21, 2015 2:05 PM ET STACEY VANEK SMITH Link to comment Share on other sites More sharing options...
merkhet Posted April 22, 2015 Share Posted April 22, 2015 Treasury has given a response to Grassley http://blogs.wsj.com/developments/2015/04/21/treasury-department-fannie-freddie-bailout-wasnt-a-loan/ Link to comment Share on other sites More sharing options...
jawn619 Posted April 22, 2015 Share Posted April 22, 2015 Treasury has given a response to Grassley http://blogs.wsj.com/developments/2015/04/21/treasury-department-fannie-freddie-bailout-wasnt-a-loan/ So the treasury admits that it was an investment. Still makes the sweep unlawful... They invested in 80% of Fannie through preferreds and it's just a question of whether what happens to the other 20% that belongs to shareholders. Link to comment Share on other sites More sharing options...
Mephistopheles Posted April 22, 2015 Share Posted April 22, 2015 Here's a copy of the actual letter: http://online.wsj.com/public/resources/documents/GrassleyResponse04212015.pdf Link to comment Share on other sites More sharing options...
doughishere Posted April 23, 2015 Share Posted April 23, 2015 Judge sees ‘dilemma’ in government defense of AIG bailout By Patrick Temple-West 4/22/15 5:38 PM EDT A federal judge on Wednesday leaned firmly against parts of the U.S. government’s closing argument in its fight with shareholders of American International Group Inc — led by former CEO Hank Greenberg — who are claiming $40 billion in damages stemming from the company’s bailout in September 2008. After 37 days of trial, attorneys for the shareholders and the Justice Department made their final pleas before Judge Thomas Wheeler in the case, which included star witnesses Ben Bernanke, Timothy Geithner and Henry Paulson. At one point during Wednesday’s hearing, Wheeler sounded skeptical of an argument by Justice Department attorney Kenneth Dintzer that there was no “regulatory taking” violation under the 5th Amendment when the government took an 80 percent stake in AIG. “There’s no question in anybody’s mind that there had been change in ownership … the government was running the show,” Wheeler said. “The dilemma I’m having, I’m listening to your arguments but nevertheless in that very first week the government is in control,” Wheeler said. “How can it be that there wasn’t some sort of illegal exaction of taking for that to have happened?” In a different exchange with Dintzer, Wheeler raised concerns with the government’s profit-taking after it acquired its AIG stake. “The government acquired the stock without paying anything for it and then pocketed the revenue,” Wheeler said. “I mean, c’mon.” Earlier in the day, the attorney for Greenberg and other AIG shareholders argued the government illegally extracted 80 percent of the company as a condition for a $85 billion loan during the September 2008. “Somebody had to be a scapegoat” so that 2008 presidential candidates Barack Obama and John McCain could “support the ‘TARP’ bailout,” said David Boies, chairman of the law firm Boies, Schiller & Flexner who is representing the AIG shareholders. “The government made a political statement … to demonize AIG.” During Boies’s arguments, Wheeler offered a favorable analogy for the shareholders, saying their situation sounded similar to a partial government seizure of a home: “We’re only going to let you live in the master bedroom.” Maurice “Hank” Greenberg, AIG’s ex-chairman and CEO, was in the courtroom but declined to answer questions after the hearing. A ruling in the case would come “in the relatively near future,” Wheeler said. But Boies said that decision is at least months away. To view online: https://www.politicopro.com/go/?id=46606 Link to comment Share on other sites More sharing options...
merkhet Posted April 23, 2015 Share Posted April 23, 2015 If Wheeler comes out the way I think he's leaning, it's going to be pretty positive for Fannie Mae shareholders. Link to comment Share on other sites More sharing options...
merkhet Posted April 24, 2015 Share Posted April 24, 2015 Looks like there's a fight brewin' -- filed on April 23rd, 2015 Full docket text for document 148: **SEALED** MOTION to Remove the "Protected Information" Designation from Defendant's March 20 Privilege Log, filed by All Plaintiffs.Response due by 5/11/2015. (Attachments: # (1) Appendix)(Cooper, Charles) Link to comment Share on other sites More sharing options...
jawn619 Posted April 24, 2015 Share Posted April 24, 2015 so when do we get our money? Link to comment Share on other sites More sharing options...
Mephistopheles Posted April 24, 2015 Share Posted April 24, 2015 I was excited to see Judge Wheeler's remarks. Let's see what happens. On a separate issue, I like to read John Carney's posts on Twitter just to provide myself with a Devil's advocate. One thing he keeps saying is that the 12% PIK was not a viable option, because it doesn't provide a cash dividend. I really don't understand this argument, so maybe someone can enlighten me. Basically he's saying that the sweep was necessary, because it doesn't make sense to continuously borrow from Treasury to have to pay dividends to Treasury. Nor does it make sense to create an IOU in the form of payment in kind. Therefore, the best option is to take all the money that pours in. My question to this is, weren't the Senior preferred dividends cumulative? So if the companies can't afford to pay, they would still accrue, right? And if the companies ever do return to profitability, the Senior preferred be first in line to receive all missing payments anyway. Furthermore, it's not like the sweep would help if the companies don't return to profitability, at which point it would be no different than an IOU. And if the companies do earn money, well then cumulative dividends get paid and no need to worry about it being non-cash. Tough to follow Carney's or the government's logic here. Edit: FWIW, Judge Wheeler and Judge Sweeney were both appointed on the same day by George W. Bush. Hopefully that's not all they have in common. :) Link to comment Share on other sites More sharing options...
merkhet Posted April 24, 2015 Share Posted April 24, 2015 There's no logic there. Link to comment Share on other sites More sharing options...
Mephistopheles Posted April 24, 2015 Share Posted April 24, 2015 There's no logic there. Lol, yeah I try very hard to avoid commitment bias. But this main argument of theirs makes no sense at all! The sweep is useless without profits, and with profits the PSPA suffices! Link to comment Share on other sites More sharing options...
morningstar Posted April 25, 2015 Share Posted April 25, 2015 There's no logic there. Lol, yeah I try very hard to avoid commitment bias. But this main argument of theirs makes no sense at all! The sweep is useless without profits, and with profits the PSPA suffices! The point seemed to be that the combination of paying the coupon and not making any money (therefore requiring continuous additional draws) was eating away at the available support, and the deal effectively provided relief, preserving availability without having to stop paying dividends on their major committed capital instrument. This seems perfectly reasonable. If you're running a financial company you don't want to stop paying dividends on your preferred stock if it's at all avoidable since it's a major sign of weakness and instability. Link to comment Share on other sites More sharing options...
Mephistopheles Posted April 25, 2015 Share Posted April 25, 2015 The point seemed to be that the combination of paying the coupon and not making any money (therefore requiring continuous additional draws) was eating away at the available support, and the deal effectively provided relief, preserving availability without having to stop paying dividends on their major committed capital instrument. They could have preserved availability by enacting the PIK, which was to be used for precisely situations in which they can't afford to pay the dividend. The dividends accumulate, and you pay them off as they make money. Effectively, the sweep does exactly that: you don't pay when you don't have the money, and when you do have money, you pay it off. Except even when you pay it off, you continue paying with everything you earn. So if granting relief was the goal, a 2% penalty with the PIK is much more relieving than an infinite penalty. This seems perfectly reasonable. If you're running a financial company you don't want to stop paying dividends on your preferred stock if it's at all avoidable since it's a major sign of weakness and instability. I'm not sure what you mean here? They wouldn't pay the dividend regardless if there aren't any profits, sweep or no sweep. Only way to pay dividends without making money is by continuing with the draws - which doesn't make any sense either. The only people for whom this is a sign of weakness are for those below the senior preferred. Well, turns out the sweep makes it far weaker for us. And the real sign of weakness for parties other than equity holders is depriving the companies of capital, which wouldn't be the case if there wasn't a sweep. Link to comment Share on other sites More sharing options...
merkhet Posted April 28, 2015 Share Posted April 28, 2015 http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/aig-american-international-group/msg219843/#msg219843 Transcript from the closing arguments in the AIG case. I'm anxiously awaiting this decision. Link to comment Share on other sites More sharing options...
doughishere Posted April 28, 2015 Share Posted April 28, 2015 http://www.nytimes.com/2015/04/23/business/supreme-court-hears-appeal-in-raisin-case.html Supreme Court hears appeal in Raisin "Taking" Case Chief Justice John G. Roberts Jr. said the program was “a historical quirk” that allowed the government to do more than regulate production. “You come up with the truck and you get the shovels and you take their raisins, probably in the dark of night,” the chief justice told a lawyer for the federal government, Edwin S. Kneedler. Link to comment Share on other sites More sharing options...
doughishere Posted April 28, 2015 Share Posted April 28, 2015 'The other element I find funny—curious, not ha-ha--Treasury made its 2012 “sweep” investment decision to gobble up "all earnings (and subsequently draw about 20 lawsuits—owing to its fear of the GSEs could be possibly “borrowing from Treasury to pay borrowings from Treasury” (isn’t that lending terminology?)—but this fear/justification about a penniless Fannie and Freddie occurred just as both companies were about to revenue ripen and burst into significant profitability.'' From Bill Maloni's GSE Blog http://malonigse.blogspot.com/ Link to comment Share on other sites More sharing options...
merkhet Posted April 28, 2015 Share Posted April 28, 2015 http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/aig-american-international-group/msg219843/#msg219843 Transcript from the closing arguments in the AIG case. I'm anxiously awaiting this decision. It sounds like Starr will win this case... Link to comment Share on other sites More sharing options...
doughishere Posted April 28, 2015 Share Posted April 28, 2015 How long do you think it will take Judge Wheeler to rule? Link to comment Share on other sites More sharing options...
doughishere Posted April 28, 2015 Share Posted April 28, 2015 More on Wheeler Judge seems skeptical of government's AIG bailout terms by Paul Davidson, USA TODAY http://archive.courier-journal.com/usatoday/article/26184917 Wheeler, however, said he remained "perplexed" by the government's treatment of AIG. "It doesn't really justify interest (rate) four times as high (as other firms) and an 80% stake," the judge said. "I mean nobody got that." Link to comment Share on other sites More sharing options...
merkhet Posted April 28, 2015 Share Posted April 28, 2015 How long do you think it will take Judge Wheeler to rule? The transcript says he will issue a opinion in the relatively near future, but that's a pretty vague concept. I'm hoping within a month. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted April 29, 2015 Share Posted April 29, 2015 Throughout the transcript, the loan to AIG is referred to as a 13(3) loan. Could someone point me in the direction as to determining what the means and what it is? It seems that one of the plaintiffs arguments was that the government is authorized to accept equity on top of an interest rate in exchange for the loan and makes multiple references that this was only done required of AIG. Ultimately, I'm trying to determine how the 79.9% equity stake granted to the government here differs from the 79.9% granted to the government in the case of Fannie/Freddie to know how relevant this ruling will be to us. Thanks, Link to comment Share on other sites More sharing options...
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