Fannie Mae (QB) (FNMAK) Quote

you do not need a lawyer. just dump all you say here and let defendant show up in court to argue.

de minimus ! Wow you sound real smart like. It’s like u are talkn’ inanwhole nother language

I am not a lawyer I do not have the necessary knowledge to file a lawsuit. Our Friend Barron has contributed valuable information to this board, and I very much appreciate him. I personally have done what I can to help our cause.

Oh please do. File in small claims court and see what happens to you.

give me just one example of conservatorship in which that company kept making money hand and fist quarter over quarter over 16 years but a net worth sweep was placed on it taking everything away and used and abused with freebies to public? just one example please!

Conservatorships happen all the time. Like it or not they are analogous with Chapter 11 bankruptcies, except that in Chapter 11 shareholders actually have rights. Priority in payment is the same and when the party with seniority is the government, don't expect any windfalls. It's not politically palatable, especially given it would likely be illegal.

great. you know this in detail, so file a small claims for the maximum allowed in your state for just below $100.00 in fee. would you? are you worried about anonymity? that is all i can think about if you say you can't.

"Treasury isn't going to become charitable." we will see . we paid a price to put on the tatoo that is etched deep in last 16 years. let's see what price treasury pays to remove it.

I understand what you are saying, and your reasoning for saying it. Good luck to you.

Yes, our friend Barron recommended just what you suggested.

Barron4664
Re: EternalPatience post# 762310
Saturday, 08/12/2023 11:25:20 AM
If you were paying attention to my posts you would have realized that my proposed strategy that Rodney has been posting relies on filing little tucker act claims in the local federal district court. If you file a takings claim for greater than $10,000, it has to be heard in Sweeny’s court of federal claims. If you challenge any aspect of the SPSPA, such as the NWS the terms of the agreement requires all claims to be heard in the DC district Court aka Lamberth.

I propose neither. I propose claims alleging illegal exaction due to Treasury and FHFA violating Federal statutes that any district court has jurisdiction over. The Federal statutes are the Charter Act, the Safety and Soundness Act of 1992, as amended by HERA, Administrative Procedures Act, and potentially the Chief Financial Officers Act.

None of the current litigation makes any claims of violation of these acts. They all challenge the actions of the Conservator and attempted to squeeze the APA and the 5th amendment takings into the Actions of the FHFA-C within the terms of the SPSPA. all have failed to this point. It is called a categorical error. Kind of like the “war on terror” how do you fight a war against a weapon?

Rather, I propose a simple set of questions:

1) is a variable Liquidation preference pegged to the amount of commitment drawn by the GSEs (with a 10% rate later changed to NWS, later to LP increased for free) attached to the sale of 1000 Senior Preferred Shares considered a charge or fee for the purposes outlined in the Charter Act?

2) are the warrants in consideration of the Commitment a charge or fee?

3) If they are determined to be a charge or a fee attached to a GSE obligation or a security, are they prohibited by the plain language of the Charter Act?

4) what appropriations law did treasury use to make $200 billion of tax payer debt available for the GSEs to draw from?

5) are the SPS with a variable liquidation preference outlined in the SPSPA and its amendments and share certificates a new product for the purposes of the Safety and Soundness Act of 1992 as amended by HERA?

6) If they are a new Product, Congress directed the Director of FHFA to apply the Administrative Procedures Act to these new products sold to Treasury. Did FHFA follow the administrative procedures congress required in the plain language of the safety and soundness act?

7) The CFO act requires the Treasury department based on published accounting standards to determine if their actions of funding through appropriations, ownership of 100% of the GSEs net worth and non-regulatory control of the GSEs through the SPSPA require the consolidation of the GSEs liabilities onto the nations balance sheet. Do the actions of Treasury under the SPSPA require such consolidation under the plain language of the Chief Financial Officers Act?

The answers to these questions would hopefully result in the voiding of the SPSPA in its entirety and a cash sum of less than $10,000 to me. Each of these questions can be answered by just reading the plain language of the statute and the Agreements. No fancy legal doctrines are needed for mental gymnastics. It is plain letter law that avoids all the traps. The only doctrine involved is the doctrine of continuing claims. Otherwise we are limited to the SOL on the 4th amendment to the SPSPA.

Link: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172580067

You think you know it all.

Reality is that the journey has been filled with unprecedented turns, at least for the 11 years I've been following the GSEs. Unlike you, I don't think that everything will suddenly revert to the "norm" of restructuring and receivership. I leave open the possibility that the resolution here will be different because the journey here was different.

I don't know it all....I assure you of that. But after the Supreme Court blessed the twisted logic in the Collins case, you shouldn't be counting on anything more than charity.

I'm not a believer of pixie dust and unicorn farts. When you've lost every step of the way, I wouldn't expect a big win. Treasury isn't going to become charitable.

friday was off, no editorial. lol.

wonder if filing a small claims case to test your thesis in court, just to see fhfa reponse. may sound silly but if each of us file in different state, may end up showing us their true colors. what do you say?

"I have real world, inside knowledge/experience in corporate restructurings."
no situation is same. this situation has never happened before. you can't apply text book or history to it. nothing lasts forever, good or bad. i don't know when, but when it resolves, the ones who hold would have learnt a valuable life lesson hard to endure for last 16 years, may be rewarded with exceptional lifetime returns than from your 500 stocks that you own. i wish i didn't had to sell and now don't have any disposable money to buy them back. imo someone is accumulating. it is clear.

To someone with extensive restructuring experience, I can understand why everything looks like a restructuring. Most of them go pretty much the same way. Hammer -> Nail.

If you don't understand the relationship between blinders and knowledge, you may want to research the concept of "Expert Blindness". In short: "Expert blindness happens when we subconsciously develop a bias as a result of our intimate and extensive knowledge on a particular subject. Your expertise fuels your success; it also creates “expert blindness,” skewing how you see and react to the world."

Which is why you understandably didn't answer ANY of my questions of how much experience you've had with the situations the GSEs are encountering? You think you know it all.

Reality is that the journey has been filled with unprecedented turns, at least for the 11 years I've been following the GSEs. Unlike you, I don't think that everything will suddenly revert to the "norm" of restructuring and receivership. I leave open the possibility that the resolution here will be different because the journey here was different.

no name said Quote: “ For anyone new here Rodney repeats the same fallacy over and over again.”

This is the information no name is referring to. You be the judge.

Published October 9, 2023

FINANCIAL SERVICES
Committee

Committee Members
118th CONGRESS

The purpose of this letter is to bring attention to the Committee violations by the Federal Housing Finance Agency (FHFA) violating of the Charter Act, and the Federal Housing Enterprises Financial Safety and Soundness act of 1992 (FHEFSSA); Both as amended by the HOUSING AND ECONOMIC RECOVERY ACT OF 2008, (HERA). The Charter Acts are Fannie Mae and Freddie Mac's enabling statutes. FHEFSSA and HERA are regulatory statutes, governing the companies' regulators. All are laws passed by Congress.

The conservatorship of Fannie Mae and Freddie Mac has continued for over 15 years. I am not sure if Committee Members understand the history of the takeover of the companies and pray the Committee will of your clemency hear me in a few words.

Before the take down of the companies Treasury Secretary Paulson was unaware that the FHFA Regulator had sent both Fannie Mae and Freddie Mac letters saying the companies were safe and sound and exceeded their regulatory capital requirements. Paulson told FHFA Director Lockhart that he had to change his agency’s posture on the two companies, and FHFA did exactly that. FHFA sent each company an extremely harsh mid-year review letter, and two days later, Paulson, Lockhart and Fed chairman Bernanke met with the companies’ CEO's and directors to tell them they had no choice but to agree to conservatorship.

When Paulson met with the directors of Fannie Mae and Freddie Mac to inform them of his intent to take over their companies, neither entity met any of the twelve conditions for conservatorship spelled out in the newly passed HERA legislation. Paulson since has admitted he took the companies over by threat.

HOUSING AND ECONOMIC RECOVERY ACT OF 2008 Page 2734 Twelve Conditions
APPOINTMENT OF THE AGENCY AS CONSERVATOR OR RECEIVER
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf

The FHFA freely admitted the companies were adequately capitalized.

SECOND QUARTER CAPITAL RESULTS

Minimum Capital
Fannie Mae’s FHFA-directed capital requirement on June 30, 2008 was $37.5 billion and its statutory minimum capital requirement was $32.6 billion. Fannie Mae’s core capital of $47.0 billion exceeded the FHFA-directed capital requirement by $9.4 billion.

Freddie Mac’s FHFA-directed capital requirement on June 30, 2008 was $34.5 billion and its statutory minimum capital requirement was $28.7 billion. Freddie Mac’s core capital of $37.1 billion exceeded the FHFA-directed minimum capital requirement by $2.7 billion.

Link: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Suspension-of-Capital-Classifications-During-Conservatorship-and-Discloses-Minimum-and-RiskBased-Cap.aspx#:~:text=During%20the%20conservatorship%2C%20FHFA%20will%20not%20issue%20a,submit%20capital%20reports%20to%20FHFA%20during%20the%20conservatorship.

The FHFA forced Fannie Mae and Freddie Mac into a contract with the United States Treasury by Senior Preferred Stock. The Senior Preferred Stock Purchase Agreement is not a law: The SPSPA is an illegal contract between Treasury and FHFA as conservator of the two companies. The Charter Act, FHEFSSA and HERA passed by Congress is the supreme law of the land that governs the two companies.

Fannie Mae and Freddie Mac's regulatory guidelines would have prohibited the companies form paying dividends to the Treasury while severely under-capitalized, but the FHFA suspended those guidelines because the regulator wanted the companies to have to draw more senior preferred stock from the Treasury to pay the annual dividends in cash, ballooning their outstanding senior preferred stock and increase their required annual dividends. FHFA and its Director are executive branch entities and can not make changes to federal laws. Only Congress can change the law. Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee.

When Fannie Mae and Freddie Mac were taken over by the FHFA no emergency existed and the FHFA had no authority granted by Congress to take over the companies, no authority written in the Charter Act that gave the FHFA right to take down the companies.

Charter Act: SUBSECTION (g) TEMPORARY AUTHORITY OF TREASURY TO PURCHASE OBLIGATIONS AND SECURITIES; CONDITIONS.— EMERGENCY DETERMINATION REQUIRED. Page 16

Under this subsection no emergency existed.

This leads to the question, who authorized the appropriation of taxpayer debt to provide the 200 billion commitment? Certainly not Congress. Treasury took it upon themselves and authorized a 200 billion commitment available in exchange for One Million Shares (1,000,000) with an initial liquidation preference of $1,000 per share. Shares of senior equity illegal and unconstitutional.

Page 5

Link: https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-SPSPA_09-07-2008.pdf

Charter act prohibits the commitment fees (Seniors, warrants, variable liquidation preference). More importantly the actions of Treasury to appropriate 200 billion in taxpayer debt, take non regulatory control of the companies through the SPSPA (require Treasury permission at least 10 separate times) and ownership of more than 50% of the companies requires them under the GAO act and the CFO act to consolidate the GSEs onto the nations balance sheet. The fact that that hasn't happened means the Treasury has violated the 14th amendment to the Constitution by repudiating the 5 trillion plus in debt the Treasury has acquired through their actions since 2008. Their actions have resulted in a takings of the entire enterprise value of the formerly private companies. These actions have necessarily turned the GSEs back into agencies of the executive branch as they were originally created. This is the definition of a major question and also a separation of powers problem since Congress did not authorize the actions Treasury took and continues to take.

In addition 'Deferred Tax Assets' the Treasury forced the companies to write down and record these non-cash expenses making the companies appear bankrupted. Fannie Mae and Freddie Mac were no where near bankrupted.

Mr. Howard wrote below,

Quote: “Between the time Fannie and Freddie were put into conservatorship and the end of 2011, well over $300 billion in non-cash accounting expenses were recorded on their income statements. These non-cash expenses, most of which were discretionary, eliminated all of the Companies’ capital and forced them, together, to take $187 billion from Treasury. But because accelerated or exaggerated expenses cause losses that are only temporary, Fannie’s and Freddie’s non-cash losses began to reverse themselves in 2012. Coupled with profits resulting from a rebounding housing market, the reversal of these losses enabled both Companies to report in August 2012 sufficient second quarter income to not only pay their dividends to Treasury but also retain a total of $3.9 billion in capital. As soon as it became apparent that a large percentage of the non-cash accounting losses booked during the previous four years was about to come back into income, Treasury and FHFA entered into the Third Amendment to the PSPA. The Third Amendment substituted for the fixed dividend payment a requirement that all future earnings—including reversals of accounting-related expenses incurred earlier—be remitted to Treasury. From the time the Third Amendment took effect through the end of 2014, Fannie and Freddie paid Treasury $170 billion, $133 billion more than they would have owed absent the Amendment.” End of Quote


The United States was not obligated after 1968 to back debt of Fannie Mae. The United States Taxpayers became obligated when the government took over the two companies.

Originally, Fannie Mae had an explicit guarantee from the United States government; if the entity got into financial trouble the government promised to bail it out. This changed in 1968. Fannie Mae became a private stockholder owned company. Fannie Mae securities received no actual explicit or implicit government guarantee. This is clearly stated in the securities themselves, and in many public communications issued by Fannie Mae.

Quote: “Although we are a corporation chartered by the U.S. Congress, the U.S. Government does not guarantee, directly or indirectly, our securities or other obligations. We are a stockholder-owned corporation, and our business is self-sustaining and funded exclusively with private capital. Our common stock is listed on the New York Stock Exchange and traded under the symbol “FNM.” Our debt securities are actively traded in the over-the-counter market.” End of Quote.

Information from: Fannie Mae form 10K Dec 31, 2007
part I, page 1, item 1.

https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/quarterly-annual-results/2007/form10k_022708.pdf

Where is "maximize profits for taxpayers" written in the Charter Act? Specifically, in this provision entitled Fee Limitation of the United States:

Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. The United States prohibition on assessment or collection of fee or charge to Fannie Mae, (section 304 Fee Limitation). Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).

SEC. 304. SECONDARY MARKET OPERATION

Fee Limitation

Quote: “(f) PROHIBITION ON ASSESSMENT OR COLLECTION OF FEE OR CHARGE BY UNITED STATES.—Except for fees paid pursuant to section 309(g) of this Act and assessments pursuant to section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, no fee or charge may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any mortgage, asset, obligation, trust certificate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury pursuant to subsection (c) of this section.” End of Quote. Page 16

Only Federal Reserve Banks are authorized to be reimbursed of fees, (section 309).

SEC. 309. GENERAL POWERS OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION

Federal Reserve Banks to Act as Fiscal Agents (Fannie Mae and GNMA)

Quote: “(g) DEPOSITARIES, CUSTODIANS, AND FISCAL AGENTS.—The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a)(2), for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.” End of Quote. Page 29


Link:

FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT
As amended through July 25, 2019

link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf

The Senior Preferred Stock, with a variable liquidation preference outlined in the SPSPA and its amendments and share certificates is a new product for the purposes of the Safety and Soundness Act of 1992 as amended by HERA.

Congress directed the Director of FHFA to apply the Administrative Procedures Act to the new products sold to Treasury. The FHFA did not follow the administrative procedures congress required in the plain language of the safety and soundness act.

The Director of FHFA as regulator violated the safety and soundness act and the administrative procedures act by not following the statutory duty to approve new products issued by the GSEs to Treasury for the purpose of stabilizing the secondary mortgage market.

The law required the publication in the federal register of the SPS with their variable rate liquidation preference tied to the commitment. It requires a public comment period, and a rule making process to make the SPS legal. It is the same law that required the capital rule. And the same law that required FHFA a year ago issue the new products law for MBS products. They have ignored this requirement for 15 years.

Director Lockhart Regulator, and Director Lockhart Conservator. Holding both positions as Regulator and Conservator; Conservator Lockhart is required by law to file notice to himself as Regulator.

The Safety and Soundness Act required Director Lockhart as regulator not conservator to approve a new product issued by Director Lockhart acting as conservator FHFA-C (SPS with variable liquidation Preference) to Treasury under the terms of the SPSPA for the purpose of carrying out the secondary mortgage market. He was required as regulator to file notice in the federal register, seek public comment and issue federal regulations for the new product we call the Senior Preferred shares sold to Treasury.

HOUSING AND ECONOMIC RECOVERY ACT OF 2008
Page 2689
SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf

The CFO act requires the Treasury department based on published accounting standards to determine if their actions of funding through appropriations, ownership of 100% of the GSEs net worth and non-regulatory control of the GSEs through the SPSPA require the consolidation of the GSEs liabilities onto the nations balance sheet. Do the actions of Treasury under the SPSPA require such consolidation under the plain language of the Chief Financial Officers Act?


The Congressional Budget Office publication states, “Federal Government effective ownership of Fannie Mae and Freddie Mac.”

The Enterprises have been Nationalized by the Government according to the CBO: The liabilities have not been added to the National Debt nor have the Shareholders been compensated by U.S. Law of the 5th Amendment.

Congressional Budget Office
From: Estimates of the Cost of Federal Credit Programs in 2023

Page 1, Foot Note 1.

Quote: “Fannie Mae and Freddie Mac have been in federal conservatorship since September 2008. CBO treats the two GSEs as government entities in its budget estimates because, under the terms of the conservatorships, the federal government retains operational control and effective ownership of Fannie Mae and Freddie Mac. For more discussion, see Congressional Budget Office, Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions (August 2020), www.cbo.gov/publication/56496; and Congressional Budget Office, The Effects of Increasing Fannie Mae’s and Freddie Mac’s Capital (October 2016), www.cbo.gov/ publication/52089” End of Quote

Link: https://www.cbo.gov/system/files/2022-06/58031-Federal-Credit-Programs.pdf

The United States Treasury in violation of the Charter Act has failed to treat as public debt the transactions of the United States when the FHFA placed Fannie Mae and Freddie Mac into conservatorship. This obligation was never recorded as public debt as required by law.

The Charter Act the Law of the Land.

Charter Act SEC. 304. SECONDARY MARKET OPERATIONS
(c) Terms and Rates

Quote: “All redemptions, purchases, and sales by the Secretary of the Treasury of such obligations under this subsection SHALL BE TREATED AS PUBLIC DEBT TRANSACTIONS of the United States.” End of Quote Page 14

Link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf

IF THE FHFA / TREASURY are allowed to continue with the violations discussed in the above writing, and the illegal contract of the SPSPA agreement is allowed to stand the Committee should give consideration to the FHFA Breach of Contract Bad faith and Unfair Dealings actions of the government in litigation that took place in Judge Lamberth's Court. It took 8 random DC Jurors only 10 hours of deliberations to see right through the Government's false narratives.

It’s bad faith and unfair dealing when the Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval to pay down the Senior Preferred Stock the Director has the authority from Congress written in HERA:

HOUSING AND ECONOMIC RECOVERY ACT OF 2008

RESTRICTION ON CAPITAL DISTRIBUTIONS.— page 2731
‘‘(1) IN GENERAL.—A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized. The exception.

Quote: “Page 2732

EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.

NOTE: REPURCHASE, REDEEM, RETIRE...

WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.

Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf

In essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full. The Treasury did not take a Perpetual Equity Investment in the enterprises, the Treasury stated a temporary investment period!

The calculation of the pay down of the liquidation preference of the Senior Preferred Stock, I am asking this committee to apply the law written in the HERA legislation passed by Congress.

https://drive.google.com/file/d/15978NWfDcTtuClMBnwgWFmoPnwK94vWn/view

The liquidation preference has been paid and the Senior Preferred Stock should be canceled.

The law actually exists! FHFA and its Director are executive branch entities. They can not make changes to federal laws. Only Congress can change the law.

Therefore, the U.S. Congress did not give DeMarco the power to take all the future profits of their wards in conservatorship into perpetuity, thus Nationalizing the GSES, based on an Incidental Power in HERA: The Net Worth Sweep.

The U.S. Congress would have given the FHFA more explicit instructions to do so than merely drafting in the HERA to do whatever it feels is in its best interests. DeMarco, this non-elected bureaucrat, has been allowed to steal the companies for the Treasury.

The SCOTUS upholding the NWS does not change the fact the liquidation preference can be paid down and the Senior Preferred Stock redeemed under the terms of the law of HERA. The money kept by the Treasury by the NWS should be applied to principle and 10% interest and over payment should be returned to the companies. $301 billion is more than enough to pay the liquidation preference and redeem the Senior Preferred Stock.

Fight - Get Mad - Shareholders have been lied to - CHEATED - We were
told this Conservatorship was to be temporary - LIE -
WE DESERVE REPARATIONS- Anger is the only language Treasury and FHFA will
understand.- Raging Anger

You can't even differentiate between blinders and knowledge. You're part of the same crew that thinks dividends are paying off equity! LMAO

You and the rest of the pump crew can just get over the butthurt. Life ain't fair. The government has all the power and you have ZERO.

Those with ZERO power should expect ZERO windfall.

For anyone new here Rodney repeats the same fallacy over and over again....some mumbo jumbo about how the lawyers are so stupid yet he's so smart....and points to a portion of the law that's irrelevant.

Thank you DaJester and Rodney for your continued fight against misinformation being posted on this board. Greatly value your posts.

For anyone new here no name is a self proclaimed prophet…

no name said, quote: "Never gonna happen."

Every time I hear someone say what will or will not happen that's a red flag! I think you, no name, are a con artist pushing the theft. YES, I said it and I’d say to your face!

In addition, short seller kthomp19 wants the Common Shareholders wiped out. Now we know. kthomp mistakenly made it known to this board that he’s a short seller. Consistently bashing the Common Shareholders.

kthomp19
Re: DaJester post# 777906
Friday, 12/22/2023 11:44:06 AM
For some more transparency, I closed both legs of this trade earlier this week. I sold FNMAO for $3.77 and covered the FNMA short at $0.724. That's about a 23% gain on FNMAO and a 2% loss on FNMA for an overall gain of roughly 20%. Not bad, even though FNMAO's bid is $4.19 right now so I could have done even better.

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173486743

"I have real world, inside knowledge/experience in corporate restructurings. Do you? Have you ever been on the 50th floor of some NYC skyscraper in room with about 60 lawyers and creditors at a "all hands" restructuring meeting?"

You are just describing your blinders. It's the exact reason why you can't possibly fathom that this could result in something unknown to you. Tell me Smart Guy who doesn't know his own name.. Did any of those restructurings involve a Government agency taking private equity for it's own long-term use for ongoing perpetual dividends? How many of those meetings ended with a Net Worth Sweep of retained earnings? How many of your corporate restructurings had to navigate around a Congressional Charter Act that outlines the very existence of the Privately owned enterprise? How many times did Common Shareholders win a court case based on violations of good faith and fair dealing? And if so, how many corporations were able to continue the behavior of those breaches?

I'm not saying this will be fair and honest. If we were going that route, I'd say shareholders are due a refund for overpayment, heads and former heads at Treasury and FHFA should be in prison, SEC should be investigating, etc. I'm just saying this is NOT your cookie-cutter receivership or liquidation in which we simply go down the capital stack. I don't think Receivership nor Liquidation is necessary for release. This one just hits different for me.

And yes, I have been on the raw end of receivership before. I've also been the beneficiary of being higher up the stack. I'm not oblivious to how it works, but thanks for your concern.

If that's true then you should probably listen.

You aren't going to convince me nor anyone else here that you have inside knowledge of the final disposition.

Common investors are betting that it's not 1,000,000 to 1 and that you don't know what you're talking about. Sounds pretty solid to me.

Sounds like cope to me. I'm not trying to convince anyone of anything.

What I do know is that commons are out of the money. They have virtually no value whatsoever. The only reason they will retain any value at all is because a release from conservatorship (without a stopover in receivership) entitles legacy common holders to retain their interests. That's it. But that doesn't mean those interests have more than de minimus value upon exit.

I have real world, inside knowledge/experience in corporate restructurings. Do you? Have you ever been on the 50th floor of some NYC skyscraper in room with about 60 lawyers and creditors at a "all hands" restructuring meeting? Only to be told those with the power AKA priority have determined the newco Enterprise Value will be based on a 5x multiple instead of a 6.5x? Then shortly thereafter, the creditors that also held equity all run to the toilet...got on their cell phones and told their employees to dump their positions during market hours? Have you ever seen real time insider trading? Have you ever seen commons lose their asses even though the corporate bonds were trading at 115%? Have you? If you've seen the real world in action, just speak up. I'm all ears. Because how you think this will work....like fair and honest....that's not how things work in the real world. ANY dollar legacy common receives is a dollar taken away from not only Treasury, but JPS and new investors as well. Charity is the proper word.

It was a crappy week.

kthomp19 works for the GOVT

"This is correct, though it's really just semantics. The juniors have no par value, but when people talk about their par value they really mean the stated value."

For someone who values semantics, you should note that JPS have a redemption value for when they get called. It happens to be the same as their liquidation preference, except for FNMFO. What pray tell is the redemption value of the SPS shares? Is it the same as the LP per share, or is it a different amount? Or are they 100% irredeemable and exist in perpetuity?

"I don't expect the senior preferred shares themselves to ever go away. Their existence is tied to the existence of the funding commitment, and having the funding commitment continue post-conservatorship would be good for everyone involved: MBS investors, FnF themselves, FHFA, and Treasury."

I agree this could be the long term method that Treasury was hoping for, but it's problematic. First, because the dividends on the SPS are a huge windfall, likely to be in excess of $30B per year and not in line with what a "reasonable" funding commitment fee should be. Second, because the Charter Act, which is the actual law - prevents a commitment fee from being charged. FHFA may be able to do what they want and ignore laws at the moment, but I don't think that will become status quo. Third, this is where Congress would need to make some adjustments, and I don't see much Congressional activity to think this is coming anytime soon.

I'm under no delusions that I have control over what happens. I'm just stating that the current state is theft of equity. We only have a single court case that will return some of the damage that was caused as a breach of good faith and fair dealing with shareholders. There are plenty more breach examples that could gain visibility. Whether that gets mitigated or not remains to be seen.

Could it be diluted 1,000,000 to 1 - sure. Could also be much smaller than that. If you want to keep acting like you know what's happening, feel free. You aren't going to convince me nor anyone else here that you have inside knowledge of the final disposition.

Common investors are betting that it's not 1,000,000 to 1 and that you don't know what you're talking about. Sounds pretty solid to me.

really hope we are getting to the end of the tunnel very soon

what a week!

Fannie & Freddie from the FHFA Report to Congress ... Combined = $7.62 $Trillion pic.twitter.com/E6BkuaDYeQ— Cmdr Ron Luhmann (@usnavycmdr) June 14, 2024

FHFA today released its 2023 Report to Congress. The statutorily-required report provides info about our 2023 examinations of Fannie Mae, Freddie Mac, the 11 FHLBanks, and the FHLBanks’ joint Office of Finance. https://t.co/U8y3Mpuw8b pic.twitter.com/48QNKDob9w— FHFA (@FHFA) June 14, 2024

""Charity" is absolutely the right word to use. Every dollar that legacy common shareholders end up with as the result of a senior pref writedown could remain with Treasury if they choose the convert the seniors instead. Placement in the capital structure matters."

^^^^^^ This is absolutely correct.

So the inverse is also true. Every dollar that is taken from the common shareholders as the result of the senior preferred write-UP, could remain with Common shareholders if they chose to stop stealing the equity.

^^^^^^ This is emotion talking. The inverse is not true. Emotion doesn't not have priority over senior equity in the capital structure. Legacy commons have no rights what-so-ever, other than retaining your shares, when it comes to the recapitalization that necessarily happens prior to the end of conservatorship.

You can be diluted 1,000,000 to 1. No lawsuit can stop it.....you can't even get a temporary restraining order to prevent it. You are along for the ride and whatever value you receive is residual charity.

😆 that wasn’t me … but the joke does limp around with a cane these days … I know it’s your way of dealing with the frustration … we’re all riding the same ship the USS Clusterfuck … beware of icebergs

So if I were to get Calabria in a room and ask him point blank to his face:

"Do you have any evidence that shows writing down the SPS LP is illegal?"

What do you think he will say? My money would be on "Well no, but that is what I was told." This is the very definition of HEARSAY.
🙄

Unless you think he did research and validated that there is a law behind what he heard? You think he'll enlighten me when I corner him in a room?

"the incidental powers clause that allows FHFA to act in its own interests"

Is the court saying the FHFA can do illegal things? I think the inference is that it can perform any *legal* act in it's own interests.

""Charity" is absolutely the right word to use. Every dollar that legacy common shareholders end up with as the result of a senior pref writedown could remain with Treasury if they choose the convert the seniors instead. Placement in the capital structure matters."

So the inverse is also true. Every dollar that is taken from the common shareholders as the result of the senior preferred write-UP, could remain with Common shareholders if they chose to stop stealing the equity. The absurdity of the NWS (cash or LP) must be lost on you. At what point does the government get to take every profit dollar from a company or citizen, and add it to their books as an accounting entry?

Trust us - we're from the Government... We'll let you keep a dollar if you owe us a dollar in the future.

Brilliant! Let's just do that with every American company and watch our National Debt melt away like magic!

"the only way you can deny that this is evidence is to say that one side or the other was lying or misrepresented. If you're going to go that route than the vast, vast majority of anything that is ever said will have to be thrown out by your own standards."

Yes, correct. Lying, misrepresented, misleading, or simply mistaken. You don't think it's likely that someone at Treasury would make a misleading statement to get what they want? Really? That's precisely why it's hearsay. It's the same reason you can throw out a majority of what is on this board. Just because Wiseman says there is a Secret Account Plan doesn't mean it's real. It very well could be. But him saying it doesn't make it evidence of such. We would expect CONCRETE evidence that there is an escrow account. Or concrete evidence that writing down the LP is illegal, such as a statue, executive order, past ruling/case law, or official word from DOJ - not a recollection of a conversation from years prior, and from only one side of the conversation. That means exactly zilch for determining the legality.

If you wan to apply "evidence-based reasoning" then show me the evidence. Not words said in a conversation, meeting, phone call, video chat, or written memoir. Show me actual evidence that writing down the LP is illegal.

"do you have any evidence that Treasury thinks a writedown is legal?"

No. First because Treasury is an entity and not a person. Second, what a person thinks is irrelevant unless they are in a position to act on bad information and nobody advises them of their error. Third, because anything that is not overtly illegal is by definition, legal. So barring any evidence that writing down the LP is illegal, it is by definition... Legal.

I like the joke and it's nice to know others are suffering day to day through these ups and downs like I am.

"Those two things are not mutually exclusive, instead one is a subset of the other. Probabilities are quantified possibilities."

Agreed. The difference is that some are blinded by what they *think* will happen, ignoring other possibilities. But the reality is, between whatever you calculate as the most probable route vs the field of all other possibilities. The outcome is probably something we aren't fully expecting. It's like the gameshow Deal or No Deal. At the end when you have your suitcase and the last suitcase from the "field." The field is the more likely to hold the higher amount. But players are reluctant to relinquish their pick because that's the path they chose. The closer they get to the end, the more they think their pick is right.

"How do you calculate that? When you wrote this post FNMA was around $1.50 and FNMAS around $5.00. FNMA going to $2.00 would be a 33.3% return and FNMAS going to 50% of par would be a 250% (2.5x) return. Any combination of FNMAS and FNMA would have a return between those two numbers."

Calculated from my cost basis. As the market fluctuates, I need to adjust my ratios as I accumulate. I haven't accumulated since common went back over 0.65. I've averaged down to roughly $1.00 per common, and less than $0.068 per $1 of JPS redemption value (mixed $25s & $50s).

"That depends on if you own enough of the juniors. Even if the seniors are written down, it's possible for warrant exercise + junior conversion + capital raise to dilute the commons enough that the juniors still come out ahead."

Yes, and not knowing how much of each of those will actually happen, I've positioned myself for as many variations as I can. If junior come out ahead of common, I win. If common realizes a higher multiple than JPS, I win more. I don't think Common nor JPS are getting wiped. I think there is upside in both.

Why are you forever quoting Freddie, report is about FNF !!!

Mental note to self better not say anything about Sherwin Williams end of day. NeoSun will start yelling and screaming at me for rehashing the same joke over and over again.

Meaningless. The FHFA and UST won't release them. Ever.

Hi Kthomp,

How do you arrive at 10 - 12 for FNMAS? What is your assumed exit date? - IRR?

I have yet to see one shred of evidence that writing down the SPS LP is illegal.

Calabria's reporting of this IS EVIDENCE. If you're going to drag dictionary definitions of "hearsay" into the conversation, why not the dictionary definition of evidence?

facts, information, documents, etc. that give reason to believe that something is true:

This is not a court of law. Reporting from a primary source (not third-hand as you have claimed) absolutely gives reason to believe that it is true.

The only way you can deny this as evidence is if you think Calabria or the DOJ lied. Is that really the road you're going to go down?

oh no KTCarneyCarnies only come out of their hole when the GSE common stock trend points up, or they want it to go down, what will the PFreaklemmings do if it keeps going up?

KT spitting facts.....and no amount of whining will change reality.

I have yet to see one shred of evidence that writing down the SPS LP is illegal.

That's because the only evidence you are willing to accept is a direct, detailed statement straight from Treasury.

Waiting for such certainty makes rational investing impossible. You have to be able to make decisions on less than perfect information.

If you don't want to be a hypocrite you must either accept Calabria's words at face value or start demanding similar certainty from all other sources, not just the ones that are inconvenient for your narratives and assumptions.

Also, there is a difference between the SPS and the LP of the SPS. The shares themselves may not be wiped out, but the LP can be adjusted.

This is correct, though it's really just semantics. The juniors have no par value, but when people talk about their par value they really mean the stated value.

I don't expect the senior preferred shares themselves to ever go away. Their existence is tied to the existence of the funding commitment, and having the funding commitment continue post-conservatorship would be good for everyone involved: MBS investors, FnF themselves, FHFA, and Treasury.

It's exactly how they are magically increasing for free now through accounting. They can just as easily magically decrease through accounting.

Your mistake here is to act like eliminating the LP would have no consequences at all. Senator Warner in particular expressed concerns to Calabria about a LP writedown, i.e. the prospect of Treasury losing the LP for nothing in return. That's political fallout right there.

More importantly, the LP ratchet is not "magic" at all. Calabria explained it in this podcast from Monday:

And so the view of the Treasury lawyers was that they were entitled to the sweep because the sweep was in exchange for some sort of hardening of you know, the line of credit if you will, in the PSPA, and so for us to end the sweep, the Treasury lawyers said, we need to be held harmless, and the only way we could be held harmless is to have the liquidity preference.

The LP ratchet was given to Treasury in exchange for FnF being allowed to keep their own earnings.
The NWS was given to Treasury in exchange for FnF never being in danger of exhausting the funding commitment (yes this is extremely flimsy but the Supreme Court bought it).
The senior prefs (and warrants and commitment fee) were given to Treasury in exchange for the funding commitment, which kept FnF out of mandatory receivership.

Every transaction had a give and take. Thinking that Treasury will just write down the LP for nothing in return flies in the face of everything we have seen so far.

Even if a LP writedown is possible, the argument that it is likely isn't possible to defend given evidence and precedent.

He said that he did not think the warrants will be exercised so unless there is a forced receivership the common will have to vote on any recap and if the USG does not own any common then the legacy common could reject any conversion terms

Calabria did say he doesn't expect the warrants to be exercised because if Treasury wants commons that much they will exchange the seniors for commons, rendering the warrants useless.

Your conclusion is incorrect. Common shareholders have no voting rights during conservatorship, and the purpose of a recap would be to allow FnF to exit conservatorship, meaning recap would precede release. Legacy common, i.e. those who own the current 1.8B outstanding shares, will never get to vote on anything before the dilution happens.

does anyone think that HERA gives the FHFA to vote for the common shareholders?

As long as the vote happens during conservatorship the answer should be "everyone" because that's exactly one of the powers FHFA has as conservator.

"avg" = volume weighted average price, VWAP.

Can't say for certain who it is but they've only showed up after the verdict

"Big corporations" are buying 949 shares at a time? lmao