Wise Man
4 hours ago
FACT: The authority of UST was about the PURCHASE of securities, and it hasn't purchased even one security.
No one has ever wondered how is this even possible.
It all began with the issuance of $1B worth of SPS free of charge (1 million stocks at $1,000 per stock), with the objective to reduce the Core Capital in the same amount (It carries an offset: it reduced the Additional Paid-In Capital account. Source) and justify the Conservatorship with (G) LOSSES: Likely to incur losses that deplete capital.
Since then, all the SPS LP corresponding to the draws from the UST (1:1) has been increased and that's a Securities Law violation because the securities must be dated at the time the company raises fresh cash, and necessary for the deed of purchase (necessary for the capital gains tax, etc).
Other theme is that, for reporting purposes, they can be unified in one security if they have the same price and characteristics.
The objective was to skip the deadline on the "TEMPORARY" second UST backup of FnF inserted by HERA with unlimited yield SPS, of December 31, 2009, because the deadline refers to the authority on PURCHASES mentioned, and there's been none.
The Warrant is another security that was issued for free on day one, in an attempt to override the prerequisite on PURCHASES by the UST of (iii) to protect the taxpayer (collateral). Once spotted, collateral it is. Collaterals aren't allowed in the original Fee Limitation of the United States ("PROHIBITION...."), this is why Calabria/Pelosi's HERA continues to raise our eyebrows.
This is one of the 7 Securities Law violations that need to be settled and also it serves as Punitive Damages that the Equity holders require to the DOJ. Although the common shareholders waive this claim in the case of "as is" and "takeover" resolution of Fanniegate, not in the case of a Takings at BVPS.
The same with the second round of Punitive Damages due to the Deferred Income accounting, in the case that it's allowed to amortize it into Earnings in one fell swoop without the existing shareholder ($61B Deferred Income together as of end of 2023, is recorded as Debt, not Equity. $42B in Freddie Mac alone)
The third round of Punitive Damages, is against the plotters of the government theft story in formal documents: court briefs, books, articles, etc., for the cover-up of many statutory provisions (Restriction on Capital Distributions; "May" recap is imperative once the capital is generated; etc.) and financial concepts (Dividends, a distribution of Earnings, unavailable with Accumulated Deficit Retained Earnings accounts).
2- SPS LP increased for free since December 2017 and its offset, are missing on the balance sheets (Financial Statement fraud)
3- Fannie Mae posted a charge on the Income Statement, when no SPS LP was required to be increased in the 1Q2020 Earnings report.
4- Stock price manipulation.
5- The value of the Warrant was credited to Additional Paid-In Capital account.
6- Dividends paid out of an Accumulated Deficit Retained Earnings account (for the Separate Account plan).
7- CRTs. Although it's a breach of the Charter Act (Credit Enhancement clause: not among the enumerated ones), it's included here to simplify and because it can also be considered a Securities Law violation. A credit enhancement operation in mortgages where the credit event is the credit loss, is a scam, because it occurs after the company carries out costly foreclosure prevention actions. For instance, Freddie Mac's STACR DNA or HQA notes. Whereas the credit event that triggers the claim of payment in the STACR DN or HQ notes, is serious delinquency. Since 2015, Freddie Mac only issues the former.
They are an excuse to make FnF pay an outstanding annual rate of return on these debt notes, currently between 9%-13% rate (Source: Earnings reports).
The CRTs look more like a continuation of the fraud in early conservatorship, with their 30-year zero coupon callable Medium Term Notes, redeemed at a 5% and 6% annual rate of return soon after they were issued, as a way to extort money from them, commented on Friday showing documentary evidence.
With the CRTs they made a mistake.
$19B in CRT expenses/recoveries is due because it's barred in the Charter Act, no questions asked.
Wise Man
1 day ago
I've posted (G) LOSSES. Can't you read?
neither entity met any of the twelve conditions for conservatorship
About the likelihood to incur future losses.
And those losses existed along with the need of capital infusion thanks to the taxpayer's assistance, as per the Charter Act (to finance their operations as a last resort, expressly written in the section Purposes, just before it's laid out their Public Mission that makes them take on credit risk and not properly compensated)
Obviously if most of them were fabricated losses, the likelihood was certain in 2008.
The losses and charges that made them need capital (SPS) to offset the negative Net Worth (Watch the signature image), have been explained a thousand times. The latest, 6 days ago.
I'll post them again just for you:
-The 10% dividend to Treasury.
-The DTA valuation allowance.
-Outsized provisions for loan losses caused by the prior Incur Loss accounting standard and the Obama's programs, as FnF were compelled to set aside a reserve equal to the concession granted to borrowers, not the actual expected loss (it was changed in January 2020 for the CECL accounting standard). An amended in 2011 ballooned the borrowers elegible, as now, it was up to the management to decide if one borrower current on its mortgage payments was at risk of default.
-The initial $1B SPS LP issued for free, it reduce the Additional Paid-In Capital account (Core Capital) in the same amount (currently in place with the SPS LP increased for free every quarter, but the managements commit financial statement fraud by not posting both operations on the balance sheets)
-The mispricing of the PLMBSs that affects the AOCI line item in Equity (No "AOCI opt-out election" through regulation like the small banks, or, directly, break the rules in the large banks with the Held-to-maturity Portfolio, thanks to a Federal Reserve's alibi in a Balance Sheet Schedule on how to fill out a Balance Sheet, because Held-to-maturity is NEVER an option in investments in debt securities. Only the Fed does it in its own battered balance sheet). The trough date in the market price of the PLMBSs occurred 3 months into Conservatorship), as seen in this image:
Obviously, other losses were actual credit losses.
I remind you that playing the fool is an aggravating circumstance when assessing Punitive damages.
Please, behave.
You are publishing lies!
Wise Man
1 day ago
The placement in Conservatorship is the only lawful action.
With (G) LOSSES, like to incur (fabricated) losses that deplete their capital. Already commented which ones.
And about the arrangements, all forms part of a SEPARATE ACCOUNT like the FHLBanks in their 1989 bailout by Congress, with assessments sent to a separate account,
Without realizing that, the FHLBanks had to pay $300 million in interests annually (a 10% rate on a $30B obligation, applying a 0.299% spread over Treasuries. GAO report. It was precisely, Sandra Thompson, who tapped the maximum amount authorized in the law, $30B, just when she arrived at the FDIC in 1990. Not a prudent course. And DeMarco in charge of accounting at GAO, requiring in the report to expel the independent accountant PwC, in order to save recourses. We later knew why: they were just reducing the 40-year interest payments from Funding Corp, where the FHLBanks were Equity holders, that only paid interests, without realizing that their SEPARATE ACCOUNT was for the REDUCTION OF THE PRINCIPAL of the obligation, not just those interests. Then, ST and DeMarco (GAO, UST, FHFA) needed funds to repay the principal. Thank goodness Silicon Valley Bank came across and ST happens to be the FHFA director, authorizing massive leverage in SVB with the advances -loans- from a FHLBank, disregarding the liquidity risk and with an AOCI opt-out election -unrealized losses in Equity- through FDIC regulation. They chose Held-To-Maturity portfolio instead, to evade recording their unrealized losses. Famous Trump's deregulation rhetoric, by removing the safeguards), the rest (on paper) reduces the principal of the RefCorp obligation (initially, a 40-year obligation), but with FnF, the dividend payments are restricted in a provision covered up by all the crooked litigants and the peddlers of the government theft story (the coverup of a material fact is a felony of Making False Statements.)
Therefore, with FnF, the entire assessment was used to repay the principal of the SPS obligation (obligation in respect of Capital Stock), knowing that later on, it will be assessed the true cumulative dividend on SPS the UST is entitled to: like the FHLBanks, it was established a spread over Treasuries, as set forth in the original UST backup of FnF in the Charter Act:
Taking into consideration the Treasury yield as of the end of the month preceding the purchase.
Hence, a weighted-average 1.8% cumulative dividend on SPS, considering a spread of 0.5% in each quarterly draw from the UST, and also the partial paydowns (It's netted out with the interests that the UST owes to FnF on the expected $152B cash refund)
Easy peasy. Just watch my signature image to see how it plays out, which is the image of a normal Conservatorship. So, don't tell me that it didn't happen.
On the other hand, a more complex mechanism in the bailout of the FHLBanks in 1989, unware that they were paying only the 40-year interests of Funding Corp, not reducing the $30B principal of the RefCorp obligation required in the law, that remained outstanding at the time.
Screenshot taken from the Earnings report of a FHLB:
And we have proof!
When the FHFA announced the "completion of RefCorp obligation", instead of paying down the principal of the obligation as stated in the provision SEPARATE ACCOUNT, it referred to "an obligation to pay interests on RefCorp bonds", mixing it up Funding Corp which was the one that only paid interests.
Playing with the word obligation: a security and also a noun (a requirement), like nowdays the Wall Street law firm representing the FHFA, with FnF: "Dividend obligation", like the RefCorp obligation that later was switched to an obligation to pay interests, instead of the security "obligation".
This way, the FHFA wants to make the dividend an obligation to pay dividends, when that doesn't exist in this world. A dividend is a distribution of Earnings (unavailable with Accumulated Deficit Retained Earnings accounts. Stuck at an adjusted $-216B nowadays), and also it's restricted when FnF remain undercapitalized (IN GENERAL).
Thus, the entire assessment was used to reduce the payment of the principal SPS, as per the exception to the Restriction on Capital Distributions (U.S.Code §4614(e)), under the guise of dividend payment (no actual dividend was ever paid in order to uphold the law).
Now is when Howard, a member of Berkowitz's legal team, steps in to claim in an Amicus brief filed with the Supreme Court, that the SPS are non-repayable securites (something not written anywhere), in order to curtail the reality of a Separate Account with FnF.
Finally, we can read in the explanation of the mechanism of RefCorp from a FHLB, that they weren't required to pay the assessments into a Separate Account if they report losses.
Any FHLBank with a net loss for a quarter, is not required to pay the RefCorp assessment for that quarter.
Whereas with FnF, the assessment worth "10% dividend" prompted the losses in many quarters, and subsequent draw request from UST and increase of SPS LP, with the objective to swelled the amount of SPS LP, so the dividend dollar amount was greater the next quarter, enriching the Treasury. Until they realized that, under the Separate Account, this was just a circular flow (drawing funds from the Treasury to pay down the UST's SPS) and the outcome is that they were just draining the UST's Funding Commitment. It's when they thought of the NWS dividend, that can't prompt the losses, similar to the FHLBanks' scheme.
We could have witnessed two rogue officials desparate to cover their losses with the FHLBanks (a $30B RefCorp obligation), using FnF, at the same time a Goldman Sachs alumni that just wanted the assault on the ownership of FnF with the Warrant "Clause 2.1: Shares assigned to any Person", and all of them made some politicians think that they had nationalized FnF to appease them, but, at the same time they made sure that they upheld the law with a Separate Account (July 20, 2011 Final Rule for the CFR 1237.12, better known as "The supplemental". A follow-on plan), authorized in the FHFA-C's Incidental Power ("any action authorized by this section,...".
To put just one example, senator Brown stating in a hearing a few years ago, that the conservatorships were being very profitable for the taxpayers. Now, he doesn't even mention the word "Conservatorship" when he realized that there is a Separate Account plan in accordance with the law, as we saw in last week's Senate hearing.
Once the dust settles, the taxpayer will net $0 in the bailout of FnF, as per the Charter Act.
Other theme is the multiple windfalls (10bps g-fee sent to UST as TCCA fee; a one-time 4.2 bps allocated to HUD/UST; the MHA program,...) and the possibility of a profit with the acquisition of our stocks at their fair value (BVPS) and resale at another fair value with a different stock valuation (for instance, a PER 10x and 12x).
The redemption of JPS at their fair value of par value, boosts the PER valuation (The EPS or Earnings for the PER, is calculated after the dividends on Preferred Stocks). It's a corporate decision and it has nothing to do with the ownership of FnF (they are obligations in respect of Capital Stock that can stay in the capital structure with a restated dividend. Though costly and unnecessary with an excess of capital: CET1 >2.5% of ATA)
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