Rodney5
2 hours ago
I appreciate you DaJester. Educating the public is the best thing we can do.
To anyone new to this discussion.
The Senior Preferred Stock Purchase Agreement is a contract between two government agencies which Fannie and Freddie had no say so. The only legal contract is the one with the U.S. Congress, called the Charter Act. The Senior Preferred Stocks are illegal because the Stocks have an illegal commitment fee attached to it.
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.
SPSPA which is a contract. 4617f bars courts from questioning the actions of a conservator. The stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f).
The Plaintiffs have to prove the FHFA / Treasury broke the law. No mention of Federal Statute.
JUSTICE BREYER told the Plaintiffs how to win. Quote: “Thank you. I think in reading this you could, with trying to simplify as much as possible, do you -- the shareholders' claim as saying we bought into this corporation, it was supposed to be private as well as having a public side, and then the government nationalized it. That's what they did. If you look at their giving the net worth to Treasury, it's nationalizing the company. Now, whatever conservators do and receivers do, they don't nationalize companies. And when they nationalized this company, naturally they paid us nothing and our shares became worthless. And so what do you say?” End of Quote, page 12
The link may not work anymore, the above statement was made and recorded in the transcript.
Link: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2020/19-422_3e04.pdf
Millett and Ginsburg summarized the case and their 70-page opinion as follows:
Quote: “A number of Fannie Mae and Freddie Mac stockholders filed suit alleging that FHFA’s and Treasury’s alteration of the dividend formula through the Third Amendment exceeded their statutory authority under the Recovery Act, and constituted arbitrary and capricious agency action in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). They also claimed that FHFA, Treasury, and the Companies committed various common-law torts and breaches of contract by restructuring the dividend formula.
We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f). We also reject most of the stockholders’ common-law claims. Insofar as we have subject matter jurisdiction over the stockholders’ common-law claims against Treasury, and Congress has waived the agency’s immunity from suit, those claims, too, are barred by the Recovery Act’s limitation on judicial review. Id. As for the claims against FHFA and the Companies, some are barred because FHFA succeeded to all rights, powers, and privileges of the stockholders under the Recovery Act, id. § 4617(b)(2)(A); others fail to state a claim upon which relief can be granted. The remaining claims, which are contract-based claims regarding liquidation preferences and dividend rights, are remanded to the district court for further proceedings.“ End of Quote
Link: https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/02/21/d-c-circuit-concludes-recovery-act-bars-judicial-review-of-suits-against-fhfa-over-treatment-of-fannie-and-freddie-shareholders/
Here’s another example of failure lawsuit with no reference of the Regulator breaking the law.
UNITED STATES COURT OF FEDERAL CLAIMS
Wazee Street Opportunities Fund IV LP,
Filed 04/03/23
Quote: "This lawsuit does not challenge the foregoing arrangement made in
September 2008. While Plaintiffs do not concede that all the measures taken in September 2008 were justified or necessary, they are not here to challenge the placement of Fannie and Freddie into conservatorship at the height of the financial crisis, or the original deal struck by Treasury and FHFA at that time." End of Quote. Page 7
The lawyers are focused on the third amendment net worth sweep. By Public Law the whole contract is illegal, the contract is illegal based on the United States is not permitted to charge a commitment fee to be paid by the enterprises.
Link: https://storage.courtlistener.com/recap/gov.uscourts.uscfc.37252/gov.uscourts.uscfc.37252.30.0.pdf
Wise Man
4 hours ago
Of course! 16 years of statutory breaches will be solved today with a "reclassification", so you can sneak the 10% dividend on SPS issued by the GSEs, that have a rate similar to Treasuries as a UST backup in the dynamics of the Charter Act.
This is a slogan spread by all the rogues that have been peddling the Government theft story since day one.
These felonies have been covered up by the litigants:
▪️Breach of the FHFA-C's Rehab power (This is Gary Hindes when he was told that the 10% dividend that he advocated, is the same breach of the FHFA-C's Rehab power as the NWS dividend that he was denouncing in his lawsuit, and he ended up removing this claim in an amended complaint).
▪️Breach of the Restriction on Capital Distributions.
The same people that deny that the NWS goes on today, with another capital distribution restricted: the SPS LP increased for free in the absence of dividends. The same Common Equity Sweep as before with the dividends. The only difference is that now it gets substituted for SPS in the Net Worth, so the NW grows.
16 years of an outlaw Federal Agency is promoted by Mark Calabria as well.
However lawless you suspect federal agencies might be, I can assure you from first hand observation, it’s a lot worse— Mark Calabria (@MarkCalabria) June 29, 2024
Instead of the reality that each capital distribution (10% dividend, NWS dividend and SPS LP increased for free) existed, and, thanks to the FHFA-C's Incidental Power: "Take ANY ACTION authorized by this section, in the best interests of FnF or the FHFA", they've been applied towards the exceptions to the Restriction on Capital Distribution in order to legalize them.
No reclassification ever took place. It's the same capital distribution, applied towards a different end.
With a "reclassification" at the time of each dividend, you transmit the idea that the dividend can be approved, when it's unlawful. This way, the litigants and others are exonerated of the fact that they missed that a dividend is restricted.
Fairholme's Berkowitz and his attorney, David Thompson, spotted it as well, when the RFP 12 asked the Treasury Department of his buddy Mnuchin:
Whether Treasury dividends were to advance taxpayers interests and/or prioritize Treasury's financial interest. Source
Fairholme withdrew this motion when he was aware that he was asking for documents that would prove the existence of a Separate Account plan. Source.
So much for the "hidden documents".
Therefore, in order to uphold the law, they were assessments sent to UST in the form of capital distributions and under the guise of dividend payments, that have been applied towards the exceptions to the restriction in order to legalize them: reduction of the SPS. Then, for the recapitalization.
And we have proof of the intent to carry out this separate account plan:
-The same plan has already been carried out by the FHFA with regard to the FHLBanks and with the same protagonists (ST at the FDIC and DeMarco at the accountant of the scheme, GAO. Then, UST), set forth in a law entitled SEPARATE ACCOUNT TO ENSURE REPAYMENT OF PRINCIPAL. In our case, the principal of the obligation with taxpayer is captured in the SPS LP, that has to be paid back asap.
-The NWS dividend came out due to the fact that the 10% dividend was causing the death spiral (it prompted a loss, more SPS are increased and the subsequent reduction of the Funding commitment). This was solved with the NWS dividend. So, it's the fastest speed for the repayment of SPS. This is captured also in the scheme of the FHLBanks that weren't required to send an assessment into their Separate Account, when they posted losses.
The NWS dividend wasn't meant to deprive the JPS holders of their "implied contract" for the expectation of dividends, at a time when the dividend was impeccably suspended. This is what judge Lamberth came up with, playing the hedge funds' game:
No genuine dispute remains on the fact of harm on the theory of plaintiffs were denied dividends that they otherwise were reasonably certain to receive. Source.
-The fact that the FHFA Acting Director enabled the continuation of this Separate Account for the repayment of SPS, with the July 20, 2011 CFR 1237.12, for the moment that the SPS had been fully paid off, they needed another exception to apply the capital distributions towards: for their recapitalization, either in the exception 1, 2, 3 and 4, because it "(c) supplements and shall not replace or affect the restriction on capital distribution by statute: U.S. Code 4614(e)", and the restriction itself is meant for the recapitalization.
There you are, the intent of a follow-on plan thanks to "the supplemental".
-The fact that the Trump Administration deliberately chose another capital distribution restricted, is another evidence of officials pursuing this plan of deception, with the SPS LP increased for free as compensation to UST in the absence of dividends. With Mnuchin and Calabria making sure that it's clearly stated that the dividends came to an end, both because this new scheme appears as a stand alone covenant in the SPSPA, unrelated to the covenant of SPS LP increase equal to the amount of dividend, and because the UST said so in the press release.
We clearly can see that the nowadays Common Equity (Retained Earnings is Core Capital and CET1) is swept to the UST, when it's substituted for SPS in the Net Worth of FnF, and, necessarily, this Common Equity is kept in escrow, because the capital distribution was restricted and because the CET1 is necessary to uphold the FHFA-C's Rehab power: put FnF in a sound and solvent condition.
This is the reason why there is Financial Statement fraud in FnF, so that you don't see it clearly. Instead, we have the attorney David Thomson praising it as the Wonderland and seeking constitutional damages, because the "for cause" removal restriction prevented it from happening sooner, firing Mel Watt before.
-Finally, we can add as a proof, that HERA didn't strike the original UST backup of FnF with a rate similar to Treasuries, which is the only exception to the Fee Limitation of the United States (PROHIBITION), when it enacted an homonymous second UST backup at an up to infinite rate and in an up to an infinite amount (what kind of terms and condition are these?) and place it just below the original one (Subsection (c)) in the Charter Act. The SPS could well have been purchased through (c) and (b) redeemable obligations, as the Preferred Stocks are redeemable obligations in respect of Capital Stock.
BOTTOM LINE
The FHFA and its hedge-funds guard that have a dozen of rogue attorney behind, are the ones peddling this idea of resolution cattle market-style, by two guys sat a table today messing around: "And we add two goats and a cow! That seals the deal!".
A "reclassification" today, is like stating that nothing has happened during the 16 years into conservatorship and what you've seen is the fruit of your imagination. Thus, everything will be decided today.
The reality is that all the capital distributions have existed and they CANNOT be dividends because those are RESTRICTED (prohibition). They've been legalized at the time of each disbursement, without reclassification.
You can't reclassify what didn't really exist because it's restricted. They were capital distributions under the guise of dividends, thanks to the Incidental Power.
These Fanniegate attorneys and others peddling the government theft story in formal documents, seek to be exonerated for the felonies of cover-up of the breaches of the statutory provisions pointed out above, that have led to a case of stock price manipulation.
Fanniegate, a beautiful story of legislative and regulatory machinery working in perfect harmony.
As I said before, the problems are the "take any action" and the global pandemic of "External Position".
There is no "Chevron deference" when every action came out as a result of an express grant of authority in the law.
Wise Man
1 day ago
This is the actual quote from Mark Calabria that I pointed out yesterday with a bullet point of what I recalled at the time, at the end of the post that I'm replying to.
The actual quote is even worse. He specifically talks about illegal behavior in legislative procedure: the period that begins with an idea of law, discussions, a draft bill,...
There’s “too little” procedure in govt action, almost no accountability for illegal behavior, little actual due diligence behind most legislation or even regulation— Mark Calabria (@MarkCalabria) May 29, 2022
We've been told that he helped to craft HERA, which is a law that included many flaws, commented in the post that I'm replying to.
And good things, like an authorization to change the FHEFSSA capital requirements.
Make no mistake. The FHEFSSA and the Charter Act work like a perfect machinery with the amendments of HERA.
The problem is that it's being used by Wall Street and its celebrities on Twitter, who hire dozens of actors to mislead on social media, with the objective to create confusion.
For instance, with the prior MANDATORY release from Conservatorship that he struck with HERA, we would know that FnF have to build capital to meet the Undercapitalized threshold: Core Capital > Minimum (Leverage) Capital Level. Already written in the power: put FnF in a sound and solvent condition, but they twist this sentence too (Judges: Sound condition, "the return to profitability despite that later all the profits are sent to the UST's coffers"; Solvency? "the UST funding commitment")
A Minimum Capital Level that was required by GAO in a report in 1991 that paved the way for enacting the FHEFSSA of 1992 with all the capital ratios, capital definitions and capital requirements.
Without the MANDATORY release, Wall Street creates confusion about the end point of the conservatorship, which was already chosen by the Treasury Department in a Report to Congress in 2011, at the request of the Dodd-Frank law: "recommendations on ending the conservatorships", with a 3-option Privatized Housing Finance System, guarantee fee increases and the Basel framework for capital requirements.
Yet, we have the Treasury Department of Mnuchin stating in its Housing Reform plan of 2019, that:
Applicable law does not prescribe a specific end point for the conservatorship.
When it's was a law that required to the very Treasury Department in 2011, to unveil the end point.
Wise Man
1 day ago
We can't wait for you to understand what capital distribution (dividends, today's SPS LP increased for free, the Lamberth rebate, etc.) is, and why it's restricted (Recapitalization).
Besides, no Earnings were available for distribution as dividend, out of Accumulated Deficit Retained Earnings accounts.
Dividend = Changes in Equity operation.
And Justice Alito endorsed the Separate Account plan, because he laid out its motto: "Rehabilitate FnF in a way...." plus the written text "...in the best interests of the FHFA".
The financial condition to assess the financial rehabilitation, is measured with Capital ratios and Debt ratios, and where the fast repayment of the taxpayer's assistance, is an obligation that has to be fulfilled asap.
It's not our fault that Justice Alito is another "unsophisticated, not regulatory lawyer" (Berko's attorney, David Thompson) that lacks knowledge in Finance with regard to the meaning of Capital (loss-absorbing capacity for the Capital Adequacy in the enterprises), and the reason why the JPS is recorded in Core Capital (Dividend discretion and Non-cumulative dividend, as set forth in its prospectus, meant for the recapitalization of enterprises).
Also, the cumulative dividend feature of the SPS (Not regulatory Capital or loss-absorbing capacity). Etc.
The SCOTUS has already blessed the legality of the variable dividend rate of the SPS.
You said it wrong. The SPS are called: "Variable Liquidation Preference SPS". Also known as cumulative dividend SPS, precisely, for the moment it's unavailable for distribution. Which is what has happened.
Regardless of being fixed- (10% dividend rate) or variable-dividend rate (NWS dividend), the underlying security in a SPS is a fixed-income security (the rule for the dividend rate is fixed).
This is why a Preferred Stock is an obligation with respect to Capital Stock (Source: SPSPA).
You still don't get that a Preferred Stock is a hybrid financial instrument. A fixed-income security recorded in Equity.
Do you happen to know Glen Bradford?
No wonder why you all are called "The Tipp-Ex gang", deleting the feature "cumulative" in the SPS dividend. Very rogue.
What's next? That FnF are retaining earnings? No, once adjusted for the Financial Statement fraud in the enterprises.
JPS prospectus:
Definition of Capital distribution:
Definition of Core Capital in the FHEFSSA and the 12 U.S.Code §4502 (7).
Rodney5
2 days ago
I’ve never been bias towards anyone bringing information to our discussion. It actually has been helpful kthomp19 has argued in favor of government taking of private property rights as per the SPSPA contract between two government agencies. His persistence has made me to understand the plaintiffs will never win arguing the contract.
kthomp19, Tim Howard and numerous others have put forward information that the Senior Preferred Stock could not be redeemed or cancelled without Treasury approval. Well, according to the language in the SPSPA that may be true. kthomp19 and myself went back and forth on this but the discussion stopped when I came across the law written in HERA.
Professor Richard Epstein discussing the Net Worth Sweep, the Senior Preferred Stock would have been redeemed. He had it right his mistake was he did not bring the law to the forefront of the argument but instead brought language written in the SPSPA.
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, apply the law written in the HERA legislation passed by Congress.
Link: 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 cannot 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.
Wise Man
2 days ago
This is something that someone who has never read the Charter Act, comes up with, after reading it for the first time.
It comes just a few days after being accused of refuting that the MBS are guaranteed by the government, without pointing out that it's set forth in the Charter Act.
One of the problems in Fannie Mae debates is that so few seem to have actually read the charters…for instance, when has the company ever priced to “prevent excessive use…” per Section 304? pic.twitter.com/YKgvr0bKK4— Mark Calabria (@MarkCalabria) July 10, 2024
The utilization of g-fee pricing to discourage the use of their facilities, is precisely what the UST of Geithner recommended to put in place for the release from Conservatorship in the Report to Congress (image below): the guarantee fee increases achieves two outcomes:
-The adoption of the Basel framework for capital requirements.
-Bring in more private capital into the Guaranty Mortgage Securitization business, that is, to discourage the use of their facilities.
First. Through the g-fee hikes, "it will help the private market compete on a level playing field, reducing FnF's market share over time." This would be achieved with the Commingled Securities, as FnF only offer a reinsurance upon bankruptcy of the other guarantors that guarantee the underlying UMBSs (commingled securities) within a "Super".
Second. FnF operate in the Common Securitization Platform owned by their 50/50 joint-venture Common Securitization Solutions that is operating independently already, with its own management, etc.. The IPO of CSS would be the culmination of the "process to discourage the use of their facilities", along with a Privatized Housing Finance System with their congressional Charter revoked.
Notice that Calabria is accused of disregarding both the FHEFSSA (Waiving the typical FHEFSSA section "18-month implementation period" in the authorization to change the capital requirements; Prior MANDATORY release Undercapitalized, when the Core Capital > Minimum (Leverage) Capital Level, scrapped. Currently an adjusted $402B core capital shortfall over this threshold) and the Charter Act (He enacted a second UST backup of FnF at an infinite rate, so that the original one at rates similar to Treasuries goes unnoticed; The Fee Limitation of the United States with the 4.2bps to UST and HUD; The Credit Enhancement clause with the CRTs; Etc.) with the amendments inserted by HERA in 2008.
Nowadays, peddling the slogan: "The Net Worth absorbs losses", when it's the Retained Earnings account (Core Capital) the item that absorbs losses. The Net Worth just prevents the Accumulated Deficit Retained Earnings account caused by losses, from driving the Net Worth to negative balance "Capital Deficiency". However, their Retained Earnings account to absorb the future "unexpected" losses that Calabria is talking about, stands at an adjusted $-216B in FnF combined.
In this article:
Freddie Mac's Feckless Foray Into Second Mortgages | RealClearMarkets https://t.co/M9pMCw2dPX— Mark Calabria (@MarkCalabria) June 20, 2024
This is why he came up with the brilliant idea of increasing their Net Worth with SPS LP handed out to the UST every quarter.
A very rogue person.
"No one has ever been indicted for writing legislation", he commented not so long ago. Clearly in an attitude of provoking outrage on the population, which nowadays it's seen as a merit to get a top job in the administration.
This is why it looks like Calabria, Justice Alito and Justice Thomas are all day with:
Blame me!
Wise Man
2 days ago
The one that releases FnF from Conservatorship is Congress, since the very moment the UST chose a 3-option Privatized Housing Finance System as end point, at the request of the Dodd-Frank law.
The UST recommended Guarantee fee increases to that end, so that FnF are subject to the same capital standards as the fully private banks (Basel framework for capital requirements) and no "subsidy cost" anymore (CBO: a cost into the Federal Budget for delivering g-fees below the fully private sector g-fees). Which is what has happened.
Obviously in collaboration with the UST and the FHFA that have to come clean about the Conservatorship, including the illegal CRT operations (Charter-unauthorized in the Credit Enhancement clause, other than the PMI and the Commingled Securities or "Supers").
"To protect the taxpayer", ST claims, jointly with "the taxpayer be adequately compensated" by Mnuchin. In either case, barred in the Charter Act. Because, likely, it's simply more money siphoned off to the UST, that began with the 35% of 4.2bps sent to the UST's Capital Magnet Fund in an amendment of HERA of the FHEFSSA, despite the PROHIBITION.
$20B, net, in CRT expenses/recoveries is due, and subsequent posting on their Retained Earnings accounts, in order to protect FnF against future unexpected losses.
More evidence of the "path of rehabilitation" of the Federal Government, a spin brought up by Justice Alito, when there is a PROHIBITION written in capital letters the Charter Act.
A Report to Congress "no later than January 31, 2011", submitted with the typical delay by UST of 11 days after the deadline, that usually occurs when the Congress requires something to the Treasury Department by law. For example: Law: "Restrictions for electric vehicle tax credits no later than Dec 31, 2022". The UST on the deadline: "It'll be March".
A 3-option plan based on a Privatized Housing Finance System.
In brief:
1- Privatized Housing Finance System + targeted assistance: FHA, USDA, VA.
2- 1 + Govt guarantee in crisis.
3- 1 + Govt Catastrophic-Loss reinsurance (Commingled Securities unveiled on June 2022 to capture this option. It can also be private Reinsurance for the options 1 or 2.)
The Dodd-Frank law doesn't state that the end point will be reviewed from time to time, or that the POTUS is charged with the end point.
There is a rogue person writing "Trump" a dozen times a day, on this message board. A shill for the investment banks' assault attempt on the ownership of FnF, the common stock.
"The rogue doctrine", coming soon to theatres.
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