clarencebeaks21
1 hour ago
“Section 4.4 is different … because a potential shareholder…usually doesn’t get to write their own terms and conditions for valid issuance of shares… before they actually purchase them.”
That’s a fair point, but criticism if any then starts with Congress, because HERA amended the charter act with 304(g)(1)(A), authorizing UST to buy “on such terms and conditions as the Secretary may determine”—which is very broad (note it doesn’t say “reasonably determine”).
An apparent check & balance there is FNMA could not be compelled to comply, rather mutual assent was required. Of course, in conservatorship we know the major powers of the FNMA board transferred to the Conservatorship Director, who thus (presumably) bargained for FNMA; that in turn might lead us into other parts of HERA, but also straight into the latitude granted in Collins v Yellen. Thanks and good luck.
Wise Man
13 hours ago
Only the pro se plaintiff would say "NWS" instead of "NWS dividend"
NWS is arbitrary or unreasonable, which has been decided by jury. In the cram down of SPS and Warrant, the payment of SPS will be deemed paid off.
No, the NWS dividend was not arbitrary, but deliberately chosen, because the 10% dividend prompted the death spiral. That is, a negative Net Worth prompted by the losses and FnF had to tap the UST for more funds 1:1 SPS LP increased. It was solved with the NWS dividend, which was the feature: "no assessment sent to a SEPARATE ACCOUNT upon losses", in the 1989 bailout of the FHLBanks, that we can read in this screenshot taken from the Earnings report of a FHLB. A complex scheme thinking that no one will figure out what really has happened, just like with Fanniegate nowadays:
The bailout of FnF wanted to mimic the FHLB's case, but carried out badly (dividends are restricted and unavailable for distribution. Then, the entire assessment was used for the repayment of principal of the SPS) and with these "patches", as there was no statutory wording behind contemplating a SEPARATE ACCOUNT on paper like the FHLBs, just an Incidental Power that allows the FHFA to mislead and carry it out secretly.
The FHLB, instead of repaying the principal of the obligation sooner as mandated in the law, they used the excess of 10% interest payment (0.299% spread over Treasuries at the time -GAO report-) to pay down the 40-years of interest-only sooner. Mixing up the RefCorp obligation, with the obligation to pay interests, as we can read in this FHFA press release in 2011 "Completion of RefCorp obligation":
-The obligation to pay only interests was for the RefCorp obligation.
-The FHLBanks, equity holders of RefCorp, had to pay both interests and the principal of the $30B RefCorp obligation that remained outstanding after 40 years as a result.
Thank goodness that $SVB came along and helped the FDIC and Sandra Thompson to cover the unpaid principal of the RefCorp obligation.
As I said, FnF don't pay interests on SPS but dividends, and certainly, not a 10% rate when the Treasury yields at the time were max 2% for a 5 year Treasury bond, as per the Charter Act dynamics. This is why the dividend rate on SPS was estimated at a weighted-average 1.8% rate, with a 0.5% spread over Treasuries in each quarterly purchase and also taking into consideration the quarterly repayments.
Not arbitrary was also the July 20, 2011 Final Rule that enacted the CFR 1237.12, contemplating the moment when the SPS had been fully repaid through the exception to the statutory Restriction on Capital Distributions, U.S. Code 4614(e). The FHFA needed another exception to apply the capital distributions towards: for their Recapitalization outside their Balance Sheets. Exceptions 1, 2, 3 and 4.
This is why the CFR 1237.12 is called "the supplemental", because "(c) it supplements...", that is, a follow-on plan. Not arbitrary but a deliberate action.
We stand with DeMarco.
Likewise, it was not arbitrary the announcement of SPS LP increased for free as compensation to the Treasury in the absence of dividends, currently in place (3rd phase of the Separate Account plan), with the Treasury of Mnuchin making clear in the press release that the dividend was suspended to all effects, and also, writing this new compensation in a stand alone clause of the PA, unrelated to the prior dividend and its feature of LP increase when there is no dividend.
This way, it made sure that it was the capital distribution contemplated in the #1 of the statutory definition, so that it's restricted, and thus, the continuation of the Separate Account plan: the Common Equity reduced as a result is, in truth, held in escrow for the recapitalization of FnF (exception 1, 2, 3 and 4 in the restriction of this Capital distribution).
It was chosen deliberately.
Wise Man
14 hours ago
Freddie Mac only announced "delisting", under the orders of the conservator.
You don't have to give an explanation, attempting to pass it off as the official announcement of the company.
Freddie Mac is delisting some bonds that were either retired, redeemed, matured
Contending that the bonds were delisted after:
-Bond retirement when the company has previously repurchased all of them on the market. This is highly unlikely, because it's difficult that all the bondholders had sold on the market, primarily because a 30-year zero coupon bond is mostly held by insurers that hold it till maturity. This is why it was an illiquid bond that didn't even trade many days.
-Bond redemption. It was a Non-Callable security.
-At maturity. The maturity date was December 2025.
Then, what happened can only be explained with the conservator's Incidental Power, that allows it to mislead the public or to take actions secretly (authorized by this section) "in the best interests of the FHFA". Just like what has happened with the Separate Account plan.
In this case, the odds are that the Incidental Power was used to call the non-callable bond before maturity, so Freddie Mac can proceed with the delisting later.
It has cost it money, because it traded at an estimated 5.1% annual discount rate to face value. Now, it will cost the company that 5.1% rate during the 1.5 years that were left. But this is why the "may" in the FHFA-C's Rehab power is for, so that Freddie Mac can take this losses incurred "in the best interests of the FHFA", and related to activities or regulatory and organitational issues, etc., because the FHFA might have thought that having the only remaining series of bonds trading on the NYSE, wasn't appropriate for the coming announcement of Privatized Housing Finance System revamp for the release from conservatorship, because FnF have their own trading platforms for their bonds.
Also, the company affirmed that there was no need to be listed given the status of "government conservatorship", a name frecuently used by Pagliara and his footmen on this board. This name is what is referred to the aformentioned Incidental Power.
The main objective was to transmit fear among the Equity holders, about the possibility of delisting of their stocks as well.
We see how the FHFA and its guard of Wall Street has made the harassment to the Equity holders the center of the conservatorship, as we see daily on this board with their "actors in an army recruited to help advance a business" (to peddle their wishful thinking) (Bill Ackman): "10%. Interests instead of dividend; Loan; Net Worth; NWS instead of NWS dividend. EPS $3 instead of EPS=$0. Etc."
This is why it was necessary to send this warning to them last Friday.
NO FEAR OF EQUITY STOCK DELISTING BY A 🇨🇳-STYLE @FHFA RULER
Advisors: $GS, $JPM.
The purchase of SPS,although subsection(c)~T.yields prevails, was (g):CONSIDERATIONS:
(v)maintain private shareholder-owned Co status(Public Cos)
The Obama WH got it right.#Fanniegate @TheJusticeDept https://t.co/N4GNFx4fZ5 pic.twitter.com/E1ELWWtani— Conservatives against Trump (@CarlosVignote) June 21, 2024
clarencebeaks21
20 hours ago
“Do yourself a favor and stop with the fancy word salad. Post hoc, ad-hominem, static statutory analysis. Sounds impressive”
Labeling is just another version of the ad hominem fallacy. If you can’t engage critiques on their merits, just admit that.
“But again I stand by my analysis.”
In this thread, so far, there is none.
“The SPS are not preferred equity shares issued by the corporations under section 303.”
If the Sr preferred stock is not preferred stock authorized under FNMA’s charter act 303, what is it?
“They are obligations in my book.”
Aha. Here at long last is a premise: the Sr preferred stock are obligations.
But this opinion runs afoul of the black letter of the charter 304(b), which covers “obligations”, which all have “maturities” and “interest rates”. Where in the SPSA precisely does the preferred stock have a maturity date, pay interest, and at what rate? Your attempt to fit stock into 304(b) simply stretches the language too far beyond its plain & simple meaning.
“No capital stock or preferred equity with these features,have ever existed before from the Corporations.”
True.
“The SPS product are not a stock…”
But the first question is whether the preferred stock *was a product*, and thus regulated, so here asserting the conclusion as a term just begs the question. Another fallacy.
“The SPSPA is the new “product”.
Here now is a second, different argument than the first one above. Now we are being told that the entire shareholder agreement is a “product”. But why?
“The following is the SPSPA:
https://www.fhfa.gov/sites/default/files/2023-07/FNM-SPSPA_09-07-2008.pdf
“The entire agreement is prefaced on section 304 to purchase the SPS.”
Which subsection of 304? Which words precisely? What does “prefaced” mean?
“Read section 4.4… validly issued….”
How is the SPSA’s Valid Issuance clause fundamentally different than the same clause in a million other stockholder agreements?
And since we’re reading the SPSA, I would be remiss to not refer you to section 5.4, which lists preferred stock and warrants as “Equity Interests”—a defined term on page 3 that does not include obligations.
“This contract between FHFA and Treasury don’t mention section 303.”
But why would it need to?
“The SPS are …a new product for the purpose of stabilizing the secondary mortgage market under section 304.
Here again “SPS…are a new product” is begging the question. Another fallacy. A general reference to a section simply will not do: what words specifically?
Speaking of 304, it’s true that under 304(g)(1)(A), Treasury may purchase “obligations and other securities” of FNMA. But Treasury was not authorized to purchase stockholder agreements. You need your novel term to fit within this listing, or be a natural extension of it, but it is of a completely different nature. Thus it also violates the principle of Ejusdem Generis.
“The agreement is the product.”
This conclusion is not quite a fallacy of Ipse Dixit but it is also unexplained.
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