Fannie Mae and Freddie Mac about to take off big time.

[mac]

But I think it is important to realize that courts recognize later laws, in this case TARP, as sometimes modifying earlier laws. So while there may well be problems with the actions of the Administration under HERA (this I don't know, and haven't yet seen a court decision that says so), the broader authority of TARP may have allowed such actions. As far as I recall, Freddie and Fannie were both in deep debt, and then were used to buy and stash bad debt under TARP to restore liquidity to the markets.

I think we might all agree that it would have been better for a functional Congress to have debated a proper role for Fannie and Freddie going forward, they were so paralyzed that they couldn't schedule anything significant like that. Too busy passing 42 (or was it more) efforts in the House to unwind the ACA. So I keep coming back to the question of what new authority was given under TARP, to the Secretary, to restore liquidity and use Fannie and Freddie for that purpose.

[thombiz]

Mac, you won't find anything about the White Papers prior to Oct 21, 2014 because I was the 1st to make the connection. Judge Sweeney has been made aware of the effects of the White Papers, so her ruling should reflect that knowledge. Again, a Fraud is not allowed to stand, it must be undone and burdened entities made whole. Lamberth had no knowledge of the White Papers and ruled accordingly. The plaintiffs did not argue anything about the commitment to the White Papers.

You have a good point about TARP. I have only read a little of TARP, but I found the publication and will read it this weekend. If there is something out there which will put my investments in peril, I want to know everything possible about it. I will post a run down on TARP this weekend. Thank you in advance. Bob Thompson

In other news today, the US Treasury pushed FHFA out of the way and used FnF to negotiate terms for increased rental concessions. The Treasury can't do that. Only FHFA can direct FnF based on HERA. This is about to become a big news story.

[thombiz]

Efforts are in full swing to expose the White Paper debacle right after the elections. The stockholders who are doing it are working the political angle to get certain groups behind us before the announcements. I have been told there are 2 books in the works about the fraud of the White Papers. One is being held up for a conclusion, but that one may turn into two books. One being the disclosure and the other the expanse of the conclusion. It has been discussed about doing a movie in the style of Erin Brockovich about the exposure and conclusions.

Well, off I go to digest TARP.

[thombiz]

In an interview today, former FHFA Director Ed De Marco predicts the Demise of FnF. Yes, he said they are like to be eliminated. That is his mantra. The truth is, Ed De Marco performed questionably in at least two ways when he was director of FHFA. First he started implementing the White Papers of 2/2012 by incorporating them in his Strategic Plan for the Conservatorship of FnF 2/21/2012. http://www.fhfa.gov/AboutUs/Reports/ReportDocuments/20120221_StrategicPlanConservatorships_508.pdf

He performed questionably by redefining the term "conservatorship" to including winding up of affairs. That could be construed as unconstitutional because the definition is established by the US Code and the US Code can only be changed by a law passed by Congress. De Marco may have ignored the law. Next, in the Strategic Plan calls for the Winding Down and elimination of FnF which is opposite of his job defined by HERA. HERA does not give him the task of creating Housing Finance Reform. That job is reserved for Congress.

That is what it says in the Strategic Plan for the Conservatorship of FnF that was published by De Marco's successor, Mel Watt. See: http://www.fhfa.gov/aboutus/reports/reportdocuments/2014strategicplan05132014final.pdf

[thombiz]

I'm sure you already know HERA says under Subtitle C, Item ‘‘(7) AGENCY NOT SUBJECT TO ANY OTHER FEDERAL AGENCY.—When acting as conservator or receiver, the Agency (FHFA) shall not be subject to the direction or supervision of any other agency of the United States or any State in the exercise of the rights, powers, and privileges of the Agency(FHFA).

This is critical because under HERA TITLE 1, Subtitle A, SEC. 1313A. HERA creates the FEDERAL HOUSING FINANCE OVERSIGHT BOARD to monitor the safety and soundness of FnF and make sure FHFA is following the statutes of HERA. Here is the fun part. HERA directs that this oversight board have 4 members, the Sec. of Treasury, the Sec. of HUD, the Chairman of the SEC, and 1 other person who shall serve as Chairperson of the Board.

The people who wrote HERA wanted to keep FHFA pure and not subject to the direction or supervision of any other agency of the US. The Sec of Treasury, Sec. of HUD, the Sec of SEC, and the Chairperson of the Board were supposed to make sure this part of HERA was enforced. In a "questionable" brazen and unconstitutional breach of responsibility the Secretary of the Treasury is directing FHFA at every turn including the Sweep Amendmant. See the Treasury’s own announcement of the Sweep Amendment here: http://1.usa.gov/NVixW5

A member of the Oversight Board, who is supposed to make sure FHFA is not subject to the direction or supervision of any other agency of the US, is directing FHFA to initiate the SWEEP AMENDMENT! This is a "questionable" breach of HERA! Oops, the Secretary of the Treasury "might be questionabley" above the law. Should there be Judiciary review?

There's more! Did you know that in the same section 1313A referenced above in item b. it says: ‘‘(b) LIMITATIONS.—The Board may not exercise any executive authority, and the Director may not delegate to the Board any of the functions, powers, or duties of the Director.

The Secretary of the TREASURY is a member of the OVERSIGHT BOARD. HERA requires that the Board may not exercise any executive authority….. but the Treasury is all over every move the FHFA makes under HERA. You can see it in all the announcements the Treasury makes like this one: http://www.treasury.gov/press-center/press-releases/Pages/tg1684.aspx

A clearly "questionable" approach of Treasury with regard to HERA, and the constitution.

[swchandler]

"This is unconstitutional. This constitutes a fraud!

Someone who breaks the law is called a CRIMINAL!"


First off, I am in no way qualified to judge this issue, or even discuss it in a thoughtful way. However, that said, it seems to me that the above comments are a bit extreme in nature, especially when repeated over and over again. That's not say that it's possible that actions of the administration aren't questionable and worthy of close judicial review.

It is important to remember that this issue is only one of many where the executive branch is being criticized for potentially exceeding its authority. Yet, I think that we all know that Congress has been terribly dysfunctional and inept, and because of that, arguments can be made for greater executive action on issues important to the nation. In areas where the margins are being pushed, I'm sure we will seeing many cases in the future being considered and argued adamantly in the judicial system. Maybe the rash and very harsh conclusions being voiced are just part of the theatre, but I have to admit that I find that kind of dialog a bit over the top and not very convincing.

[thombiz]

Point taken. I will endeavor to just state the facts and identify such breaches as "questionable and subject to review". I don't want to drive away people who might get caught up in my wording. Thanks SW. I will correct what I have written appropriately. Thanks.

[thombiz]

Well, good people, I spent the day wrapped up reading the Emergency Economic Stabilization Act of 2008, of which TARP or Troubled Asset Relief Program is a significant part. Matter of fact, TARP is the first Chapter of the ACT. I can see why Mac is familiar with the Emergency Economic Stabilization Act of 2008, because numerous Chapters or Sections deal with everything from renewable energy, to natural gas, to coal gasification, to electrical distribution, to alternative energies, etc, etc. There is even a section for Katrina relief and a section for bicycle use. I am happy to report there are no provisions at all for the futures of FnF. There are no parts which deal with Fannie and Freddie other than using them to purchase troubled mortgages. There is an expanse of information about how to evaluate, purchase, insure, etc. etc. trouble mortgages, but nothing about housing reform or the management of the conservatorship of Fannie and Freddie. I did find a section about the Secretary of the Treasury and remedies for any violation of the constitution, even the location of such remedies in the US Code, but nothing about winding down Fannie and Freddie and creating new housing finance infrastructure.

[thombiz]

Full disclosure. I've been investing in FnF since 2008. I purchased a bunch in 2012 when the stock price was $0.26 a share. I invested in FnF based on a class I took in architectural graduate school where I learned what FnF did and how they were critical to the US housing industry. At the time they were highly respected corporations. I started purchasing FnF after the stock price dropped from about $68 per share to less than $1.00 a share in 2008-9. This was when they were loosing money because the mortgage originators were using all forms of deception to get people to purchase homes. This included such things as single signature purchase, adjustable rate mortgages, balloon payments, no credit check or FICO score check loans, etc. Then the mortgage raters were passing them thru as highly rated securities. FnF didn't originate or rate the mortgages, they just purchased them, repackaged them as guaranteed securities, and resold them as mortgage backed securities. Supposedly they were some of the safest investment entities you could buy, so a lot of municipalities purchased them as solid investments for their employee retirement systems, etc.

In 2008 toxic mortgages caused significant losses for FnF. They were in the hole $14.9 billion. Given time, some argue they could have overcome that debt. But they were needed for a much more important role. The same toxic mortgages that threatened FnF also threatened the "too big to fail banks". If the likes of Bank of America, JP Morgan, an Wells Fargo failed due to the load of toxic mortgages on their books, they could visit upon the nation a depression worse that the Great Depression of the 30's. To prevent this from happening, the US Government had to use FnF. A bill was passed which allowed the government to put FnF into conservatorship, then force them to purchase the toxic mortgages, saving the banks, and giving them time to recapitalize. Since that time, the new mortgages granted have been the most pristine in the history of the US. Only extremely qualified people have been able to get mortgages. As investments, these mortgages are the best ever.

Since, the conservatorship of FnF, mortgage defaults are at the lowest rates ever. This has got to be very profitable! Add to that, FnF have cleared most of the toxic mortgages from their books by selling them off at fair market value prices or even below fair market value.

Once the banks had an opportunity to recapitalize, the Fed has been suing them to recover losses based on the toxic mortgages sent to FnF. You've seen all the headlines in the news about the settlements made by Bank of America, JP Morgan, Wells Fargo, etc. Well, the settlements and the profits FnF have made have repaid all the money it took to purchase all the toxic mortgages in the first place plus interest of 10% a year on that money. Now, instead of releasing FnF from conservatorship, the Obama Administration wants to blame the financial meltdown on FnF because of their business plan conflict of making profits for shareholder while using the US Treasury to backstop losses. The Obama administration wants to get rid of FnF and create new housing finance infrastructure. It's just activist politics where Obama is trying to write a legacy for future generations to admire. The first black president of the US is a big deal, and anybody with common sense knows that he will serve as inspiration for all ethnic peoples of the good things all people can do as his legacy is written.

In the case of FnF and conservatorship, getting rid of them is wrong, at least in the way Obama is trying to do it. There are law abiding ways to eliminate FnF but they require the work of Congress to formulate and pass a bill to do it. To ignore the laws passed by congress for the conservatorship of FnF and instead push in your own plan is a "questionable violation of the constitution". Congress directed that HERA be the directives for FnF. They passed a law, and some choose to disregard the law and do their own thing in possible violation of the constitution.

We have the rule of law here in the US to regulate the orderly day to day affairs. We have laws to abide by and we tend to take it badly when someone breaks the law. The way in which the Obama Administration has tried to eliminate FnF will come under judicial review. If a violation of the constitution has occurred, it cannot be allowed to stand by US law. It must be undone and restitution visited upon the damaged or burden parties. In the case of FnF this could be the return of some of the billions of dollars they have sent to the Treasury under conservatorship. It could also be the ending of conservatorship for FnF and they them go about their business with better supervision and regulation as required by HERA which is the Law controls them. FnF have already repaid the money they were given to buy the toxic mortgages plus 10% interest. They are very profitable, but the Treasury is claiming every penny of their profits. FnF have been very very profitable since early 2012 and all projections are they will remain profitable for the foreseeable future. When these billions of dollars are returned to FnF the stock will climb very quickly from it's current price of $2.50 to somewhere between $40 and $100 per share.

I have 78,000 shares. so that means a payday of between $3.12 million and $7.8 million.

You got to wonder why I'm risking my reputation to bring you this info. There is a tremendous amount of work here just to bring this to you, so why am I doing it? I have to ask the same question.
Signing off. Have a good day.
Bob Thompson

PS: Alright punctuation, grammer, and spelling police........have a field day with it.

[thombiz]

Mel Watt, Director of FHFA “Well clearly we have the authority to end the conservatorship. It’s in the statute. The statute gave us the authority to start it and it goes with that the authority to end it.”