My thoughts on Peter Champman’s update from th717 $FNMA #FANNIEGATE
Posted on June 8, 2015
Peter’s remarks are below but I just wanted to point out that it is interesting that they made this claim at the point of August 12, 2012, because isn’t it true that, according to the government, that all claims once HERA took affect and FHFA took all shareholders’ rights that that was the point of time after which all shareholders who acquired stock should have rights to nothing?
You can’t have different rights attached to the same class of securities.
Is the third amendment net worth sweep a one time event or does the Treasury steal money in perpetuity?
Is the third amendment not a new security, what else do you call a preferred security that takes all future profits but common equity?
My point is that, this filing indicates that the game has markedly shifted. The government is losing far and wide and is now pathetic. The information they are arguing with now they’ve had for over a year. What they are trying to do is make this a case where the entire third amendment does not get reversed and simply the damages are paid out to shareholders at the time.
Basically, this is how you admit guilt without actually saying that you’re guilty… you try to figure out who exactly you are guilty to, and in this case, stockholder rights are transferrable, and if their argument is that shareholders have no rights, then that’s fine and dandy but now what the hell are they doing by trying to segment classes of common shareholders midway through conservatorship?
Peter Chapman update on motion:
“Our Government has filed a Supplemental Motion to Dismiss in Fairholme v. U.S. this afternoon. Our Government wants all claims by all shareholders who acquired Fannie or Freddie shares after Aug. 17, 2012 — the date of the Third Amendment — to be dismissed as a matter of law because, our Government argues, they lost nothing.
The argument is nonsense. In America, the bundle of rights that attach to a security do not change based on the identity of the holder. Here are some legal citations for that proposition:
— In re Lorraine Castle Apartments Bldg. Corp., 149 F.2d 55, 57-58 (7th Cir.), cert. denied, 326 U.S. 728 (1945) (“[T]he prices which security holders pay for their securities in no wise affects the measure of their participation in reorganization or their voting power.”);
— Standard Gas & Elec. Co. v. Deep Rock Oil Corp., 117 F.2d 615, 619 (10th Cir.), cert. denied, 313 U.S. 564 (1941); and
— Security-First Nat’l Bank v. Rindge Land & Navigation Co., 85 F.2d 557, 561 (9th Cir.), reh’g denied, 86 F.2d 3 (9th Cir.), cert. denied, 299 U.S. 613 (1936), reh’g denied, 300 U.S. 686 (1937) (“The legal value or property right in an obligation is the right to recover from the maker to the entire extent of his promise to pay. The consideration given for a security by the holder thereof is immaterial.”).
A copy of Judge Firestone’s Textainer Equipment Management decision on which our Government relies is available at http://bit.ly/1IyxePx and is easily distinguishable from the shareholder claims asserted in Fairholme v. U.S.”