obit iHUB $FNMA #FANNIEGATE PART 1
Posted on June 9, 2015
In their motion for dismissal, the US Government argues that Fairholme and other shareholders must have had ownership of the property at issue at the time of the alleged taking. If they did not have ownership at that time, then they did not have a valid property interest at that time, and therefore, are not entitled to compensation.
The Government says:
The Fairholme hedge funds and other plaintiffs allege that the Government took their shares and shareholder rights on August 17, 2012, when Treasury and FHFA entered into the Third Amendment.
The Government states that purchasers of GSE stock who purchased after the date of the alleged taking (August 17, 2012) lack standing to bring a takings claim. Fairholme and some of the other Plaintiffs, in fact, did not own GSE shares prior to August 17, 2012. So the government wants Fairholme and others to be dismissed from the case and not a dismissal of the case itself.
The Government says in conclusion:
For the reasons described above, we respectfully request that the Court dismiss the Fairholme hedge funds, along with all other plaintiffs who did not own stock in Fannie Mae or Freddie Mac on the date of the Third Amendment, from this case.
However, the argument misconstrues the Plaintiffs’ case by saying that the Plaintiffs are saying that the Government took their shares (property) and shareholder rights. This is plainly not the case. It is obvious to all that the shares were not taken. And the complete abrogation of shareholder rights did not occur (GSE shares are still traded and owned by investors and traders) though there has been a reduction in certain rights (i.e. voting, dividend distribution) since the conservatorship began. Shareholder rights are not relevant to the argument made by the government since the argument is made and supported only by cases dealing strictly with real property not shareholder rights.
The Plaintiffs’ case is about the actual negative financial impact of the Third Amendment on share value, dividends, capitalization of the GSEs and more over a duration of time and not a one time taking of shares or total abrogation of shareholder rights.
This motion on the face of it appears to be nothing more than an Hail Mary pass by the Government.
Supplemental MOTION to Dismiss pursuant to Rule 12(b)(1) , filed by USA.
Response due by 7/9/2015. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Schwind, Gregg) (Entered: 06/08/2015)