Fannie Mae, Freddie Mac: This Is Getting Absurd

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This is bordering on the absurd. I’ve marked up the document. What you will find in Treasury and FHFA consistently making arguments to win “point A” that are in direct conflict with the argument they made to win “point B”. The effect of that is they effectively invalidate both arguments. In some instances Treasury/FHFA lawyers manage to contradict themselves in the same argument. There is even a case that Treasury/FHFA cite that manages to makes the argument Fairholme is trying to make.

Cooper and Kirk (Fairholme Fund (MUTF:FAIRX) law firm) is running circles around the folks at Treasury and FHFA. I find that chance discovery is denied (in Circuit Court here) to be infinitely small (note discovery was already granted in DC Court of Claims).

You really have to step back and consider the admission from FHFA that they did not make an administrative record of the decision to enter into the Net Worth Sweep in 2012. Essentially the FHFA is saying they agreed to enter into an agreement with Treasury to take 180B in upcoming profits and give them to Treasury in place of the ~18B they were owed (in 2012) AND THEN provided Treasury with what gov’t officials are now saying is another $180B$200B in profits over the next decade. You see? They essentially agreed to hand over nearly half a trillion dollars from shareholders to the Treasury and no one thought, “we might need to keep a record of this decision making process”? It is unfathomable any gov’t agency (Fed, State or even Local) would do this. Unfathomable.

Fairholme Response to FHFA

Via: valueplays

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About the Author

valueplays
Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.

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