Tuesday, January 21, 2014

FHFA’s Ugoletti: Dividend’s Threat to GSE Soundness Prompted Treasury ‘Sweep

lcald67  1 minute 40 seconds ago 

FHFA’s Ugoletti: Dividend’s Threat to GSE Soundness Prompted Treasury ‘Sweep’
Talk about perjury...

The Treasury Department’s surprise move during the summer of 2012 to revise the GSE Senior Preferred Stock Purchase Agreement was prompted by fears that Fannie Mae’s and Freddie Mac’s previous dividend payment obligations “would lead to the exhaustion of the Treasury [financial] commitment,” according to a senior Federal Housing Finance Agency official.

The change resulted in the cessation of dividend payments by the GSEs to Treasury, replacing it with a “sweep” of all almost net profits earned by Fannie and Freddie.

In a sworn statement filed in DC federal court last month, Mario Ugoletti, special advisor to the FHFA’s Office of the Director, detailed his involvement in creating and implementing the PSPAs when the GSEs were placed in conservatorship in September 2008, and then the August 2012 “Third Amendment” which replaced the quarterly GSE dividend payment effective for the first quarter of 2013.

Of the $188 billion that Fannie and Freddie drew from Treasury between September 2008 and August 2012, $45.7 billion was drawn solely to pay the 10 percent dividend back to Treasury. Each time the GSEs drew funds to pay the 10 percent dividend, the total amount of the Treasury draw increased, in turn increasing the next 10 percent dividend payment, Ugoletti explained in his deposition.

Ugoletti was deposed in December as part of a pending lawsuit by GSE shareholders Perry Capital and Fairholme Funds challenging Treasury’s third PSPA.


As I said when then sweep was initiated, it will probably turn out to be quite positive for us. It dramatically speeds repayment, dramatically reduces or eliminates the risk of any of the dilutive warrants being exercised, and is guaranteed by out Constitution to terminate before the government can profiteer at our expense (Takings Clause of the Fifth Amendment.) The way share price has moved since then, one might assume people are pricing in a 99%,likelihood that our Constitution is now irrelevant and carries no authority. Pure nonsense. There was never any plausible scenario in which this should have gone below $20 per share.
Correction: if the sweep terminates after the government has profiteered at our expense, the Takings Clause guarantees we will be compensated in full.

I totally agree: If the sweep is found illegal, which how could it not, they will have to pay back to Fannie every penny past the senior shares. and if that occurs the senior shares would be worth 0. this leaves the only argument left is the un-used warrants that the treasury holds. I would think they would go back too since they are tied to the senior shares. 
this would leave fannie to recapitalize under conservatorship. Leading to conservatorship being illegally holding down fannie by not releasing them from it.

So their own actions in 2008 caused them to take more action against their action. THE SWEEP...

If you borrowed 100 dollars and your payback was 50 a day but you could not afford that, the treasury will take all you have, FOREVER. FANNIE never agreed to terms of dividend, they were IMPOSED by FHFA. In 2008, and again in 2012 with sweep. this is defined as ENSLAVING!!!!!!!1

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