DRAIN THE SWAMP

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________________________________________________ Washington Federal v. United States, No. 13-385C WAZEE STREET OPPORTUNITIES v. United States, No. 18-1124C Before Chief Judge Margaret M. Sweeney. In the United States Court of Federal Claims - BRIEF OF AMICUS CURIAE - The shareholders are witnessing how the plaintiffs (mainly Junior Preferred Stock -JPS- holders) and the Government, along with the FHFA-Conservator collude with judges to favor their economic interest, at the expense of the shareholders (holders of common stocks) A shareholder of a company is related to the ownership interest, that is, the ability to vote directly on the decisions of the management in the Annual Shareholders' Meetings and the appointment of the members of the Board Of Directors, who are tasked with the supervision of the management. A common stock, unlike the debt instruments Obligation, Bond, Note, MBS, etc, reflects the value of the enterprises because it has an econ...

According to 2008 HERA, Capital Distributions (like dividends) are restricted for Undercapitalized enterprises. But there are exceptions where they are authorized: if it's in connection with the "purchase of ownership interest" (the SPS are Equity) and it will "reduce the obligations" (the SPS are obligations). In July 2011, when it was clear that FnF would become profitable soon (the losses were driven by the provision set aside for loan modifications and their portfolios were almost fully reserved) and thus, the SPS would be paid back soon (I estimate they were paid back in 2013 for FMCC and 2014 in the case of FNMA), the FHFA, with the excuse of writing regulation to be more transparent about what is set forth in HERA, added one important exception more that would allow FnF to continue paying dividends to the Equity holders: "to meet their Risk-Based Capital levels", that is, for their recapitalization. The Administration's narrative ha...

In Spain we know it well. Every time there's a switch of political parties in any Administration (Municipal, Regional or Central State) and the opposition party takes over the helm, the news about unpaid bills emerge. It's commonly known as " bills hidden in the drawer ". So, a new Administration starts its mandate with the coffers in negative territory. This causes many troubles to the private contractors working for the Administrations because their bills are due during months or years. But the authorities in the Eurozone have come up with a brilliant idea. Let's use the Central Banks to advance the payments to the creditors using the money printing press but, as the new bank notes in circulation would show up in the statistics provoking depreciation of the currency and thus, inflation, it's better to conceal it issuing Book Money, which is not legal tender and therefore, it cannot show up in any statistic. In my previous article a talked widely about...

Capital Distributions are restricted while in Conservatorship, according to 2008 HERA, where is set forth the regulation. The FHFA has repeated this several times, although referring to payments of claims, etc. But a dividend is also a Capital Distribution. It doesn't matter what is written in the SPSPA signed between the FHFA/US Treasury, because a contract doesn't supersede a law in force. Distributing dividend would go against Established Insolvency Principles and common sense. The companies need to increase capital and not decrease it, retaining earnings and not distributing it. The FHFA has allowed to distribute Capital only to one holder of Equity interest, the holder of Senior Preferred Stocks. Why is that? It turns out that distributing capital to the US Treasury both recapitalizes the enterprises (to be in a solvent condition) and pays off the obligations with the Treasury (to be in a sound condition), which is exactly the Conservator's Power: If you have...

I’m still in a state of shock after visiting the Money Museum, at the Bundesbank’s complex in Frankfurt. There are different exhibitions. A few of them are video displays, where a person, supposedly a Bundesbank's employee because they are in an office, explains basic concepts about different economic subjects, like the exchange rates or how money is created through “Book Money”. Book Money? I don’t know you but it’s the first time I read that term. In three different stages (each one you have to press a butto n ), they try to explain how money is created. I didn't tape it but I took a picture of the buttons:  1. BOOK MONEY AND LENDING : Basically they say money is created when the B ook M oney exits the bank through lending. 2. CREATING BOOK MONEY : This whole subject is simply to say that “the money the banks use for lending, unlike many people assume, doesn’t necessarily come from the deposits made by the customers”. So, it refutes the economic theory that sa...