I know we promised the Republican analysis tonight but due to some very interesting developments concerning last nights post this will be delayed. Late today someone reached out claiming to have more information pertaining to the FHFAs fraudulent 2012 report.I have since received this information and will have it up in a post tomorrow. So For now I want to share a comment we received in the comments section of yesterday’s post by Neal Newman. I also want to thank everyone who has been participating in the comments section; we continue to mine some great data there, bravo! Keep the Faith!

Neal Newmans comment: 10/7/14
FHFA/Treasury are right. They started out wrong when they instituted the 3rd amendment sweep as a means of restraining the profitable GSE’s while the Administration and Congress attempted reform, but Watt got it right with his quiet shift towards maintaining the GSE’s, and keeping the sweep in place solely as a means of accelerating repayment of Treasury’s principle and interest prior to release. Watt/Lew are also right NOT to embarrass the Administration and Congressional supporters by going public on this about-face BEFORE the November elections.
Lamberth is right. Well established case law dating to the SnL crisis bolsters HERA’s bar against judicial interference for mere “arbitrary and capricious” actions such as the third amendment sweep. Lamberth agrees that FHFA acting contrary to the role of a conservator IS a violation, as is any outside “direction or supervision” by Treasury. But given the LIMITED facts available to Lamberth AS OF SEPTEMBER 30, neither threshold had been breached. Contrary to Epstein’s Oct. 1 critique, Lamberth did not find that the Third Amendment was fully consistent with duties of a conservator – only that its existence AS OF THE DATE OF HIS RULING was permissible (not yet ripe). Epstein’s “manifest, disabling and irreconcilable conflict of interest” clock does not begin until 4th quarter sweep commences. Lamberth simply wanted this case gone so that justice could best be addressed in Sweeney’s Federal Claims court.
Sweeney is right. And since the facts she’s set her sights on are materially different from those that were before Lamberth, her siding with plaintiffs will NOT contradict Lamberth’s ruling. Specifically, Sweeney is gunning for evidence Treasury “was really the guiding force” behind the sweep. Lamberth only had the light read of an administrative record (vs reams of data under full discovery) and a third amendment sweep that was presumably only about recouping P&I (“the court can’t ask ‘why’ – only ‘what’”). And when Sweeney hears her case next year, if one red dime is swept beyond P&I, FHFA will have shifted from “arbitrary and capricious” behavior to violating its conservatorship.
Fairholme Attorneys were right. They agreed to a discovery schedule that a) allowed for more thorough discovery; b) allowed time for the elections to get out of the way; c) opened the door for a Dec. 31 sweep which would clearly be in violation of a conservator’s charter.
Dept. of Justice is right, when they surely advise Treasury and FHFA that the window of legally defensible behavior is rapidly closing. There can be no further sweep of GSE profits without breaching the conservatorship obligation cited by Lamberth. Nor will the government be able to maintain there is no “cognizable” property taken in violation of the 5th amendment if one dime beyond P&I is diverted from the GSE’s. Lamberth even hinted that the only way out for the government is a fourth amendment being put into place before the 4th quarter sweep. DoJ was listening and is adjusting.
Tim Howard717 is right. There is a shift underway which involves key democratic housing policy insiders like Maxine Waters and outsiders like Watt’s friend former Congresswoman Eva Clayton. Politically, the toxic image of FnF must be rehabbed before release.
And, I am right. I understand all the above as my justification to double down on this very promising bet.
Neal added this :Thanks for the air time Tim! One clarification: I may be mistaken in my assertion that the 2014 4th quarter sweep will put us over the top on principle and interest due. Would appreciate some help pulling those numbers, a key assumption being all monies paid via the sweep should be considered pay down of principle.