We are witnessing a rush of activity on all sides of our struggle. I could not be any more pleased to see the panic that surrounds many of our opponents actions.

It appears the moment we have long awaited has arrived; the depositions are underway in the Fairholme Lawsuit discovery. We learned from a source connected with Mike Milken/Milken Institute that former FHFA chief Ed Demarco has been deposed.Ed came to FHFA from the OFHEO where he was part of repeated attacks designed to discredit and weaken Fannie and Freddie. He attained his dream job as “acting director” of FHFA and was a more than willing accomplice in the plot to destroy Fannie and Freddie.Ed partnered with Treasury in their quest to hand the GSEs business to the very banks who created the financial crisis.

As the vice closes on the legal side, our opponents at Treasury are feeling increasingly frustrated by the slow progress on the CSP. A plan is being considered that would move Dr. Stegman out of Treasury to a new position in which he would spearhead a push to expedite the CSP and try to use it as a “final solution” for the GSEs. A final decision has not been made on where Stegman would conduct this plot from. Our opponents at Treasury and beyond are under increasing pressure from the big banks to complete the phase-out of Fannie and Freddie. Here I feel compelled to say a few words concerning the mixed signals we continue to get from the administration concerning the GSEs. Clearly two schools of thought have emerged behind the scenes. One still beholden to the big banks and their quest to get their hands on the GSs lucrative business. The other who understand the critical role the GSEs play. I want to make it clear to everyone involved that for Obama to continue to play chicken and risk handing the GSEs and all they represent over to a Republican in 2016 is the height of irresponsibility. Believe me when I tell you I have been assured that the most loyal Democratic supporters fully understand what is at stake and if Obama continues this game Hillary will pay dearly in 2016. After over six years of being largely left on the curb, it is time for Obama to heed the calls of those who put him in power.Those who after over six years of “economic recovery” are still sitting on the curb waiting for this administration to do something that benefits them and not the big banks.I issued these same warnings in the spring and summer of 2014; I warned that if actions were not taken the Democrats would be slaughtered in the midterms.The results confirmed my warnings and 2016 will bear similar fruit if the neglect continues.The most trusted and loyal Democrats will not be energized at all in 2016 if the GSEs and all they represent are left on a path of destruction.I assure you that Hillary’s fate will follow ours.
For in the absence of Fannie and Freddie black Americans and underserved communities have historically been horrifically abused by banks and private mortgage co.s in the housing market.If Fannie and Freddie were allowed to be discarded, this abuse would dominate their choices and ensure that many never would own a home again.

The decision by Senator Shelby to include Corkers GSE panic amendment in his bill confirms just how desperate the Republicans have become. On May 5th, Corker made this statement regarding the decision by Mel Watt to consider raising the salaries of Fannie and Freddies CEOs.

“While Director Watt’s decision to reassess the existing compensation cap may seem minor, it is emblematic of a much larger problem: FHFA appears ready and willing to unilaterally drive the GSEs back to the failed model of private gains and public losses. If Congress doesn’t act to reform our housing finance system, it will be blessing FHFA’s push to recreate the failed pre-conservatorship model.”


The inclusion of Corkers amendment in Shelby’s bill confirms that Republicans have been picking up the same mixed signals that we have. Why would they feel compelled to pass a law saying Congress must resolve this if they weren’t fearful that a unilateral plan was being considered? These comments and actions coupled with the Senator Grassley lead Republican double cross confirm that to my delight the Republicans have now almost completely broken ranks with the Democrats on this issue. As in any great campaign, our strategy to divide our opponents has worked brilliantly. I would encourage everyone to fan the flames of this new found split in every way possible.

To offer a little overview as to our strategy, in the beginning we had two clear goals: one was to get some of Fannie and Freddies most trusted allies to come to their aid. At the time we got involved Fannie and Freddie had been completely abandoned and were unable to defend themselves. We watched as so many of our foes would relentlessly beat them into submission virtually unopposed. We launched a vigorous campaign and were incredibly successful in getting many key Democrats to defend and speak out on behalf of Fannie and Freddie, many have even called for reform release. We have been told that we have had a profound impact in rallying defenders to our cause. To those that have heeded our calls we thank you.Our most recent champion is rising Democratic star Patrick Murphy who recently had this to say about Fannie and Freddie:

@RepMurphyFL was on the Bloomberg Radio show ‘A Closer Look with Arthur Levitt’ (@ArthurLevitt) 1:00 pm – 1:30 pm today and talked about the GSEs. His remarks are transcribed below, which occured around the 23 minute mark of the show.
“You take Fannie Mae, Freddie Mac, the Chairman’s (Hensarling) legislation called the Path Act dismantles Fannie and Freddie entirely. I believe we need to, we can improve Fannie and Freddie, that we can have more private sector involvement but ultimately I think the federal government needs to be involved and have that backstop to ensure that housing is affordable for all Americans. That’s something that is key to me, back to the middle class there, is making sure folks can afford a home, that they can build that equity, have something tangible to invest in.”
Thanks, @DoNotLose and @pgray41 for the alert! Bloomberg Radio is channel 119 on SiriusXM, and the show may still be available on demand. This transcript was provided by gselinks.com, which is a great resource to stay up to date on GSE happenings.

The second part of our strategy that I touched on above was to get the Republicans to speak out against the sweep. We knew we could never get the Republicans to come out in favor of the GSEs so this was the most useful strategy to apply on them.Grassley’s attack was a huge success in this aspect. Our motives for those two strategies were multi-dimensional. One key result we sought was to break the unholy alliance that existed between the Republicans and Democrats The Republicans were all too willing to ignore the lawlessness of the sweep as long as they felt they could achieve their lifelong goal of destroying Fannie and Freddie. Quite simply we sought to divide and conquer, this strategy continues. There are other aspects of these strategies that would not be productive to share now, our opponents will not know these until it is too late.

I want to assure everybody that Senators Shelby’s bill is considered a highly partisan wish list and stands no chance of passage.

On the legal side, we have seen yet another desperate move by the government. This time they seek to make the privilege logs “protected” in the “Fairholme Lawsuit”, They obviously were not happy as we were with the fact that Fairholme Funds shared portions of prior logs. I found it amusing that Fairholme chose to include past logs in their entirety in their response attached below.

Meanwhile in the “Perry Injunction” an order concerning the schedule in which various briefs will be due has been issued.This is below as well too. All new documents have been added to the appropriate links above as well.

In closing, I just want to share a tremendous letter drafted by Bryndon Fisher to our beloved John Carney:
Dear Mr. Carney,

Bill Maloni was kind enough to include me in this email exchange, for which I am grateful. I very much appreciate your perspective on our Fannie Mae and Freddie Mac quagmire, and since I have some interest in, and experience with the topic, I am hoping that you may be amenable to hear my perspective as well. I am a shareholder in both Fannie Mae and Freddie Mac, as well as a lead plaintiff in two of the many cases pending in the U.S. Court of Federal Claims.

When I purchased common and preferred shares in these two companies, beginning in March 2009, I did so with the full and complete understanding that, ifeconomic conditions allowed, their conservator, the Federal Housing Finance Agency (FHFA), would see to ferrying these two entities to financial safety. How did I know this? Because the Housing and Economic Recovery Act of 2008 (HERA) mandated it, and the FHFA was thoughtful enough in September 2008 to promulgate a fact sheet, summarizing its responsibilities and goals as conservator under this new law:

“The purpose of appointing the Conservator is to preserve and conserve [Fannie Mae’s and Freddie Mac’s] assets and property and to put the [two companies] in a sound and solvent condition.” Moreover, the FHFA is “to keep the [two companies] in a safe and solvent financial condition.” And, “upon the [FHFA] Director’s determination that the Conservator’s plan to restore [Fannie Mae and Freddie Mac] to a safe and solvent condition has been completed successfully, the Director will issue an order terminating the conservatorship.” (obtained from the FHFA Fact Sheet, attached)

I, along with many others, relied on these covenants when I entered into my ownership interest with the GSEs. By the same token, I also recognized the primary risk involved in holding shares of these two companies. If the economy didn’t recover quickly enough or substantially enough, the conservator would have no choice but to recommend receivership for either or both firms, and thereby begin the formal liquidation process.

Yet, I remained confident in my investment because the United States economy is a powerful machine – second to none – and the services that Fannie Mae and Freddie Mac provide to a growing housing market are essential and valuable. And guess what? My investment thesis was vindicated. The economy did recover, and beginning in 2012 my companies turned the corner to begin their final journey through conservatorship by repaying the U.S. Treasury (or the American taxpayer, if you wish) and rebuilding their capital structures.

Unfortunately, the U.S. Treasury and the FHFA had a different agenda, one comprising ideas and actions that were not authorized under HERA, or any other American law. As you may have come to realize, the FHFA forgot that it was the conservator for the companies, and decided in August 2012 to begin surrendering to the U.S. Treasury all future profits (assets, really) of these two enterprises. And they did this through an amendment to the Senior Preferred Stock Purchase Agreement (SPSPA). This action essentially imprisoned the two GSEs in perpetual conservatorship.

So, where are we now after almost three years since this inauspicious act? Arguing over whether my fellow shareholders and I deserve to have our companies returned to us as prescribed by law, and have them returned before, dare I say it, Congress has reformed them. Setting aside the legal arguments for a moment, let’s discuss reform.

Fannie Mae and Freddie Mac, our nation’s most prominent government-sponsored enterprises, were already reformed by Congress through the enactment of HERA. This law not only provided a more robust regulator, the FHFA, but the law gave the GSEs more specificity when it came to capital standards. Today, as was the case when HERA was enacted, Fannie Mae and Freddie Mac have been reformed. But what about the government guarantee? As one would assume, it applies to every major systemically-important American company in case of catastrophic economic collapse. But, proper capital requirements and effective regulatory oversight can reduce the frequency of this tumultuous intervention, considerably.

And with regards to the duopoly argument, the FHFA’s regulatory mandate has the ability to create a public utility-like environment for Fannie Mae and Freddie Mac that will protect taxpayers and investors alike, all the while delivering cost effective mortgage rates and safe investment instruments.

So, do I deserve to reap the benefits of this extraordinary financial rescue through my ownership of common and preferred shares in these two rehabilitated GSEs? You bet I do, for the same exact reasons why I reaped great rewards from my post-bailout investments in Citigroup, AIG, Bank of America, and General Electric. I purchased the stock certificates, and I took the risk that the economy may not recover quickly enough or substantially enough for those firms to survive. But guess what? They did. And guess what else? I was able to retire a few years ago due, in part, to these great investments. I did what every other red-blooded, American investor has done since before America became a country. I capitalized on an opportunity, an opportunity born from economic turmoil and backed by the law of the land, for my benefit.

But this perspective wouldn’t be complete unless I advocated for the obvious. It is time for the most important and powerful person within this whole drama to finally come forward, and do the right thing. Of course I’m talking about Mr. Mel Watt, the Director of the FHFA. As conservator for the two entities with a well-inked pen, and the power of HERA behind him, he can unilaterally 1) strike down the third amendment to the SPSPA as contrary to the FHFA’s mandate to put the entities in a sound and solvent condition, 2) declare the U.S. Treasury and the American taxpayer repaid with the March 2014 “dividend” payment and, thus, the senior preferred stock fully redeemed, 3) extinguish the warrants issued to the U.S. Treasury as unnecessary for repayment, 4) permit the GSEs to relist their securities on the NYSE, 5) allow the entities to recapitalize through a prudent mix of debt, equity, earnings, and overpayments made to the U.S. Treasury since March 2014, and 6) release the entities from conservatorship, and back, not to the American people, but to this American shareholder and his fellow owners – the ones who hold the stock certificates.

I do so hope you will consider what I have written here. Although we may not agree on all aspects, I do value your opinion and insight very much. And the next time Mr. Lew or Mr. Watt tells Congress that they need to pass a law to solve the problem of Fannie Mae and Freddie Mac, you can tell them through The Wall Street Journal that Congress did pass a law, and guess what, they’re not following it.


Bryndon D. Fisher

Keep the Faith!



5:6:15 Briefing schedule order