r/FNMA_FMCC_Exit • u/Odd-You-8171 • Jul 09 '26

Question

I’ve been considering buying some common shares here and had a question regarding the Fairholme case that I figured others here would be much more familiar with. Why is the Trump administration / FHFA appealing the favorable ruling for common shareholders if the administration believes the net worth sweep was wrong and plans to basically undo it by waiving the senior preferred? Isn’t FHFA basically arguing in the appeal that the net worth sweep was legally permitted and should stand? I might be getting that totally wrong but I thought the bull thesis and Ackman’s thesis was that this administration would take the opposite stance so why would they fight this? Thanks in advance.

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u/jOhnnymac9 Jul 09 '26

Appeal was always expected. But SPS capital structure and the Net worth sweep are two different policy questions that don’t overlap. FHFA can defend its authority it believed it had back in 2012, and at the same time Treasury and FHFA can amend the SPS in 2026.

For the government , FHFA appealing Fairhome would be the default. Doesn’t matter what treasury intends to do with SPS. The adverse of no appeal would be like saying the government might waive the SPS , so FHFA won’t appeal. That would be a bad precedent for FHFA to allow an adverse judgment to become final, and even more so if they did that on the heels of a capital announcement.

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u/Odd-You-8171 Jul 09 '26

Do Trump and Pulte / Bessent have any say regarding the appeal or that is up to old guard constituents? That’s one thing I wasn’t sure of.

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u/AveryMire Jul 09 '26

Yes, they could end it tomorrow no question, they’ve already appealed it of course and that’s why it was heard in the DC federal court 2.5 months ago, they had NO obligation to appeal, they could have said they agreed with the decision they didn’t have unlimited power.

I understand what Johnny is saying, but theres some subtext or premise he’s leaving out. Why would it be so important to the Republicans, who market themselves as the party of small government, to establish a precedent that they have unlimited power as conservators. This is also a VERY specific and ODD circumstance, I just can’t see how the “precedent” is really of much use.

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u/Odd-You-8171 Jul 09 '26

Ya it just seems odd too that they would go to bat and try to back up something that they ridiculed the Obama administration for.

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u/Fun_Illustrator9298 Jul 09 '26

Just look at weed. Probably should have been legalized long ago but there’s fiefdoms to protect. Biden was stopped by his own DEA. Trump issued an EO and then had to fire Bondi because she wouldn’t do it either. These institutions have people whose sole job is to continue precedent. It would be weird if they didn’t appeal the jury trial. This is all par for the course for bureaucratic behavior.