I want to share what I have learned through many discussions over the weekend with those very well versed in these proceedings. The government has laid all their cards on the table in this motion for the protective order. They have used every defense they have to get out of complying with Fairholmes discovery requests. Many of those I spoke with thought they would have saved much of this for the actual trial. This confirms what we have been saying for weeks now, that if they are to comply they will essentially forfeit the trial. This is it, the entire trial possibly hinges on this protective order. I say possibly because it is also likely that Fairholme already possess enough evidence to sink the governments claims in trial regardless of what is found through discovery. As has been the case all along, things have been progressing far quicker than I ever imagined.
The consensus I have gathered is that Fairholme will essentially shred the government motion for a protective order. The government continues grossly to contradict themselves, such as their claim that they can not share anything to do with past, present and future profitability of the GSEs without essentially bring the worlds financial markets to ruin. In reality though the government had shared in depth the profitability forecasts of the GSEs when it benefitted them in terms of federal budget considerations. They have even bickered over just how much of our profits they will have available for years to come. But when the senate was considering a bill to wind down the GSEs, they conveniently released a totally bogus stress test result showing how horrible the GSEs would fair in another housing crash. This shows that the governments claims in the motion are nothing but more foolish lies.
Remember this is the 3rd attempt by the government to squash discovery, and they have been shot down every time. Judge Sweeney has made it more than clear that she favors very broad discovery, and she will likely squash this final attempt by the government to cover up the details of what is obviously the biggest case of securities fraud the world has ever seen. It is becoming clearer and clearer that the government made a huge misstep in the way they went about filing the motion to dismiss.
I can not stress anymore the perilous predicament the government is in right now. If they lose this motion for a protective order its lights out for the governments scheme to defraud us. Keep the faith!

One of the biggest insights we have gained in this motion for the protective order is a glimpse into what exactly Fairholme has requested in discovery. Fairholme has continued to conduct themselves masterfully, the documents they seek essentially has the government in check and we may soon see a checkmate. The government knows this and at last they are taking this seriously. That is a great sign, until now they have basically brushed us aside with their insolence and arrogance.They are visibly terrified at this point. It is important to remember that the discovery that Judge Sweeney granted is to do with the governments motion to dismiss. Judge Sweeney allowed discovery so Fairholme could defend against the reasons the Government cites as its reasons for the motion to dismiss.I suggest that you reread Judge Sweeneys order for discovery (Feb. 26) to get the proper context. The government spent the last several months making a mockery of the US judicial system with their insolence and arrogance. Their main defense has been we are the government, we can do whatever we want. It seems that Judge Sweeney has finally got their attention. She has made it clear that we will have our day in court, and they will comply with her orders.
I have many thoughts on what I have read but first and foremost I must remind the government that if they had not chosen to commit securities fraud they would not have to produce anything at all. They have entrapped themselves in their own web of lies and now are begging the Judge to wave a wand and magically release them. I can not wait to see Fairholmes response to their many pathetic arguments. Again and again they grossly contradict themselves. One of the most alarming arguments is that somehow by producing factual documents investors may be spooked into not buying Fannis and Freddies bonds. Think about this for a moment, imagine if the CEO of Bank of America or any big financial institution was caught saying something like this? Basically, they are admitting that they have withheld information and have been misleading investors into buying their bonds? I have honestly to wonder if mel Watt is trying to sabotage the governments case completely, his arguments are that bizarre.
The government argues that to reveal what is being requested would make it hard to retain employees at Fannie and Freddie. Do they think all the bashing and wind down talk has been an employee morale builder? Representatives from all areas of government have had no problem discussing the very issues they now seek to repress in the most negative of contexts to bash us and attempt to destroy the value of both Fannie and Freddie, to further their own self-serving theft of all of our profits. Now that Fairholme is requesting all aspects of their date somehow it would cripple the entire US economy. I highly doubt these delusional/fantastical claims will sway Judge Sweeney to go along with their desire to bury the evidence.
I am prepared to post a summary of the governments own words in regards to the conservatorship in relation to this lawsuit, but I will withhold that for a few days as not to distract from this current development. I have been asked to choose our words carefully as some of our commentaries appears to have been used by the government in their own strategies. I could not help but notice their use of the “chilling” adjective 7 times in their motion. You will remember I said in a recent post–One person who has vast historical experience on these issues, when reviewing the third amendment sweep said,” I find this absolutely chilling, orders such as this were commonplace in the former Soviet Union” I knew that would get their attention, but to copy us seven times? I am less than flattered. I remind the government the definition of chilling–adjective \ˈchi-liŋ\
: very disturbing or frightening. It is chilling that they would even have attempted such a brazen scheme nevermind the lengths they are going to cover it up. Fear not, the truth will be victorious and always, Keep the faith!

The government has filed their motion for the protective order I have attached a pdf file. This reeks of desperation. Commentary to follow. Stay tuned. Keep the Faith!

Motion for Protective order 5:30

Don’t think for a minute that the long holiday weekend brought our information gathering to a stand still, I am literally up to my knees in material over here. While the cats away, …..
I hope this doesn’t go any further than here, but it appears we are becoming the darling of the hedge funds. Not just hedge funds of course but many big buyers have been contemplating an entry here. With the markets peaking we are attracting quite a bit of attention. With the Johnson/Crapo bill all but dead in the senate and good legal news on the horizon there is little downside risk and quite a bit of upside potential. One problem still exists; that is whenever they try to put through anything but small orders the price instantly spikes. Nice problem to have don’t you think.
The coup marches on, the 6 democratic senators who voted against Johnson/Crapo are busy preparing their own bill which will entail reforming and releasing Fannie and Freddie, I do not have a timeline on its release yet.This is a very fluid situation; I am trying to get a feel for the content. This will solidify the coup on the legislative end.

On the legal side of things, we can expect the government to file their last gasp attempt to delay the inevitable with their protective order by Friday, knowing them it will be Friday at 3pm. I anticipate this will be immediately shot down by Judge Sweeney. This will bring us to next Wednesdays status conference that I expect will be one that you won’t want to miss. The games will be coming to an end real quick. I am in the process of putting together an examination of the governments own words in regards to Fannie and Freddies conservatorship. We will point out the gross contradictions they have made by comparing their public statement with their claims in the courtroom. Security’s fraud is an obvious conclusion and if they continue to push, perjury is next. One person who has vast historical experience on these issues, when reviewing the third amendment sweep said,” I find this absolutely chilling, orders such as this were commonplace in the former Soviet Union”
I usually refrain from giving buy or sell specific advice, but I will say that if I was not in the position I am in I would be adding to my position here. buckle up and Keep the faith!

First I would like to commend this insightful followers who added some intriguing comments after my last post “connecting the dots”. I encourage anyone who has not read them to do so. It’s great to see that people are indeed connecting the dots and beginning to formulate the big picture. Bravo!
We now see the next phase of the coup develop. This will be the gradual changing of the narrative from Fannie and Freddie must go to reform and release. I call attention to an article that was on The Huff Post first.”Housing Finance Reform Should Now Focus on Fixing and Preserving Fannie Mae and Freddie Mac” by John Taylor.
We then saw Warren Buffet a staunch Obama ally give his nod to reforming and releasing Fannie and Freddie during the Q and A segment at his annual conference.I am going to post the exchange below I think it was clear that Warren gave an implicit nod to Berkshire investors to possibly get in Fannie and Freddie here.
I was glad to see Todays following article in Politico by Jon Prior confirming the coup. “Democratic senators who recently opposed a bipartisan housing finance bill have begun mulling how to devise a plan that would let Fannie Mae and Freddie Mac stick around. Such an approach, while so far only under preliminary discussions, would vary significantly from a plan authored by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) that would abolish Fannie and Freddie and create a new mortgage finance system. The panel approved the bill by a 13-9 vote on May 15 but it is unlikely to receive a floor vote this year.”
I know some of you felt like we were starting to become an Oliver Stone conspiracy flick, but the coup is not only real but moving quickly to solidify their gains. In the coming weeks we will see the narrative continue to shift, and a chorus begin that calls for our release.
I hope that once republicans begin to realize that their dreams of eliminating Fannie and Freddie have been dashed more of them begin to speak out against the illegal sweeping of all of our profits. They are the supposed champions of the free market and protectors of shareholder rights yet on this issue they have been notably mum save for Senator Toomey, who did a great job Feigning concern, but then threw us under the bus in the Johnson/Crapo vote.
On this eve of Memorial day I am here to say that although they have tried we will not be silenced. This is OUR UNITED STATES OF AMERICA; we will utilize our right to free speech. We know you have made repeated and possible successful attempts to hack our computers.You will not be successful in silencing us or our sources, and you will be held accountable for all you are doing to try and forever change our great nation. I call on all of our followers to honor those who have sacrificed their lives to protect this nation and preserve our way of life.It is our duty to continue to hold Washington accountable and prevent them from turning America into Hugo Chavez’s Venezuela. God bless us all and always Keep the Faith!

Buffet endorsing reform and release.

Do you think we need housing reform? How do you think we should do it, and should Berkshire be involved?

Warren: I think the 30-year fixed rate mortgage is a terrific boon for homeowners, but it’s not a great instrument to own as an investor. It’s done a lot for home ownership in the country. Let people get into homes earlier, kept costs down — the government guarantee keeps the cost down.

Home mortgages are an $11 trillion market, and there is no capacity for private industry to do the job. The question is how to keep the government in the picture without keeping politics in the picture. You’ve found Fannie Mae and Freddie Mac doing dumb thing with politicians prodding them into it.

I think there could be a way. I wrote an article 30 years ago when S&Ls were falling apart, suggesting how to get the private sector into pricing and evaluating risk. But essentially the government being the main insurer. There could be a way that model works in terms of home mortgage insurance.

I don’t think we’d likely be a player, because others would be more optimistic in setting rates. In the end the government would need to be the main insurer. Perhaps private industry could set the price and take 5%, and the government would take 95%.

I do think it’s important, mortgages for homes, to get a correct national policy. I know it’s being worked on, and I think very unlikely that Berkshire will play any part in it… Charlie?

Charlie: When private industry was running it, they owned the whole field and you had the biggest bunch of thieves and idiots running things, so I’m not all that trusting of private industry in this field. At the moment, Fannie and Freddie are being pretty conservative, and they’re making pretty much all the home loans. I think that’s OK. I’m not looking forward to when the investment banks get back to a race to the bottom.

Warren: One question is whether you let Fannie and Freddie run off as is… I think certainly one of the things that led Fannie and Freddie astray was their desire to serve their masters and deliver double-digit earnings gains. If they had stuck to insuring mortgages instead of becoming the biggest hedge funds in the country. Would you let them have portfolio activity at all?

Charlie: Let them just keep doing what they’re doing. They are on the whole being very conservative. When they really got lousy, when everyone was rushing into the market, Fannie and Freddie jumped in as well. I think that particular experiment in privatization was a total failure.

By the amount of messages I have received it’s obvious that some folks are confused by the whole Mel Watt situation. Someone messaged me an excerpt from the Yahoo Finance board in which someone has begun to connect the dots that I have laid out. Here it is – “I’m with you! I see this unfolding the same way – if you have been following it for a while you can start to connect the dots and with some logic can see the way they have recognized that F&F are here for the near future anyway – I personally think they threw in the towel on the whole wind down nonsense when the numbers started coming out about the historically low numbers of first time home buyers and how many all cash transactions the market had… they recognized we were in uncharted water and I don’t believe they liked the way the numbers were coming in… now comes the tight rope act of how to reverse course and not wind up with a boat load of bad press – flip flopping – etc. etc… so move one was to green light Watt to say that he is not going to shrink F&F – but don’t say much more than that…. baby steps here.. I think the next step will be to start walking back the conservatorship… so they can start to re-capitalize.”
This is a very simplistic, but accurate explanation of what is transpiring. I will fill in the blanks more on this as we go along. I could write a 5 page analysis on the Watt speech and a 20 page analysis on Obamas strategy on Fannie and Freddie. It is tricky to convey that kind volume of information in a 3-4 paragraph blog entry. It is critical that people follow along as the narrative develops here. Mel Watt is Obamas trusted lieutenant in what is a trillion dollar Coup which will affect every facet of American life. Don’t think for a minute that the reporters from Forbes and the Wall Street Journal/Enquirer stood even a remote chance of tripping him up in yesterdays interview. It was sad to watch their juvenile attempts to do so. They know the stakes and judging by the brazen way they have begun I have no doubt we will be victorious. Keep the Faith!

I hope those who have been following my writings from the beginning can clearly see that this is playing out exactly how I anticipated. Watching the Watt interview confirmed everything I thought after his first speech. It was clear by both his answers and lack of answers that he knows Fannie and Freddie will be here to stay. I didn’t expect him to stray from the administrations talking points with regards to the conservatorship and the shareholders. I think the reason Bloomberg and The Wall Street Enquirer asked some of these were simply to get more doom gloom headlines to further bash us and promote their own agendas. One thing I’d like to point out and I think was missed by most was his key refrain that One of his key mandates is to reduce taxpayer risk, this is another big step in releasing Fannie and Freddie. It was announced just after his speech that Fannie will be selling 1.6 billion in risk sharing MBS double the amount that was expected. Freddie has also been selling quite a bit of these. This is new, it was tried unsuccessfully in the eighties but has been reworked and is selling favorably now. Mels big smile whenever he answered questions or spoke of the future of the GSEs spoke volumes. Of course he isn’t laying in bed worrying about the share holders, he just smashed all of Demarcos efforts to shrink and ultimately eliminate Fannie and Freddie. He knows that with the legislation to replace Fannie and Freddie now DOA we will be here to stay.I don’t envy his position; he is walking a fine line and must navigate the many lies the government has woven, but all in all he did pretty well. It is with utmost confidence that I have confirmed the Coup is well underway.
With the “DEFENDENTS UNOPPOSED MOTION TO AMEND SCHEDULING ORDER” released Friday (see prior post) The government has set the stage for filing a motion for a protective order by May 30th. This I believe is the last chance for them to stall and delay discovery. They did this to avoid the status conference this Wednesday where Judge Sweeney was sure to drop the hammer on them for their arrogant antics. I know we all have had enough of their delays, but I am beginning to get a little enjoyment watching the government squirm, after the abuse they have subjected us to, throwing a stick in our spokes every chance they get. With watts shift in policy and the utter failure of any legislation passing congress I think, we will see the court case move along now.Their motive to continue making a mockery of the U.S. judicial system has been greatly reduced over the last few weeks. Keep the faith!

The government continues its stall/delay gamesmanship,disgusting.I will discuss this over the weekend.

5:16 orderFAIRHOLME FUNDS, INC., et al., )

5:16 defendents motion to amend
)
Plaintiffs, )
) No. 13-465C
v. ) (Judge Sweeney)
)
THE UNITED STATES, )
)
Defendant. )

DEFENDANT’S UNOPPOSED MOTION TO AMEND SCHEDULING ORDER

Pursuant to Rules 6(b) and 6.1 of the Rules of the United States Court of Federal Claims,
defendant, the United States, respectfully requests that the Court amend the discovery schedule
set out in its April 4, 2014 order to allow the parties additional time to resolve objections to
plaintiffs’ first set of document requests and seven days thereafter for the United States, if
necessary, to file a motion for protective order. Specifically, we request that the parties be
granted until May 23, 2014, to resolve objections and defendant be allowed until May 30, 2014,
to file a motion for protective order. Plaintiffs Fairholme Funds, Inc., et al. (Fairholme) do not
oppose the requested extension of time.
There is good cause for the requested extension of time. Fairholme served its first set of
requests for production on April 7, 2014. The United States responded on May 2, 2014, by
asserting a number of general and specific objections to plaintiffs’ requests. According to the
Court’s April 4, 2014 order, the parties have seven days to resolve objections to discovery
requests and, if any objections remain unresolved, the objecting party has seven days after the
close of that period to move for a protective order.
In this case, the parties have been working diligently to resolve objections to Fairholme’s
document requests and further negotiations are warranted. The parties have exchanged detailed
Case 1:13-cv-00465-MMS Document 46 Filed 05/16/14 Page 1 of 2

document search proposals and the United States has provided technical reports detailing search
results for plaintiffs’ use. At this time, the parties are exchanging information and plaintiffs
intend to provide a revised search proposal in the next several days. The parties are hopeful that
further negotiations will narrow the issues in dispute.
For these reasons, we respectfully request that the Court amend the discovery schedule
and allow the parties until May 23, 2014, to resolve objections and allow defendant until May
30, 2014, to file a motion for protective order.
Respectfully submitted,

STUART F. DELERY
Assistant Attorney General

s/ Robert E. Kirschman, Jr.
ROBERT E. KIRSCHMAN, JR.
Director

s/ Kenneth M. Dintzer
KENNETH M. DINTZER
Assistant Director
Commercial Litigation Branch
Civil Division
U.S. Department of Justice
P.O. Box 480 Ben Franklin Station
Washington, D.C. 20044
(202) 616-0385
(202) 307-0972 fax
KDintzer@CIV.USDOJ.GO

I wanted to check in and congratulate everyone, calmer minds prevailed today. It would have been a sin to give up more ground over what was actually very good news for us. I can see where those who are not following in-depth could have panicked at some of the doomsday headlines. So much has transpired over the last two weeks I am not even going to begin to do a summary analysis at this hour.
These last few months a lot of us exercised quite a bit of restraint as not to further antagonize those in DC who were plotting our demise. With the vote finally over and any chance for legislation to pass now dead, this blog will be shifting gears a bit and we will be going to a new level. Although I still have to manage a delicate balance respecting and taking into consideration all involved, I have a bit more liberty now.
Watts interview today was exactly what I expected, It was akin to him thanking Demarco for his fine service after he had just finished destroying his entire agenda on Thursday. Don’t listen to their words their actions tell the real story.
The tide has turned in a big way for us and the next few months should be exciting. Stay tuned and Keep the faith!

Thank God we can put the bill behind us I honestly don’t think I could have written one more paragraph about such a non issue. Our followers here knew this news 2 week ago I might add. It was obviously news to some which tells me we still have a lot more educating to do. I hope we didn’t lose too many to the turbulence today. If anyone needs more information on todays bill, please read my prior posts.
Dick Bove shared some great thoughts on Watts specie in regards to Fannie and Freddie ; I am posting a link to the article. I couldn’t help but notice more than a few similarities.
Bove Declares Victory On Fannie Mae, Freddie Mac.
“For some time, I have argued that the United States cannot shut down Fannie Mae and Freddie Mac,” writes Bove. “It now appears that the Administration along with the Federal Reserve sees and understands what they have done. More importantly, it now appears that the policies of disaster are being ripped up, and there will be a return to the housing philosophies of the past.”
Bove sees Watt’s speech as a complete change of course for the GSEs, sets long-term $20 price target.
4 things notably absent today, Obama, McConnell and Reid, did not voice any support for the bill in the days leading up to the vote. And Toomey the one republican who was acting as a true republican defending our shareholder rights didn’t say a word on our behalf today. Reagan must be rolling over in his grave as his party sits by and lets our government continue their Hugo Chavez like scheme.
We have an another status conference next Wed., How long can the government keep running from the truth? I would be willing to bet not very.Buckle up folks this is where the ride gets fun! Keep the Faith!

http://www.valuewalk.com/2014/05/bove-declares-victory-on-fannie-mae-freddie-mac/