BTShine
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http://www.wsj.com/articles/dont-hold-your-breath-on-fannie-mae-and-freddie-mac-1480878666
whats the deal with wsj/carney continually writing negative pieces on the gses? do these authors legitimately believe what they're writing and are writing on their own accord or are there subterranean (top down) forces at play? serious question
A few dozen pages ago in this thread, someone speculated that Carney may have source(s) in the Treasury and so to keep them, he reflects their interests. We'll never know but seems like the most likely explanation for his incentives.
It could just be me, but I've noticed the character of his articles has changed over the past several months too: his pieces are more brief now, and contain less analysis/interpretation, more facts. He could see the writing on the wall as well.
fred fraenkel 6 hours ago
It might be a good idea for you and John Carney to wake up and smell the coffee. The treasury department you were fronting for no longer exists.
Fred Fraenkel: http://en.wikipedia.org/wiki/Fred_Fraenkel
I think Mr. Fraenkel deleted his comment. Probably a smart idea, even though I agree with him.
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Likely Mnuchin is currently working on this with stakeholders. Would allow him to enter office, check his work against the internal treasury documents and then proceed with settlements.
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I think the shareholders may not want to settle until Mnuchin, etc are in office. It might take an unbelievably shareholder friendly offer from Obama and current Treasury to get the plaintiffs to settle now. If I was in the drivers seats I wouldn't settle for much less than perfectly fair restitution.
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I don't understand how there's much of a difference whether you return the excess payments or not on the senior preferred. Let's say they've overpaid by $187 billion over the last 4+ years versus paying the straight up 10% dividend.
Okay, so you deposit $187 billion into the companies' coffers.
Then you have a capital stack that looks like this:
Gov preferred stock - $187 billion
Jr. preferred stock - $34 billion
Pub. common stock - residual
So it doesn't matter if (A) the $187 billion is used to pay off the senior preferred stock or (B) the $187 billion is given back to the GSEs but is not accrued against the senior preferred stock.
Either way, everyone underneath the senior preferred stock (or who remains in the case of the pay off of the senior preferred stock) is "lacking capital."
It's not like the $187 billion of senior preferred stock magically disappears at the same time that the companies get back $187 billion of cash...
What would help though is if they count the excess dividends as repayment of capital, and adjust the 10% accordingly. So if in 2013 they swept $100 billion, and owed only $18.7 as per 10%, then that $81.3 billion extra not only counts as repayment, but then in the next year the 10% counts only for about $100 billion. So the 2014 excess would be anything over $10bn in dividends, and so on.
I agree that having to pay $19 billion a year in dividends for all these years leaves nothing for the common, but there is certainly a range of possibilities in retroactive maneuvering.
Mephistopheles,
You make the point that I was getting to originally. If they are able to apply the overpayment to the principle then we reduce the 10% dividend payments going forward form that date, too. So, if the principle was reduced by $50 Bn, their 10% dividend would be $5 Billion less each year. Over 4 years that's $20 Billion. Significant IMO.
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Hardincap,
Serious answer here. Yesterday Josh Rosner, via his twitter account, posted some treasury docs that implied treasury was planning to get media on their side before announcing their plans. Therefore one theory would be Carney, Timriaros, etc became biased to the side of treasury.
Link here:
This is clearly conspiracy theory-esque, yet sometimes these can be crumbs that lead to something bigger.
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Agreed, it would be appropriate to reduce the balance of principle by the overpayment.
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Yeah it seems to this casual observer that crediting the previously "swept" funds against the outstanding preferred would look much more seemly to the press and outside observers than treasury stroking a check.
Totally agree.
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For some reason I was under the impression that Berkowitz, or someone else, floated the idea that public shareholders just wanted the company back and they didn't care about getting back some of the overpayments made by the GSEs. Ex: If GSE's overpaid by $50 Billion the Senior Preferred would still have their original balance of $187 instead of reducing that balance by $50 Bn to $137Bn.
Apologies if my memory is way off for this one.
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Wouldn't Mnuchin just go into the treasury office, take a look at what happened by seeing the internal projections, emails, agreements, etc and say "Ok, I've looked back at the agreements that were made and discovered some mistakes. The GSE's overpaid the government based upon the agreements of the Senior Pref, etc, so the govt will pay back the excess payments since it wasn't our (US Govt) money to begin with, and this will help capitalize the companies to where they should've been. Now we can start with a clean conscience and create a plan to properly capitalize them."
Is this far too optimistic? I mean, it's pretty clear to most unbiased individuals that the govt strong armed the GSEs into overpaying the govt, is it not? Am I falling into the alt-universe of the CoBF Board?
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Have there been public coments by any of the major players (Paulson, Berkowitz, Ackman -- people that will be negotiating for us) on what they believe the common is worth?
Sorry if this had been covered by the board over the thousand+ posts on here.
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Did the NWS originally require congressional approval? If not, can't one treasury secretary undo another's work?
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Except, I think that "Most sober, clear eyes businessmen" is stretching things just a bit where Trump is concerned... no?
Agree to disagree on this one?
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An investment in FNMA(S), etc has always been speculation and handicapping. It seems logical the odds dramatically shifted when Trump won and his advisors are Carl Icahn, etc. Most sober, clear eyed businessmen would see this case as one where the govt stole from shareholders, therefore the odds are Trump will see things that way.
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I thought he said something along the lines of "most stocks have a 52 week low that is 50% of their 52-week high, so it would be achievable to get 50% returns with small amount of capital"
Does anyone else remember hearing something like this?
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4 More years of Obama and my now messed up health insurance is not exciting.
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This is funny, because when writing that I thought "hmmm... giving insights into politics is usually a bad idea, especially on a message board. I might regret this, but heck this board wants to know everyone's thoughts, right?"
I now regret joining the discussion.
All the best to all of you
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I think Trump did better last night than most realize. This is not a judgement of who's fit to be a better president. I'm currently an undecided/Johnson supporter at this point.
Scott Adams (of Dilbert fame) has offered his thoughts, via his blog, Twitter and Periscope, on the elections, and they have been prescient. For anyone that enjoys watching and talking about the political races, he is a great mind to learn from. His knowledge of persuasion is top notch.
His Twitter is @ScottAdamsSays
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As for the Google Glasses, Snapchat Spectacles are one potential copycat/winner.
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I have no idea, yet one reason people don't settle is hubris. It affects many people in many different ways.
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Importantly the business of alcoholic beverages would disappear. As would tobacco, gambling and other vices WB abstains from
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I'm an outsider to this board, so apologies in advance if this has been covered.
If all the leaders of the world want to fight deflation with everything they've got, doesn't that make mid/long term defaltion very very unlikely? I understand there are powerful forces pulling the world towards deflation, but the printing press is a near trump card, no?
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Yes, exactly. What kind of tactics was Ackman using by coming off as nice and getting Corker to commit to a meeting re FanFred, etc. does this just give Ackman an opportunity to schmooze or an opportunity to get Corker on the record?
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Also he said Ackman on his CC said that Corker's Jumpstart bill was a head fake but Corker said he disagreed and explained why he thinks Congress should fix the issue and even extend the jumpstart bill regarding f and f even further
yup yup....i think he was just trying to probe Bill a bit and make it look as if hes a baddie hedge fund guy........trust me this will hit the press sooon.
I thought it was fantastic theatrics and shows that Corker is clearly biased against Ackman's camp on the Fannie/Freddie fight. Also, that Corker is clearly ok with the government expropriation of FanFred property.
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It also looks bad for the govt and POTUS to keep, or request to keep, documents sealed only to have them released, which may generate more interest and press coverage than it otherwise would. President Obama's incentives are likely to keep the documents sealed so that people can always think "well, it must've been best the documents were kept private." Once the docs are released and people see what was in them it turns into "I can't believe he wanted to keep that from us!!! He said he'd have an open Presidency, but clearly did the opposite!"
FNMA and FMCC preferreds. In search of the elusive 10 bagger.
in General Discussion
Posted
It's terrible how anti business and anti-shrewd investment CNBC peeps are. Brian Sullivan rips Mnuchin for making a profit from his investment and then implies blame to him for foreclosing on people during the biggest foreclosure boom of our lifetimes. Ridiculous.
On the topic of this investment, that is more solid info from Trump's thinking on this.