onyx1

Good point ROLG. Based on Breyer's argument, I was left with the impression that an easiest way to "unscramble the egg" is for SCOTUS to withhold remedy on both counts and have the P's move forward on their takings claim in Sweeney's venue.

Plus Mnuchin's planted question with Timmons-SC designed to clarify the trigger point for release during the capital build. IMO, Mnuchin is unlikely to make this type of effort if he wasn't serious about a PSPA amendment/consent decree. Overall, I looked for any sign of a change in direction away from the objectives written out in the UST Housing Reform plan. I didn't see any, and new signals (from Powell/Crapo/Warner) left me feeling even more positive. Mnuchin appears to be a man of his word who works in an administration that prides itself on keeping promises. Like it or not that's a wager we are all making.

I struggle to get to $10 as well. Only when I make the most rosy assumptions on variables like commitment fees, G-fees, market cap, conversion terms, and sub debt issuance do I approach $10. Plausible? Yes, but I can also make a plausible case for <$2/share. There are too many unknowns at this point. That's why he has to add a qualifying "may be worth" to his statement about $10/share. Nevertheless, common buyers jumped in head first today. Ackman is a smart guy but when he makes public price prognostications I almost always discount them.

Friday 12/4 I suggest a bottle of McCallan presented at our victory dinner.

The stars appear to be aligning... Very nice! https://twitter.com/hannahdlang/status/1329171755425013769 Per FHFA officials, the move to finalize the capital requirement tees up FHFA and Treasury making amendments to the PSPAs to end the net worth sweep sometime before the end of this year, which would allow the GSEs to retain all of their earnings. (Current cap is $45 bil) curious how this will play out, specifically what voice Ps have in this. I would think Ps would have a place at the negotiating table, as why would T/FHFA amend PSPA and leave Collins outstanding? I have read some rumoring that FHFA/T may just amend as they see it, and let Collins continue....which would be a big time amateur hour by FHFA/T Is a two-party agreement required to drop Collins, or is it at the option of either party? if I were T I would tell fhfa that I would want Ps dropping collins as a condition of the 4thA. so Ps dont sign 4thA, but they have to drop collins in order to bring T's pen to paper Thanks, I understand why Cherzeca-UST would demand Ps drop Collins. I also understand the self preservation argument that Ps will drop it on their own or face a failed recap. What would a Cherzeca-UST demand of the Lamberth P's?

The stars appear to be aligning... Very nice! https://twitter.com/hannahdlang/status/1329171755425013769 Per FHFA officials, the move to finalize the capital requirement tees up FHFA and Treasury making amendments to the PSPAs to end the net worth sweep sometime before the end of this year, which would allow the GSEs to retain all of their earnings. (Current cap is $45 bil) curious how this will play out, specifically what voice Ps have in this. I would think Ps would have a place at the negotiating table, as why would T/FHFA amend PSPA and leave Collins outstanding? I have read some rumoring that FHFA/T may just amend as they see it, and let Collins continue....which would be a big time amateur hour by FHFA/T Is a two-party agreement required to drop Collins, or is it at the option of either party?

If we go SCOTUS, it matters to me because I don't see anything to force the UST under Biden to write down the SPS. Even after a SCOTUS win.

This likely reflects Mr. Tim Howard's political views. Also IMO his primary objective is advancing FnF's homeownership mission over the shareholder / NWS issues. I think the cat bird seat would be PSPA, settlement, consent decree and eventual lower cap requirements for investors. Once converted to common preferred holders can pine for lower cap requirements. Why would they wait for after the election to do reform if they were not going to anyway? Why not extend the comment period if they were not going to do anything in the lame duck period? Why pre announce another amendment to the PSPA if they were not going to do anything? Why mention consent decree if they were not going to do anything? Why is it reported there has long been agreements on parts of the PSPA for months? Why put out a Treasury Plan if they were going to do nothing. Why does Calabria say he has to follow the law if they were going to do nothing? I would have to have good answers to the above before I would believe they would do nothing. More questions that would need good answers: Why would UST Reform Plan label ending the conservatorship timeline "as promptly as practicable"? Why would MC say on September 14, 2020, there is an "Urgent need to build capital at the enterprises and advance housing reform". @orthopa @onyx I sincerely hope you guys are correct but I don't invest on hope. The capital plan was a big lie, and that big lie was endorsed by FSOC (Mnuchin). You honestly think they're too stupid to realize the GSEs are not banks? Further, Calabria and Mnuchin have both gone on to say the GSEs "failed." That was a lie also. Further, Mnuchin said in 2016 they will get the GSEs out of Government control "relatively soon." How many more times does the boy need to cry wolf? These are demonstrably verifiable falsehoods, and Tim Howard has cut them to shreds (i.e. bank-like capital, the "failure" of the GSEs). So with all that as history, you think they're telling the truth about ending the conservatorship soon and in a chaotic lame duck session? That's a heavy lift. You may be correct, but... That's a reasonable way to look at our situation. On the other hand, maybe SM underestimated the time it would take to end the conservatorships. As a business person new to DC, I can understand. Trump's order didn't come out until March 2019, and the UST Reform Plan appeared in September 2019. The Plan strongly suggests that a new Capital Rule was needed to replace the Watt rule from 2018. Add months to formulate a new plan, COVID-19, comment period, and a desire (I presume) to avoid political risk until after November 3, and here we are. To me, none of that signals a change in direction as much as confirmation that DC runs on a different schedule. Will that schedule push us past the point of no return? I don't think so, but we'll find out soon. Signaling from MC is full speed ahead: "The Federal Housing Finance Agency will continue its mission to release the GSEs Fannie Mae and Freddie Mac from conservatorship, even under a Biden presidency, a spokesperson from FHFA said." Although nothing from SM, I am somewhat comforted by the fact that when UST decided the PSPA needed to be post-election, they signaled it to the press. As of today, I haven't seen any such signal that would likely accompany a delay or a reversal of the published UST Housing Reform Plan.

This likely reflects Mr. Tim Howard's political views. Also IMO his primary objective is advancing FnF's homeownership mission over the shareholder / NWS issues. I think the cat bird seat would be PSPA, settlement, consent decree and eventual lower cap requirements for investors. Once converted to common preferred holders can pine for lower cap requirements. Why would they wait for after the election to do reform if they were not going to anyway? Why not extend the comment period if they were not going to do anything in the lame duck period? Why pre announce another amendment to the PSPA if they were not going to do anything? Why mention consent decree if they were not going to do anything? Why is it reported there has long been agreements on parts of the PSPA for months? Why put out a Treasury Plan if they were going to do nothing. Why does Calabria say he has to follow the law if they were going to do nothing? I would have to have good answers to the above before I would believe they would do nothing. More questions that would need good answers: Why would UST Reform Plan label ending the conservatorship timeline "as promptly as practicable"? Why would MC say on September 14, 2020, there is an "Urgent need to build capital at the enterprises and advance housing reform".

Midas – This is an exceptional idea in the scenario where Biden wins. It locks up and simplifies the recap process to a point that it can’t be reversed, keeps Calabria in place (constitutional plaintiffs would crazy not to settle), is consistent with the UST Reform Plan and Calabria’s recent messaging. The $125mm payment is easily justified by the common sale proceeds, and no political downside. Current common holders won’t like it but Calabria warned them of dilution over a year ago. My experience in dealing directly with Mnuchin (years ago, in a much smaller matter) is that he is very thorough and cognizant of alternative outcomes. It wouldn’t surprised me if your idea (or something very similar) is part of his playbook in the event of a Biden victory.

In the event of a Biden win and a P SCOTUS win, it's unclear to me how the SPS gets written down.

Speaking of chances, I've laid out the possible near-term scenarios from today and assigned conservative probabilities to each node to arrive at a "low-ish" estimate of a JPS win. Spoiler: It's 80%. I have no doubt others will see different probability distribution and for that reason, I welcome any feedback (especially from those with more insight & expertise). FWIW I've owned JPS since 2011, and recently added significantly more around current levels. See attached. You have 80% odds of an amendment which requires Mnuchin's approval. Why is it only 20% odds that Mnuchin says F* you and leaves the mess to the next administration if Trump loses? If partisanship is the primary motivation, and I don't believe it is, then leaving the NWS in place would be giving a Biden Administration exactly what they and many democrats (like Warner and Sherman) desire: nationalized GSEs they can control and continue to milk.

Speaking of chances, I've laid out the possible near-term scenarios from today and assigned conservative probabilities to each node to arrive at a "low-ish" estimate of a JPS win. Spoiler: It's 80%. I have no doubt others will see different probability distribution and for that reason, I welcome any feedback (especially from those with more insight & expertise). FWIW I've owned JPS since 2011, and recently added significantly more around current levels. See attached. GSE.pdf

https://www.c-span.org/video/?475865-1/federal-housing-finance-agency-fhfa-director-testifies-mortgages-covid-19 1:34:56 Rep asks Calabria if he plans to make any "adjustments" to his capital framework, or "stay the course"? Calabria responds that he plans to "stay the course", and offers an argument for the need of buffers. Question: Is Calabria talking about the form of the capital framework or the proposed levels of capital?

I'm not sure what to make of this, but Trump just added two 5th circuit Judges to his SCOTUS short list, Judge Duncan & Judge Ho. Some may remember that despite the two disagreeing on remedies, both joined Judge Willett's opinion that the FHFA is unconstitutional and the FHFA exceeded its authority in executing the NWS.