rros

They also speculate D. Stevens might become FHFA's head. So... From an investment perspective what matters is who will be the owners of the guarantors. Legacy shareholders? If so, what matters next is where to be, in commons or Jrs.? Their interpretation of the OMB plan is actually closer to Millstein's and/or Berkowitz original proposal as both converted the companies into guarantors/monoline insurers. Whereas Ackman's vision was of fully reviving them as utilities with no market competition. The MBA touch in all this is the paid-for government guarantee which Berkowitz (and I believe Millstein) rejected. Berkowitz is on record saying there is no need for a government guarantee. On the opposite side of the spectrum is David Stevens whose allies can't live without one. And that was the contention against shareholders he always had. For us as investors, leaving aside personal opinions regarding the social benefits of the companies, the central question is how much equity will we receive, if any. Back in the days, with Millstein/Berkowitz, that would have been full face value of the Jrs. turned into equity. The "if any", in my view, now relies entirely on recapitalization. So any move towards eliminitating the NWS, canceling the Srs. or an FHFA request for the companies to produce a recapitalization plan will be good news and put us on the right track. At this point, you know there are probably a lot of ongoing backdoor dealings. If David Stevens is able to get his paid-for guarantee, he may concede gains to shareholders and stop working against. The FHFA's head position seems to be highly sought after so most likely is on the table in exchange for something. Those invested with big bucks from the old days are likely too engage in talks. And the Srs. elimination will definitely be on the table. Since there is no legislation in sight, we can only assume that administrative action is really nothing but dealmaking behind the scenes.

Sears?

There are so many tricks to be used to hide buying that only the MM can know this. And the MM will make sure you don't know using tricks of his own. About the only hint for us will be MMs stop shorting at higher highs. Meaning, game over.

I think by their own certificate preferreds have a $1 or $2.50 face value no matter what scenario, including nuclear war. So that would be the minimum amount of money that needs to be redeemed, by law. Someone correct me, please. My information is 8 years old, when I digged this up. As for a co-op, for us to be toast, banks should recapitalize the companies fully and therefore get the largest share. This may leave current shareholders with little. But it really doesn't sound like the OMB is pointing towards anything like this. What is worrisome: Coker and David Stevens happy statements since these two have always been enemies of shareholders. We just don't know what they are so happy about. Yes, someone from the Administration (WH specially) should come out and say something precise and meaningfully specific about shareholders' future. Two potential reasons why they are happy: - political reasons for posturing to uninformed as to why they were "successful" (even if they weren't actually successful). Although explicit MBS, removal of govt charters, multiple guarantors would indicate partial success (although we all know they are personally upset if shareholders who personally attacked them get rich) - bank mutualization model incoming And I would add for Stevens at least.. His thing against shareholders was based on his belief shareholders (investors) wanted no government guarantee at all, not even a paid-for, which would be a major obstacle for his allies to get in the business. It appears from OMB's plan this is in the cards so in his view shareholders have been defeated. At least, in that respect. Corker, as you say, may spin the positive narrative that OMB is actually Corker 2.0 (as TH also mentioned) and take credit. As for us, we need to know if we are going to have a seat at the table or will be part of the menu.

I think by their own certificate preferreds have a $1 or $2.50 face value no matter what scenario, including nuclear war. So that would be the minimum amount of money that needs to be redeemed, by law. Someone correct me, please. My information is 8 years old, when I digged this up. As for a co-op, for us to be toast, banks should recapitalize the companies fully and therefore get the largest share. This may leave current shareholders with little. But it really doesn't sound like the OMB is pointing towards anything like this. What is worrisome: Coker and David Stevens happy statements since these two have always been enemies of shareholders. We just don't know what they are so happy about. Yes, someone from the Administration (WH specially) should come out and say something precise and meaningfully specific about shareholders' future.

Have you seen Charlie Gasparino on #Fanniegate twitter? Now there's a guy I wanna see eat crow. "With assistance by Joe Light" lol https://www.bloomberg.com/news/articles/2018-06-21/fannie-freddie-privatization-urged-as-part-of-white-house-plan

Where is my Joe Light article? Joe?

I am not sure T. Howard is right on this one. Mnuchin hand-selected Jerome Powell who made it known in a housing reform speech his belief of breaking up the duopoly and need for privatization. How likely is it that Mnuchin would have picked the head of the Federal Reserve had he disagreed with these two points? The OMB is the largest office within the executive branch and is overseen by the WH chief of staff John Kelly. Although there may be some disagreements within the executive, the OMB plan has to have strong backing. Specially from Trump himself. It is possible that he will get involved -even if behind the scenes- to move this plan forward through Congress, a new Congress perhaps, and form a strong coalition. It is ridiculous to think that because Treasury/Trump aren't mentioned in any form in the plan they are against it. My view is that this will move forward as it very likely has the backing of large investors too. And that T. Howard and others hate it. The coming competition and the breaking up of the duopoly. ICBA could also be in the camp of TH. And Watt, who proposed a utility and -now it is clear- is not in sync with the Administration. It makes sense Mnuchin will prefer waiting until there is a new head of the FHFA who will be on *their* agenda. TH would only like one thing: restitution of the companies as they were as a protected duopoly.

Just like us, everybody seems undecided of what this means. I am hoping Berkowitz wasn't the one selling fnmas today. Perhaps Mulvaney shows up somewhere (cnbc, bloomberg) with clarifications?

So this sounds like Mnuchin has now his hands free to strike a deal with FHFA -all perhaps, as Watt is the Utility maverick- paving the road for a more complete recapitalization? Maybe even doing away with the nws and imposing the infamous commitment fee for the credit line? Then, sit on their hands till there is a new Congress and push for legislation that is inline with the WH's view? ?? ? I am full of questions today. ?

Removing charters, shrinking size, full privatization and conversion to monoline insurers reminds me of the original Jim Millstein's plan. Don't forget Berkowitz's plan from way back as well... You are right. Was that his 50 bill purchase price plan backed by investors? why think of Berkowitz's plan more so than Noelia's blueprint? is there anything in this release that augers for one over the other? Does Moelis also shrink them in size and provides for competition? I can't remember now... But more competition and smaller sizes are both in line with J. Powell's speech of a few years ago. I believe Berkowitz/Millstein's idea was of them becoming reinsurers. I seem to have forgotten the essence of Moelis but it sounded reviving them with a few changes (paid-for gov guarantee and a double layer of capital).

Removing charters, shrinking size, full privatization and conversion to monoline insurers reminds me of the original Jim Millstein's plan. Don't forget Berkowitz's plan from way back as well... You are right. Was that his 50 bill purchase price plan backed by investors?

In the past, this piece of news would have sent the Jrs. skyrocketing close to full value. Given current reaction we run the risk that upon full recapitalization we go back to pennies on the dollar.

Removing charters, shrinking size, full privatization and conversion to monoline insurers reminds me of the original Jim Millstein's plan.

Is this the reason for the spike? Official stance/support by the WH?

Nah.. These are the same hedge funds that have been trying to get the same groups that have been trying to get FHFA to stop the sweep... for the last few years already. (joking).

Thank you, Luke. I don't see "cornerofBerkshire" in that list of signatories. Have you guys sold?

Check your messages. Could you send me one as well pls Check, please.

Check your messages.

There is a "suspension" of this requirement set by prior Director. And it looks like courts can't get close to this. According to ch. There is the law. And there is governing by regulation which aims at circumventing the law. Judge Brown specifically referred to this on her dissent. Lockhart did just that in 2008 when he suspended assessing capital levels. And it looks like he has been able to get away with murder.

Thanks!

Wow, shots fired. I wonder why nobody has tried a lawsuit challenging these aspects of Watt and FHFA's behavior without going after the NWS itself, so as to not get the case consolidated with others. Since this is a duty of the Director, and not the Conservator, the 4617(f) bar cannot apply. Even then I would love to hear a Congressional committee ask Watt directly why he has chosen to suspend capital standards when he has no statutory authority to do so. The idea that Treasury's backstop can substitute for capital is indefensible, and points to some level of hypocrisy given FHFA's use of the statutes to defend their choices in the capital requirements paper. Heck, the capital standards paper from yesterday should have been done long ago. And not just that, the standards need to be enforced. It's in HERA section 1361(a)(1): (emphasis added) These requirements trigger specific other duties by FHFA and the companies as the levels are breached. Since maintaining sufficient capital is a "shall", then doesn't every NWS payment violate this section, especially since not having capital requirements isn't a statutorially (sp?) authorized option? Especially because the SPSPAs cannot override HERA. Let's go further. Section 1313(a)(1)(B)(i): (emphasis added) Hard to square NWS payments with the maintenance of adequate capital. Unless you decide that zero capital is adequate? Or that if no capital standards exist, neither does the notion of "adequate capital"? Between HERA and the NWS, James Lockhart (OFHEO) suspended the capital framework making that section of HERA irrelevant (to this day). He did it within weeks of HERA being signed into law. This made possible for the companies to bear losses and operate under-capitalized without risking receivership. Watt (and Geithner) have been asked about this repeatedly in many congressional hearings. Originally, Watt would say he "inherited" the problem. Later, he understood and "owned" it. But I agree with you, it's all a farce. They have all used the suspension of the capital framework to suspend things in time. Literally. An indefinite time out.

"Fast" is in the eye of the beholder lol. At the speed this Administration moves we could still be right on schedule.

Midas, Treasury can deem the Srs. paid and remove the overhang but can still provide a backstop in exchange for a commitment fee. Can't they? Isn't this part of the plan?

I will take a closer look. I could very well be wrong. I don't doubt you either but if I remember correctly, Moelis stated there is the companies capital (between 150B and 200B) + Treasury's backstop for which the companies will pay a commitment fee for a total +/- of 400B of capital cushion. If Watt is implying more than 300B of capital is needed perhaps a chunk of that could be that taxpayer's backstop.