rros

He calculates the fee on total liabilities, not on the funding that is or will be made available. He knows perfectly well what he is doing. Which doesn't make things easier for us. A clever, believable narrative that is complete fiction can be thrown out there and people will buy it. In fact, he just did. I maybe mistaken and can't exactly remember but I think the Sweeney math for the cf was part of the defense by the plaintiff. So even then, not set in stone (correct me if I am wrong). Still, cf's are not punitive in nature but mean a discrete compensation for opportunity cost.

You'd think. Yet the preferreds fall every day. Just rotation to commons? Im honestly perplexed to a degree also. Preferreds aren't much higher then back just before the Lamberth decision yet look how far we have come and where we are. Maybe it takes the NWS being off permanently or release of capital plan to see much closer to par. Either way seems like price will be up substantially overnight like after the 5th circuit ruling. Personally I was disappointed that even if NWS ends, the capital retained will simply be added to the senior liquidation preference. In essence, all 100% still flows to the Treasury likely for the next couple of years. This combined with the capital raise plans being deferred to after the election is disappointing. I had loaded up my position to 20% of portfolio after Calabria's statements in the early summer about capital building and shareholders getting some conversion, but after this information have cut it down to 5% again. Surprised no one else is bothered about continued usurping of profits despite the court ruling. It's not ideal, but also can't last. Common shareholder's are NEVER going to give company new money if retained earnings simply increase government's ownership. So we know this will be ended before a capital raise. Secondly, we know that litigation needs to be settled - which it won't be - if the Treasury keeps all $ past the 10% moment AND continues to usurp the value of all future retained earnings. This won't stand - how it gets nullified/reversed is uncertain - but it will be nullified/reversed if we're to do a successful capital raise and we know that is the administration's goal. This is definitely a situation where I'd say uncertainty =/= risk. In my view, everybody knows this. Including Congress. Likely, Mnuchin and Calabaria are simply assessing how the GSE's debt market is digesting announcements and news, piecemeal. It appears it is a slow digestion process.

What if the commitment fee after the Senior preferred is cancelled is really high and it leaves very little profit available to common holders? Commitment fees in the business world are usually small. They are not meant as "profit". They compensate the issuer for the opportunity cost of the funds sitting idle. They are common and make sense. They will still mean billions (low single digits) for FF.

Here's the interview: https://www.bloomberg.com/news/videos/2019-09-16/fannie-mae-and-freddie-mac-won-t-go-to-market-until-end-of-2020-fhfa-director-says-video Thank you, Luke. There is a dissonance in his discourse... retaining earnings while making taxpayers' claim proportionally larger? That dagger above is only getting bigger! No amount of capital will be enough. Clearly, they still have not found a way to deal with the elephant in the room.

Instant 100% face value.

That would be assuming a symbolic fixed rate for the Srs. set at 0.1% and a minimal commitment fee for the 240+ bill not drawn.

Berkowitz will have his 5 bagger. Is not that enough? What are people thinking! But Midas, we are talking the Treasury of the United States of America. The greatest pirate ever!

Thank you. It is clear from his prepared remarks how much needed that explicit guarantee is for the normalcy of the GSEs debt market. So a) narrow, explicit, paid-for guarantee; b) charter away. My guess, Brown is not going to like neither a) nor b). And given how clear Treasury's path is there may not be much talk about the 5cc ruling. Treasury will still work with FHFA on a 4th amendment, anyway and anyday. brown will piss all over congressional reform, and warren if she shows up wont piss on it, she'll be all #2. lol looks like Sherrod Brown didn't need any help from Warren to spew his hate of wall st.

Link to hearing. 10am est https://www.banking.senate.gov/hearings/housing-finance-reform-next-steps

Thank you. It is clear from his prepared remarks how much needed that explicit guarantee is for the normalcy of the GSEs debt market. So a) narrow, explicit, paid-for guarantee; b) charter away. My guess, Brown is not going to like neither a) nor b). And given how clear Treasury's path is there may not be much talk about the 5cc ruling. Treasury will still work with FHFA on a 4th amendment, anyway and anyday.

Agree. And I am long Jrs. since 2010. The only thing that has been deemed illegal is the sweep. Not the Srs. at 10%. Not sure why people forget that. At this point, the likely scenario is that the Srs. are modified to carry a low nominal rate to allow for maximum earnings retention, still sitting on top of the Jrs. Mnuchin used the words "treasury still has meaningful (?) claims" which can only refer to the Srs. None of the money is coming back if the original PSPAs, ex-nws, stand. I think we still rely on that *Presidential pardon" by which the Srs. will disappear or somehow deemed repaid. Hopefully, this will not require an act of Congress. It will be wise not to get extra greedy.

This is going to sound strange, but I think it will be rather flat overall. The weekend is enough time to digest the fact that the en banc panel did not grant the plaintiffs the big awards some were expecting. It's the same as the Treasury plan, many who bought in hopes that Treasury would say something really shareholder-friendly were disappointed. I can't put my finger on it, but for some reason I am underwhelmed by the opinion. I think it gives plaintiffs more settlement leverage but that's it. If the case ever gets to trial it means that the administration isn't nearly as committed as we thought to recap and release. Midas, don't you think that the wording "prospective relief is the proper remedy" will provoke a buying stampede on Monday morning? Doesn't this mean that whoever held in the past and sold is out of luck but whoever buys on Monday and holds is in possession of the lucky ticket, whenever the rewards come? Sort of a sprint to get in through a really narrow door... buy first, ask questions later.

A hint of what the real issue could be... And why all the cautiousness and baby-steps. I did reduce my stake this past June/July after Calabria's switch. I figured he must have seen something really disturbing to change his tune. I now have only a small stake.. just for Collins. But I would not be surprised to learn judges too are intimidated by the bond market. As IG usually says, good luck everybody.

No, of course not. My fear is that Congress has the same understanding. I just don't/did not like Calabria's change back in June/July.

So you do not think the widening of the spreads seen in June -as talk of privatization peaked- is an obstacle? I would think this is the reason why Calabria changed his tune on a speedy privatization. Also, Brown loves the status quo.

whoa. I am not a big fan of a senate hearing at this moment. would have preferred to see it earlier this year when more general terms could be discussed and/or at the end of the year to give more time for a potential 4th Amendment negotiation. good luck everyone. I’ll take the exact opposite. SBC will passive aggressive posture. Nothing will happen other than mnuchin saying you have a role so do it or not and stop bugging us. Warner will be a certain clown This looks like the final warning/offer from the trio to congress to act. We all know what will happen or not happen that is, at least in the short term. Looks like plan release is T-7 days for those keeping score at home. Not a warning. Calabria and Mnuchin need Congress to come up with an explicit guarantee so that the securities continue to hold their AAA rating. Even then, FF may not be able to keep up with the government's AAA. In my view, a good outcome from this hearing would be one that reassures the market there is bipartisan consensus on the explicit guarantee. The rest will rely on this.

I do not need to be challenged by you. http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/enph-enphase-energy/ That's a 25+ bagger. Post yours.

One theory I read is that someone knows that the Fifth Circuit is going to affirm the panel decision and that the price movement is similar to that before the initial Lamberth decision in 2014 that sent the shares tumbling. I wasn't following FnF at that point, but the chart does bear out the similarity. It is not the same pattern. Back then, preferreds closed Sept 2014 below the 5 month moving average for the 1st time in over 2 years. They solidly broke long term support (before the ruling). In today's monthly close, fmckj and fnmas are trading above long term support. fnmat needs to regain it at $10.68 before eod. Not that it means anything. We could still get some shitty news tomorrow and suffer another Lamberth.

We could see a trading bottom today. there's no urgency to buy and plenty of people urgently want out. It looks like it was the bottom, as per this weekly close. Which topped the 34 weekly ma. Likely, we will regain the 5 monthly ma for the Jrs. FNMAS sits at $11.27 and FMCKJ at $ 11.16 and continue the bullish run started on October last year. Hopefully, nobody has sold their shares. Recent comments by Gasparino on Calabria (thank you, Luke) may indicate the administration is still on the side of shareholders trying to put together the fact that c-ship is hard to terminate (or cannot) while shareholders must be made right. I can totally see the FHFA trying to achieve some kind of co-existence between Treasury (taxpayers) and us, with Treasury agreeing on sharing profits. This looks like a "second attempt". A new twist to throw us a bone. it may be premature for confidence that this week was the bottom as actual events / quotes carry more weight than speculative tweets. Yes, premature, you are correct. Eyes on the monthly close and more definite news.

We could see a trading bottom today. there's no urgency to buy and plenty of people urgently want out. It looks like it was the bottom, as per this weekly close. Which topped the 34 weekly ma. Likely, we will regain the 5 monthly ma for the Jrs. FNMAS sits at $11.27 and FMCKJ at $ 11.16 and continue the bullish run started on October last year. Hopefully, nobody has sold their shares. Recent comments by Gasparino on Calabria (thank you, Luke) may indicate the administration is still on the side of shareholders trying to put together the fact that c-ship is hard to terminate (or cannot) while shareholders must be made right. I can totally see the FHFA trying to achieve some kind of co-existence between Treasury (taxpayers) and us, with Treasury agreeing on sharing profits. This looks like a "second attempt". A new twist to throw us a bone.

We could see a trading bottom today.

I am confused. Why is Otting filing this instead of Calabria, who seems to be the interested party reconsidering the constitutional issue? Shouldn't be Calabria the one claiming change of leadership?

I don't recall if I have recommended that book, but I have definitely read that book. You have to be careful with the concepts in Intelligent investors. I don't think it is applicable anymore, and even buffet didn't use those concepts of NAV margin of safety. Munger taught him to focus on the moat. There are countless times when I bought a declining stock, thinking that I got a deal, and it is safe because there is margin of safety, and later some shocking news came out and I had to sell at big losses, which eventually caused me to quit value investing. Even GSE preferreds could be a very good example. There are countless times in this thread where we were really bullish, and stock was going up. Later it came down on unbelievable news. I learned that lesson and changed the way I operate. Most here will not tell you this. Just like my simple, underrated 5 month MA that to this day continues to hold the line and has shown NO sell signal since this last run, here is another simple -perhaps even useful- nugget. To learn, all you need is to be active in the market and be utterly observant. Become a student of the game. Continually and constantly. Along the way read some, hear some as a complement to your own observation. And be prepared to lose about $100,000 of your savings and 5 years to walk through several economic cycles. By far, the largest and most important lesson in this journey is about yourself. What you can safely handle, emotionally and intellectually, together with being patient.

Everybody relax... The big picture: back in the days of the Berko run from end of 2012 through Lamberth 2014 the 5 monthly ma contained all retracements. A history of 23 months. Today's 5 MMA for fnmas stands at $11.43, for fmckj at $11.31 and for fnmat at $10.74. We are well within normal retracement territory and likely July will test these levels. Preferreds just ran too fast, too strong. Nothing has changed.

As investorG said, time for consolidation. Which means, you can sell now and buy back around September time frame or simply stay put if you don't mind another 10%-15% price drop from here. By September, the pump will re-start and reignite shares. Nothing has changed. In the next 3 months, Calabria will try to get something out of Congress and by then it will be clearer -to him- whether there is a real chance of doing so or no chance at all. A time when IPO options can be explored in more depth. After consolidation, we go higher. By 4Q, Calabria will either have new powers at the FHFA plus a good shot at a Congress-approved government guarantee or they will go the route of the commitment fee/line of credit plus a full recap voiding the NWS.