rros

Yes, so far knowing that FHFA does have power to overturn the situation has been useless. The best way to understand this failure is by closely looking at the actors. DeMarco was happy to sell FF's soul to the devil under the excuse Congress owns the issue. Watt appears to be an extremely weak agent who -in the best Pilate's fashion- doesn't want to own what he inherited. And I am not even getting into their more obscure motivations. Since investing is about people, it is correct to disregard the possibility that FHFA could one day surprises us. I agree following actions and money seems to lead to better results. Actually, DeMarco opposed Geithner when there was a push to raise fees by FHFA. Something DeMarco sought and succeeded in doing. Watt, in turn, somewhat forced Treasury to permanently rebuild a capital cushion. That came after Mnuchin said he expected to continue to receive all dividends. So while Watt seems shier as an acting Director his actions may still count as a precedent.

The access to billions and billions was made possible by a mutual agreement between FHFA and Treasury. Not one-sided. The thesis that one party in control receiving all the benefits has no motivation to change has a wrinkle. The second party to the agreement (FHFA in the shoes of Fannie and Freddie) who has received some benefit initially now faces a major conundrum, complete drainage of capital. This comes from the Director himself and the letter of agreement between the two parties is a testimony of Watt's dire warnings. The one exception to no-judicial-review is FHFA initiating a lawsuit against the Treasury. FHFA is the only entity allowed to bring lawsuits by HERA. You have to wonder why this isn't happening -as strange as it sounds- if, according to your thesis, only Treasury is benefiting. If you are correct and the benefit is one-sided, Watt can stop this.

Orthopa, ;) or :-\ or maybe >:(?

We all sell and send a 'wishing you well' card to Mnuchin.

There is a big short on St. Joe that is out there where Fairlhome is the largest shareholder. His, is a very illiquid position and by recent SEC rules Fairholme is being forced to sell. Maybe he is in dire need of raising cash. Briefly, his downsizing may have nothing to do with the merit of the FF investment.

Emily, lobby the government to go against the government? Maybe we have all been myopic all the way. I have a better plan for you. Why not get Mnuchin in front of someone who can call his bullcrap? Like asking him about the Treasury he heads stealing from private shareholders? It doesn't have to pretty or sexy Bartiromo style.

Treasury is Treasury. I am starting to feel nothing has really changed since the Obama days. While Mnuchin himself may not care or be thrilled to see the Jr. preferreds crashing since his appearance on TV I suspect someone in his team feels "mission accomplished". The only difference between now and Obama's Treasury is that they aren't coming out guns blazing against us. Just a softer approach. But equally negative.

Evidence in the real world of what? I don't follow. Given that Mnuchin cannot unilaterally implement two of the core parts of the Milken proposal, how do you expect that to be a plausible downside scenario? I don't see how the Milken plan could be amended into something Treasury can do by itself. It begins with amending the charters, something only Congress can do. It can't be. Hence why I'm worried that he's waiting for another Congress & a new FHFA director to stand behind him. If he wanted to go the route of Moelis, he can do that today. Doesn't need a new congress. Doesn't need a new FHFA director. With respect to your legal argument, all of the legal arguments to date have passed every basic common sense test (and seemingly the opinion of some attorneys), yet we've been absolutely blindsided by the judicial branch opining that it does not have the authority to review. How does that argument not also apply to the liquidation preference in the event of receivership? You're acting like its a probable event that we win a liquidation preference suit and I just don't see how you're optimistic on the legal front at this point. To be clear- I remain cautiously optimistic and am playing devils advocate. Common sense is that doing anything administratively now, including Moelis, will only create controversy/animosity and open the door for other administrations to restart the fight. Mnuchin, whether we like it or not, is correct in looking for an accord from Congress. An agreement (turned into law) that will settle the matter forever, never to hear again from the GSEs. What remains to be seen is what his agenda is. And if any future Congress will buy it. We will have to wait until after the elections. Or, if you believe in miracles, perhaps Mnuchin shows his hand a little before that.

We wouldn't. Given who wrote the paper.

he likely wants a govt guarantee and also permanence of his actions -- both of these require congress not administrative. so, as he's said a month ago, he's waiting for a new congress, likely with different leadership in place. potential administrative action is late 2019 at a minimum. I just wish he'd stop the sweep in 2018 and turn on the commitment fee -- we're overpaying for the backstop in a big way. But turning on the commitment fee would change things little. Except for us. It doesn't look like he is going out of his way to help hedge funds/shareholders. Something has changed. The opposite more likely as these appearances happen at the exact moment of shares on the verge of a breakout. Anybody has any reason to believe J Powell and perhaps Mnuchin are in an Andrew Mellon “purge the rottenness out of the system” mission? Yellen would have stabilized markets long time ago. No help for markets, no help for hedge funds, no help for us. Why end the sweep, then? officially, to get the ball rolling on building capital while still leaving most critical reform decisions to congress. unofficially, because it's the right thing to do after the full sr pref + 10pct interest has been repaid. It is mind-boggling. Mnuchin himself said in more than one occasion companies need capital before any reform takes place. He must have gotten used to the idea that taxpayers' backing IS the capital.

he likely wants a govt guarantee and also permanence of his actions -- both of these require congress not administrative. so, as he's said a month ago, he's waiting for a new congress, likely with different leadership in place. potential administrative action is late 2019 at a minimum. I just wish he'd stop the sweep in 2018 and turn on the commitment fee -- we're overpaying for the backstop in a big way. But turning on the commitment fee would change things little. Except for us. It doesn't look like he is going out of his way to help hedge funds/shareholders. Something has changed. The opposite more likely as these appearances happen at the exact moment of shares on the verge of a breakout. Anybody has any reason to believe J Powell and perhaps Mnuchin are in an Andrew Mellon “purge the rottenness out of the system” mission? Yellen would have stabilized markets long time ago. No help for markets, no help for hedge funds, no help for us. Why end the sweep, then?

Yep. Well, we know what the agenda is for the RNC. It can only be an agenda that, presumably, Watt doesn't support. Moelis?

So, what is the agenda?

C'mn Emily. All the experts you need are here. No more imfpubs for you! I am predicting the start of a recession by July lol. More likely, lots of R talk by the summer. Can Paolo even perform my Oracle magic?

OT: Globally, around 150 bill of green bonds (renewable energy) were issued around the world. About 56% in China, France and the US. In the US, Fannie Mae was the largest overall issuer with $24.9 billion from its green Mortgage Backed Securities programme. And the majority, globally, towards solar projects. A new line of business for Fannie, it appears. For 2018, global green bonds are estimated to double to 300 billion. Target is 1 trillion by 2020. Although green bonds make up a small fraction of the overall bond market, they are attracting more attention because meeting emissions-cut targets will require trillions of dollars of capital from public and private sectors.

Thank you. some changes.. https://www.congress.gov/bill/115th-congress/house-bill/4560/text Senators playing with words are more dangerous than a monkey with a thompson submachine.

As mentioned since January, watch April/May. I am now seeing potential recession by July. This downdraft together with congress legislative failure and the fear of Watt being replaced next year maybe the sweetest "exigent" recipe. The 10Y T will not break through 3%.

The sweep is actually a *variable* dividend. How do you stop it? Make a fixed one of 1%? 3%? 5%? Declare the Srs. paid off? Any radical change to the sweep will be considered by Congress -perhaps correctly- an attempt to rebuild capital moving away from congressional reform. It will all depend on the narrative Treasury comes up with.

close to 0% odds Also that both the 180 billion and 350 billion numbers are quite inflated. According to Moelis the potential profit from the warrants is $75-100B, and the total dividends paid so far have been around $276B. Subtract the $187B that Treasury gave to FnF and their total profit right now is only (!) $89B. The headline is also poorly written and wouldn't make it close to the editor's desk let alone past it. I actually said reform takes precedence. This has to be clear even from Mnuchin's and Philips' own words. Meaning, if the warrants are ever to be exercised this will be one aspect of the reform. Without reform, no warrants. And if they are ever exercised I have the feeling there will be no headlines and it will be another obscure move that leads to nobody talking. Just like the December letter of agreement between Tsy and the FHFA that led to stopping the bleed, partially. That was big. And it went almost unnoticed. I do not think Mnuchin wants to be seen as someone who can move markets. As in specific shares.

Housing reform takes precedence over cashing in the warrants. It's been the case so far and possibly even more so now. A restructuring or a hint of such, even administratively, could save the day. For the Jrs. perhaps more than for the common.

there is a lot to learn for you. Read the classic investing books by Warren and Graham. Understand the capital structures. Understand basics about bankruptcy. I don’t think you understand that yet. Hey muscle, you surprisingly seem to know a lot about investing in spite of looking like someone who has spent most of his life at the gym! :) With torn ligaments, screws in one knee, a dislocated clavicle and torn rotator cuffs, I can relate to that.

What is not simple about this? Goal: create a secondary liquid market for mortgages to stimulate housing. 1. borrow at the lowest possible low rate (from Fed). 2. buy quality mortgages (95%+ of which are single home risk-weighted at 50%). 3. pool them to securitize. 5. issue securities (mbs) backed by the pool. 6. guarantee payments of principal and interest on the mbs in exchange for a fee. 7. sell the securities to institutional investors. 8. hedge interest rate. 9. make coin. risks: interest rates (hedged), bad mortgages (qualified). If the fee does not cover borrowing costs CFO needs 3rd grade math tutoring. The not so simple part is who owns this? The government think that they own this and you own toilet paper. Thes speculators who buy the “toilet paper” think otherwise. So far it looks, smells and feels like toilet paper for the last 10 years and especially since the government is on the other side of the table, I think chances are fairly high that this in fact is toilet paper. That’s my simple way of looking at this. Docsnow discusses the merit of the investment from the business side while removing the government ingredient, however key this ingredient may be. Yet you come here to denigrate our opinions at every corner under some 30 000 feet view telling us all is well in the land of the rich. Although not overly open I suspect you would also love to denigrate us as a group as the imbeciles who bought these shares. As of today, yes, these are toilette paper. And that is why they trade as they do. What's the news you bring to this forum? We already know that and some of us are prepared to lose our money.

What is not simple about this? Goal: create a secondary liquid market for mortgages to stimulate housing. 1. borrow at the lowest possible low rate (from Fed). 2. buy quality mortgages (95%+ of which are single home risk-weighted at 50%). 3. pool them to securitize. 5. issue securities (mbs) backed by the pool. 6. guarantee payments of principal and interest on the mbs in exchange for a fee. 7. sell the securities to institutional investors. 8. hedge interest rate. 9. make coin. risks: interest rates (hedged), bad mortgages (qualified). If the fee does not cover borrowing costs CFO needs 3rd grade math tutoring.

there is a lot to learn for you. Read the classic investing books by Warren and Graham. Understand the capital structures. Understand basics about bankruptcy. I don’t think you understand that yet. Hey muscle, you surprisingly seem to know a lot about investing in spite of looking like someone who has spent most of his life at the gym! :)

If they sell treasuries, they need to buy something else from the proceeds. It would push prices up for whatever they decided to buy. re selling treasuries or stop buying them. Chinese probably know this will not work as the 2008 crisis has proven the Federal Reserve will buy whatever there is to buy in lieu of China, Russia, Japan or whoever. The US can finance itself, it appears, although at great risk to the dollar. Unknown territory, if you ask me. Remember too central banks require extremely liquid markets. What else is out there besides treasuries? Spekulatius, one of the CEOs a while back stated his company (either Fannie or Freddie) is unwilling to extend credit (probably as in buying lower quality mortgages but still acceptable) because they would not put taxpayers capital at risk. This was a clear complaint on how the company had to operate day in day out. Meaning they were overly conservative with the credit box. Watt made a mention in this regard as well. You speak as in from 30,000 feet. Of course the banks will extend credit to the rich, well-to-do and the lucky ones scoring above 700 in their credit profile. Or you also think there are no issues in the lower percentile of the mortgage market where credit scores rank low, those mortgages Fannie and Freddie may not be willing to securitize given the risk in relation to a taxpayers' credit line? Is it possible that your definition of "credit worthy borrowers" may be leaving a good amount of people in the cold, those who could still buy a home if credit standards loosen up a bit? Fannie and Freddie could -for lack of better words- relax standards so long as they put at risk their own capital. I don’t know the answer, but wasn’t it FNMA/FRE job to create a vehicle for conforming and standardized mortgages with 20% downpayments a certain minimum credit rating and income/debt service ratios? As long as these entities stayed with these parameters, they did OK, but when they moved downmarket starting in thr early 2000’, together with other subprime lenders, the mortgage market for really distorted. Nobody prevents private capital to jump in and fill gaps left by FNMA/FRE which should and are run like utilities. I dont think they should be everything for all people. FWIW, credit frothiness in the mortgage markets is already occurring as we speak right now.The evidence is clear when you look at the real estate markets in many urban centers. I don’t think now is the time to light the second stage of this rocket, because I think we know how this will end. At least FNMA/FRE should not be part of it, when market participants decide to do stupid things again. I am not familiar with current real estate market so I appreciate the perspective. My point actually is... would you risk your own money the same as you would other people's money? Perhaps, being overly conservative is hurting a segment of the population. Running FF as utilities will definitely cut improper risk taking. Yet, as utilities they may risk just a little bit more than in a conservatorship with no capital of their own giving some an opportunity to own a home. Sufficient capital levels, as well as other protections/regulations, should keep them safe from frothiness that may negatively impact the RE market. But I am really no expert, speaking from common sense only.