rros

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.

Damn it! How nobody thought of this before? Shoot, let's nationalize the entire economy and stop worrying about bankruptcies or bailouts. Problem(s) solved! You wanna run for President? I can’t run for president, because I am not US citizen and not born here anyways, but thanks for thinking of me. Also, I don’t know how you get the idea that ai suggested to nationalize the whole economy, Inusut suggesteddp the revolutionary thesis that if everything works just fine for virtually anyone, but a few speculators, the current status quo is very likely to persist, why would it not? While this maybe correct, it doesn't make it right. And, are things just working fine for virtually everyone? Are they? Do Fannie and Freddie engage in reasonable credit expansion while they have no capital of their own? I was under the impression Watt sees the companies operating with a straightjacket. "working fine" is just in the eyes of the beholder. Or the eyes of the banks.

Damn it! How nobody thought of this before? Shoot, let's nationalize the entire economy and stop worrying about bankruptcies or bailouts. Problem(s) solved! You wanna run for President?

Once congressmen get over the bucket of cold water and get used to this, may there be more transfers?

oh so you are the reason the common is up >10%.... lol price may be up 10% but I am only up 3%. I bought at $1.50/1. This is oversold as much as January 20th, 2016. Two years ago! Maybe a technical bounce with machines buying. Who knows.

I am so confident I just purchased a bunch of fnma for the first time since my investment in preferreds in 2010 (which I still hold half). And don't sell your preferreds. They are great value here.

Yen is at a critical juncture this moth and this quarter. Same juncture it was in 4Q07. Back then yen crossed over its 34/13 monthly averages and remained in state of alert for 2 quarters before a full financial crisis developed and yen skyrocketed. April/May/June may show similar path -plus state of alert for 2 quarters- with a full blown crisis at the start of 2019. Yen is important because Japan is one of the largest creditors with enormous foreign investments. Japan has -roughly- overseas assets of 8 trillion and debt of 5 trillion. Meaning, in a full blown world crisis, Japan might be the only country who has the means to pay its debts. World smelling fishy? Money flies into the yen in droves. Gold picks on the yen alert and starts to rally as well. We are seeing an indecisive prelude to a potentially bigger crisis. On a narrow money basis all points to a bad year for equities. Narrow money, as in strictly household deposits (not M1 or M3), has a superior track record in anticipating GDP globally. It now stands at a substantial decline in GDP in the UK, France and Spain with very bad prospects for China and the US. Germany is in the doldrums. What's more important. This will come as a shock. I may also be the outlier here thinking that by the summer markets will look horrible and Trump will desperately reach into the 100 bill tin jar.

A little tweak is what I also envision. Nothing that may get on the way of real legislation down the road. Of course, that little Neil Armstrong moment of a small step for a man will be a giant leap to us.

One can easily add a more positive outlook to investorG's viewpoint. For example, Phillips supported Watt's utility proposal and Munchin expressed at a Senate hearing Treasury has administrative options he will not disclose because of market impact. In addition, it is not a given democrats will make a comeback in Congress. Since they more likely also support Watt's utility proposal gambling it in the hopes of a democratic win in Congress may simply be too risky. Which all leads to better to act before mid term elections. If democrats finally win, they can ratify any admin change legislatively later. If they do not win, they can feel better that some administration reform has taken place. Strategically, for democrats, it is better to see action before midterms rather than risking seeing Republicans consolidate their power and face a stark reality in 2019.

If you have the Midas touch, flattered. Ackman then mirrors (as in opposite) your touch. But... just now... preferreds are moving. Looks like Ackman is back on a buying stampede :)

In recent months, we purchased preferred stock of both companies. Our preferred stock represents approximately 21% of our total investment in Fannie and Freddie, or about 1% of net assets. While the substantial majority of our investment historically has been in Fannie/Freddie common stock, we acquired preferred stock recently because (1) we believe that the timing of a favorable outcome for the two companies is more proximate (timing is an important consideration for the preferred shares as they are noncumulative and perpetual), (2) it hedges our risk of a restructuring that disproportionately benefits the preferred versus the common shares, and (3) we found the trading prices of the preferred securities attractive at current levels. We still prefer our investment in the common shares because the government and taxpayers’ interests, as owners of 79.9% of the common stock of both companies, are aligned with the interests of common shareholders. If housing reform is successful, we believe that both FNMA and FMCC common and preferred stock will likely be worth multiples of their current share prices. Is this the reason preferred shares have been collapsing? Ackman appears to be anti-Midas.

Fair point, and I agree with what you said. But I'm looking at this from the perspective of a possible legal victory that would unwind the NWS. It's easy to say that voiding it as if it never happened would eliminate the seniors, but I don't remember anyone bringing up the undercapitalization issues it would create. It's probably moot anyway, any court decision that unwinds the NWS would get appealed anyway, though I don't know what would happen to all the dividends in the meantime. Perhaps they would go to escrow, being returned to FnF if the appeals fail and sent to Treasury if the decision unwinding the NWS is overturned? That would make a recap a complete nightmare because FnF wouldn't know how much capital they need to raise. An injunction is dangerous. The SPSPAs have their own self-triggering explosive mechanism. Courts can see this. The commitment terminates instantly leaving companies severely undercapitalized. I am starting to think of Hank Paulson as some kind of genius. Or a complete fool who landed the deal of the century by mistake. As Tim Howard points out, an injunction would motivate Mnuchin to resolve the situation. Favorable ruling from 5th Circuit has the most potential in the near term to trigger this. SCOTUS would be very likely to grant cert on appeal. Not sure if Mnuchin would let SCOTUS rule on it or settle prior. I used to think the later, but now think the former is likely. Ultimately, I'm not sure how spineless Mnuchin is on advancing administrative reform. He may be more or less spineless than we think. A favorable ruling that advances the arguments made in Judge Brown's dissent would go a long way to bringing Godot around. Just to make sure only.. have you read the SPSPAs? There is a specific mention to what may happen if there is an injunction granted by any court.

Fair point, and I agree with what you said. But I'm looking at this from the perspective of a possible legal victory that would unwind the NWS. It's easy to say that voiding it as if it never happened would eliminate the seniors, but I don't remember anyone bringing up the undercapitalization issues it would create. It's probably moot anyway, any court decision that unwinds the NWS would get appealed anyway, though I don't know what would happen to all the dividends in the meantime. Perhaps they would go to escrow, being returned to FnF if the appeals fail and sent to Treasury if the decision unwinding the NWS is overturned? That would make a recap a complete nightmare because FnF wouldn't know how much capital they need to raise. An injunction is dangerous. The SPSPAs have their own self-triggering explosive mechanism. Courts can see this. The commitment terminates instantly leaving companies severely undercapitalized. I am starting to think of Hank Paulson as some kind of genius. Or a complete fool who landed the deal of the century by mistake.

Just don't forget "exigent circumstances". https://www.bloomberg.com/news/articles/2018-03-22/global-momentum-shows-cracks-as-trade-tensions-loom-over-economy It's not really the trade wars. Narrow money (strictly household deposits, not m1, not m3) anticipated this 6 months ago. Worst is yet to come.

i am watching congress dysfunction over the dodd frank amendment bill. bipartisanship agt to mostly to help small banks is fragile and may not survive a reconciliation process. if congress cant pass this modest bill then forget about housing finance regarding the dodd frank bill, imo it will get done. there were 67 votes in the senate, not 60, creating a little wiggle room. hensarling is likely posturing, he'll throw in a few large bank goodies and perhaps lose a few D senators and call it a day. on the kudlow news, not even a little bounce? my best guess is that potential institutional buyers are aware that ackman / berk / perry are selling and they think they'll get better prices in the near future. as stated in the post, it's a guess. my main suspicion is ackman selling, dragging down the whole complex (as investors rotate between the two). he has punted other legacy dead end positions recently and fired staff; he's likely under investor pressure to tighten his ship. when corker's plan was either released (perceived as not good for common) or failed, and phillips made his downbeat comments several weeks ago - combined with our terrible court record - he perhaps lost any visible catalyst to justify near term success. i could be way off. but if i'm right, things will stay stuck, at best, until a huge clean up block trade happens in the common shares. From all listed, only Perry owns pre nws. Paulson does not care. He is not litigating and he is relying on a restructuring. Ackman and Berkowitz bought after. From lawsuits, Washington federal (did I get the name right) owns pre or maybe even pre conservator ship and is part of Berko's lawsuit. And some of us here. But Berkowitz made clear his legal fight includes pre/post so how can post be discarded?

Where in the debate is Josh "utility" Rosner?

Any preferred holder with an Ameritrade account? This was posted yesterday at the ihub preferred board: The highest weekly closing price was at $12.31 on March 2014.

Pressure re implicit/explicit guarantee is a good way to twist MBAs arm in favor of a recap. If anything, I imagine banks will drop their pants as long as they can secure an explicit guarantee. If they can come out of all this with just that it will be a victory for them. Even if they can't get their hands on Fannie and Freddie's business.

Interesting article by Alex Pollock regarding the real estate market. Not directly related to us. Just that he is pessimistic about this market. http://thehill.com/opinion/finance/378004-home-prices-are-soaring-as-federal-reserve-hope-to-avoid-market-crash

Looks like a 2015 show as LK speaks of government compensating us in 2016. However, he kept the same point of view of unjustice to shareholders up until recently. The main risk we face, kudlow or not kudlow, is that anyone becoming part of the administration will have access to new information we may not have. This new information could make them change their stance or may force them to. So what they may have thought before doesn't really matter.

tim howard has a comment up to his last post from his book quoting kudlow as being virulently anti-congressional charter for GSEs...wanted them to become pure private companies. but i do believe that given his free market capitalism bent, he would want GSE shareholders to get back to square given the 10% moment has been reached. Thanks. Yes, he most likely wants the government completely out as TH states. But check HalfMeasure's tweet by LK... That wasn't his only tweet. He was saying the same thing over the radio and in cnbc interviews over a period of time. Point is, he was very specific at defending shareholders' rights w/o one mention of Fannie and Freddie (which he may not like). I have followed him for a decade when he was commenting daily at cnbc together w/Cramer. He is seriously free market and his defense of shareholders could be real. As oppose to yapping on top of a hedge fund's check. My question stands, will he turn into a do-nothing Mnuchin/Mulvaney/Ross? At a minimum, Wayne's Goldman fears have subsided a little?

Kudlow was outspokenly in favor of GSEs shareholders. Will he be of any influence should he finally get Cohn's job? Or will he end up being metamorphosized by the government, like Mnuchin/Mulvaney?

This is why Tim Howard advocates for hard up-front equity capital, i.e. shareholder ownership, as opposed to the pro-cyclical risk sharing deals that don't actually transfer risk in any economical fashion. But I still don't know where current shareholders fit in. All of their capital was put up when the shares were issued and then eventually swept to Treasury, so the equity capital to absorb first losses has to be put up by others, and they would have to receive actual equity for their capital. Dilution of commons is basically necessary here, right? put up by others (raised by dilution) , retained and/or converted from preferreds.

There could be another judge in that panel with specific bias. Take a look: Senator John Cornyn had strong views re Fannie and Freddie 2008 bailout. https://www.cornyn.senate.gov/content/cornyn-statement-fannie-mae-freddie-mac Have faith and keep your shares.

went to the GSEs...and then swept to treasury http://metrowestvacuums.com/images/vacuum.jpg