rros

"In its 2016 figures, the Center for Responsive Politics ranked the National Association of Realtors as the 2nd largest top spender in lobbying after the U.S. Chamber of Commerce. On the total spending, the largest share—46% -- has gone to Republicans." Maybe NAR can move the needle?

This break up plan would be a logistical nightmare even if the companies were well capitalized and out of conservatorship. Doing it for $5T asset companies with no capital? Sounds highly unrealistic to understate the case Boltansky lowered the chance of legislative action prior to 2019 from 30% to 10%, after this lol.

I am surprised shares did not react positively to an early-stages potential split plan. There is no way in hell FF can be successfully broken up and sold into private hands as bankrupt businesses. Split is a private market solution that must inherently respect shareholders. You can't wipe them out and then hope new buyers will fund the split. That is what Moelis plan is telling the world: "you need the guys with the capital".

Splitting up single- & multi-family and having multiple smaller companies sounds like a mix of the Berkowitz & Millstein proposals. Will be interesting to see how they deal with existing shareholders. Single family is the bulk of their businesses. I may be mistaken but it is above 90%. Since it is risk-weighted at 50% (low risk) makes capital requirements less onerous. In my view, this is a private capital solution. Senators meddling with this, Corker and Warner, is an attempt to slow down again any progress in any other venue (Moelis) in an effort to extend the conservatorship. Unless it is the continuation chapter to Moelis. This break up, a-la-standard oil, should be handled after companies have been recapitalized, have exited conservatorship and are standing on their feet. And shareholders should reap the benefits. The split made Rockefeller the wealthiest american ever! Shareholders getting a piece of each smaller company will have unanimous consensus among everybody.

Looks like they are precisely timing this one. I wish Mel Watt does a one 'on-your-face-senators' this time.

What do you mean? Don't they ring a bell at the top? I heard the same guys alert you when to get in.

I am still having a hard time accepting this. Most MBS are held by central banks. Namely, japanese, russian and chinese. The other big chunk, maybe half?, is held by the federal reserve. Then, smaller chunks may be held by large institutional investors and pension funds. So is it foreign governments that have leverage or Wall st?

So according to this we are in trouble as bond guys would rather have FF nationalized.

Even if it is a tbtf/bondholders fed pr, which I agree it may be, there is Calabria to contend with. From his paper co-authored together with Krimminger, Calabria made it clear he doesn't give a dam about bondholders. Neither russian, japanese nor chinese investors. According to the paper, receivership of FF should absolutely entail bondholders taking a big hit. Within this frame, and being chief economist of Pence, extreme protections for bondholders as in full blown government guarantees will never be part of any discussion by this WH. In my view... So I cannot see this piece from Joe Light as having any kind of influence. I am thinking the bondholders' lobbying that had the upper hand during the Obama years, is over.

I just checked the annual & mid-annual 2016 reports, and the Series S position was unchanged amongst all three of the funds, and, as far as I know, Fairholme doesn't report the preferred shares on their 13-F filings anymore. Do you happen to have a link to the filing or remember where you saw it? He raised a good point at the end. If for any reason shares appreciate substantially he must sell to size position. AIG was 60% of his funds at some point and Morningstar kept hitting him with liquidity risks. Perhaps, he sold some prior to the appeals debacle. If we hit the jackpot Bruce B. will have to sell some whether he wants to or not.

Maybe Chris/Mekhet can comment - Epstein seems to equate the court's "expectations" with "rights attached to shares". As a layman that seems eminently sensible but given everything else we've seen to date, is that the breach through which yet another course will send its troops by arguing 'sure, the rights transfer, but they should've expected that the rights have no value anymore, hence no loss, no damages, etc.' If that argument were made, of course at least it would be established that there are rights and they did not just end, but I wonder whether this then ends up as a Pyrrhic victory? Thanks. Unfortunately for us, we have not found yet in courts any champion of capitalism. But yes, Epstein raises the AH point of view of "resurrection" where someone's trash may well be another one's treasure. When this idea is killed, not only an exit for the original holder is eliminated (no buyers anymore) but also the essence of why participants in markets are willing to take risks. The chilling effects are absolutely obvious for those with their "capitalists" glasses on! Judges and their moral high ground may remain oblivious to how markets really function. Or worse, may abhor this point of view.

who is rob schain?

To believe that Corker will sit comfortably and not make his strongest push for a bill in any way, shape, form or color is misguided. Corker may be confronting his biggest, darkest danger which is a Moelis recap and release. That is what Moelis means. For Mnuchin it is a restructuring. For Corker it's *the* nightmare scenario. Before jumping under a train Corker will try to outmaneuver everybody. So we should take those "rumors" as true and that any bill might show up at any moment with the intent to tie Treasury's hands even further, straitjacket Mel Watt or simply kill shareholders.

danger? Why? This is not a bill yet. And will it ever pass the Senate in the current form?

i suspect that anything coming out of the senate banking committee will be something of a compromise. whether that compromise proposal ever gets enacted is another question. so seeing howard and stevens discussing things face to face is a positive imo, as it might result in MBA getting closer to accepting some compromise closer to the Blueprint than otherwise. Chris, aren't you afraid of a backlash by some Senators? Maybe they (Corker et al.) view this as their last chance to kill shareholders and go for a David Stevens alternative with a few added tricks. I do expect bad news from the senate banking committee. But could be emotional inertia...

Moelis and MBA have no common ground. And they are as far apart as it comes. Moelis' essence revolves around the principle of shareholders' rights. Instead, MBA's plan completely ignores these rights even explicitly stating the plan is agnostic when it comes to shareholders. What Stevens can't understand is that having no view on something *is* a point of view.

Great point, investorG. I don't think that fact is lost on Carson (very, very familiar with management that backed the blueprint). And it's awfully convenient this plan came out when it did just before Mnuchin, Calabria, and others are ready to tackle the GSE issue in the 2nd half of the year... I think it pays to be cautious. That has been the case... for years... something coming at us out of left field... and Carney and Joe Light hiding behind the scenes waiting to strike. What undervalued said.

I believe race figures are correct. And he is also correct on similar upside -at this point- for commons and Jrs. Chris, in turn, has a point. Why would hedge funds be interested in conversion? My view is that common upside is major in the very long run for very specific reasons. Once Srs. totally disappear (equitisized, as per the plan), Jrs. are called or replaced for lower yielding shares AND companies are fully capitalized... what will happen with all the earnings? Hint: buy backs. If you want to see how a long term buy back plan operates and what kind of leverage it can exert take a look at the chart of Dominos Pizzas (DPZ). Or simply go back and study Henry Singleton. Sure, there is no hurry to convert. But commons might be the play after all is said and done. Right now, I am staying with my Jrs. Lawsuits: The recent filings in Perry may go the way the rest of the filings/cases. Benefiting defendant. I have made up my mind that all courts (except Sweeney, so far) are after a concerted effort in not allowing "lawsuit bets" to prevail. That is, buying into a stock just to pursue court action with the goal of a positive outcome. Wayne: I purchased a large amount of Jrs. from December 2010 through February 2011 after reading many insightful posts and information by him. Thank you Wayne. You have always showed common sense. The only worrisome thought is the one you have about Goldman Sachs. How they may view Moelis plan?

Do you have a link? it's not much.. http://video.cnbc.com/gallery/?video=3000623709 Thanks! It looks like all the parties needed are slowly entering the room. "I am very, very familiar with Blackstone and its leadership" lol It's a small world! Like a handkerchief.. almost. Do these guys meet in a locker room after playing bridge?

I do not think they "get" par. I think they will naturally trade at par once the 2nd step takes place. That is, the 4th amendment. That seems to be their assumption. Either way, we do get there with this proposal. And thank you for pointing out that error. Good eye!

What error?

This plan makes the Jrs. whole. 1) 4th amendment to make outstanding Srs. balance to $6.3 billion. This removes 97% of the Srs. balance (balance which later gets zeroed due to conversion into common). If this doesn't make the Jrs. trade at close to par nothing does. I cannot find any indication of Jrs. being converted at any specific price. Not even in the notes of page 36. But I do see this. A portion of Jr. holders converts their X amount of shares for 2.1 billion common shares. Which end up being valued at $20 billion by 2020. (2.1 bill shares x $9.62). If I remember correctly, hedge funds own less than half of Jrs. (16/17 billion and the rest remains at banks approx $18-19). Perhaps this paper is considering conversion of all hedge fund holdings? If so, the Jrs. are being valued (converted or not) at their face. Whether instantly or by 2020. The added benefit of owning commons (converted at face value) is the voting power. My view is that this plan assumes a ~3:1 ratio common/preferred ($25). So valuing common at $7.95 would value Jrs. at par.

moelis put out a real world, solve the problem, financial restructuring analysis. everything else is think tank whitepaper BS. there is no comparison. I would not assume from this plan that there is a forced conversion of Jr. at 1/3 their face value. There is a chance this is a rights offering available ONLY to Jr. holders and for new common equity. If so, Jr. holders will be adding about 12 billion of fresh capital in common equity. I assume ALL hedge funds holding Jrs. will take it. It is also possible this rights offering is slightly valued below what they believe will be the price of common shares at the time. This would make sense as there is a comment somewhere that Jr. holders will help raise additonal fresh capital. In my view, the Jrs. will not be part of ANY conversation and will be left alone. So, full value. Down the road, 2 to 3 years may be called and switch for newer Jrs. at lower yields. There is already an endorsement by someone at ICBA as in 'the proposal is somewhat aligned to our thinking'. The best indicator we could ask for that this doesn't get derailed would be no attack from Treasury. Had this been an Obama era proposal, we would be hearing shortly from Antonio Weiss, Stegman and FHFA. As soon as tomorrow morning before market opens. With Joe Light's and Carney's articles by mid morning. We'll see what the new actors in this movie do. Or not do. And to note, Blackstone and Blackrock are almost opposites. Blackstone (Schwartzman) has always been friendlier to shareholders. The guy from Blackstone that was part of a list to counsel Treasury, withdrew. Blackrock (Larry Fink) instead, has been our archenemy for a long time and it is a Blackrock guy that is assisting Mnuchin in housing. Someone correct me.

And facts that Mnuchin, the most important player in this game, is well aware of. If so, why sit on it? Why not do anything? Mnuchin doesn't even want to stop NWS. I think, for Mnuchin, the courts have spoken (so far). Whether he agrees, likes it or not he has no option but to "expect the dividends paid to Treasury to continue", as he put it. Any stance other than this would be irrational. On the other hand, he sounded firmly negative about taxpayers continuing supporting the companies. During Corker's exchange Mnuchin used the word "credit" as opposed to capital when he referred to ample credit before the risk loss. Corker rephrased that using the word "capital". But I do not think this was a mistake. I understood it as Mnuchin saying that for a paid-for guarantee Treasury will make sure there is ample credit backing the companies, as in a large credit line. So in the last public appearance Mnuchin totally dodged the "capital" bullet. We know though, he doesn't want Treasury's credit line to be that capital. And that that line would only be a backstop for which taxpayers will be compensated. So now comes June and getting awfully closer to a definition. No surprise the Stegmans and Mark Zandis are coming out like frogs in the rain. Will Antonio Weiss chime in? Another Parrot piece? Larry Fink on the attack? MBA's will try another push? I expect a lot of noise come end of June. In a concerted effort to deter Watt from retaining earnings. Which is the most logical thing that can happen.

? So then let the retaining of earnings ride! Once that crosses the 20 bill threshold look at Senators rushing for a bill.