rros

"The foundations GSEs of our mortgage finance system remain undercapitalized vulnerable".

The only publicly known information about Paulson's GSEs holdings came from the UK. Paulson's investment firm worked together with Schroders asset management running a "Merger Arbitrage" fund. Small. In that fund, Schroders disclosed Paulson's bet in GSEs preferred but the investment was never itemized so the quantity was unknown and the classes were unknown. The fund shut down early last year due to regulatory requirements from UK authorities. It is unlikely those were the only holdings by Paulson. That was a tiny fund but it was useful in that the manager would comment about Paulson's views on the investment. This is the last commentary from March 2018: As you can read, a bit outdated. Besides this, it is my understanding he wasn't in any of the big Berkowitz's bets. Take it with a grain of salt.

Perhaps interesting. Relevant, who knows. Is it really comparable? Geithner was keen on getting rid of the AIG shares. He literally rushed selling them and did not want Treasury or any government involvement. Obama was MIA not participating or being part of the issue and the Jr.preferred holders traded at par at almost all times. Ours, instead, seems to have the direct involvement of Trump. How this changes the final outcome? I don't know. But comparing it to AIG's may not be useful.

Calabria is a HERA man. There is no good reason for him not follow it. HERA is good for us. And receivership is not in sight.

choo choo all aboard!

So cloture passed. Confirmation should follow? Sorry, I do not understand how this works... Yes, the confirmation vote should happen this afternoon. I tuned in to Toomey's time as he was talking about the unrealized gain tax, I guess he had already talked about Calabria. Did anyone here hear what Toomey had to say about Calabria? Missed it. Now, Schumer on. Strongly against Calabria.

So cloture passed. Confirmation should follow? Sorry, I do not understand how this works...

Some more color of how it went down.. @ Midas Yes, it's all looking like a freight train. But it doesn't seem its us the ones being railroaded.

For Today:

collins counsel has said that 5th c rehearings take as a median 5 months from arg to decision. dont forget you have 16 judges to review maj/min opinions, everybody has got to get into the act, and they all have their separate workloads. likely will take into June The Zimbabwe discount :) I hope your hopes on the Collins en banc decision are hopefully right.

Not sure it is about "sensitivity". This sentence caught my eye: "A copy of the Protective Order shall be served along with any subpoena served in connection with this litigation that seeks documents." And this: * Protected Information does not include discovery material. * Non-parties producing documents in the course of this litigation may also designate materials as Protected Information. Putting it altogether it either looks like *somebody may know something* and that information has to come out or... Lamberth realizes the flaw in his initial ruling was about not getting ALL the information and... has requested this? This broad brush of protection will have rats coming out of hiding. He can then get THE full picture. I admit, I haven't read the entire thing... so this interpretation could be off.

On your face, Judge Willett.

Likely. But less relevant after WH's memo. Key -for me- is Treasury's housing reform plan. Hopefully, it will include a comprehensive solution for sweep, implicit guarantee, recap, warrants and Jrs. treatment. And a benefitial-to-us timeline.

I think it will reduce objections Sustained. I thought I was the only funnyman here.

Good point, Chris. I hope you are right. Yes, his sources of information are never to be underestimated. On the other hand, it appears he will only achieve nirvana with full restoration and full exoneration. But is hard to re-write history. The hope is that he is only being biased. It is still a bit troublesome to see the WH stirring towards a multi-guarantor system right after the last 2 hearings. Like... it is not going to happen. Mnuchin appears to be the moderating force, so far.

Even if there is a dispute it will not be the first for Mnuchin. Mnuchin was never part of the China trade war thing and timidly tried to stir issues to a friendlier camp. Yet, he silently took a back seat when he realized R. Lighthizer and P. Navarro succeeded in building a stronghold around Trump. I can't wait for April, May and June.

Re TH's take. Interesting how he views a possible Kudlow/Mnuchin dispute. But there is an angle he might be missing giving too much credit to Kudlow. Trump has shown time and again he is and wants to be the alpha guy. An alternative reading to TH would be that Trump himself wants to speed up the process (whatever that means) and has embarked the services of Kudlow in a way that does not offend Mnuchin (not having to admit publicly Mnuchin has been too slow). Kudlow, in turn, may have advocated for breaking up the duopoly on his own. While TH may believe Kudlow is now part of the Bank lobby -and TH has a clear anti-bank bias-, it is also possible that Trump sees Kudlow as instrumental in pushing administrative reform and does not care he may insert his own agenda. Is it purely coincidental that there are resemblances to actual events, persons, living or dead? We do not know. But if it is truly Trump who is now demanding results we will see an acceleration next quarter. It is really, really hard to be negative about this process at a time when the WH has officially entered the fray. Not just because Kudlow is powering through. Mulvaney is also in there... pretty close to Trump. And both have been firm supporters of shareholders' rights.

Would that be: Calabria, Mulvaney, Otting? or Mnuchin, Kudlow, Trump? Oh.. sorry. Trump is not a soldier. Sorry about that.

And we only really need 1 thing to be done administratively to see the fruits of our patience, which appears to be close at hand after this memo. Yes, the implicit/explicit thing should not be underestimated. The explicit is a whole different animal... what to guarantee, narrow-broad, which securities, etc. I can see hearings after hearings on this. The implicit, in a way, seems straightforward. FHFA/Treasury have room to play a little and use it to replace the sweep. the implicit guarantee proposition is huge. first, lets assume that congress never passes an an explicit guarantee. so, what is the major criticism of the GSEs? that private gains public losses refrain. this kills that. GSEs will pay govt for nothing other than its continued existence. and it is a wink to the institutional market that the govt will be there next time since this time it is being paid to. this is a subtle part of the whole admin reform plan...that we are moving forward with or without you congress, and we dont even need you to act in order to have a paid for backstop Agree. A paid-for implicit is an absolute first one. Sticks out. And was added to the memo for a reason.

this memo is something of a Rorschach blot, but I disagree with howard; this is an administrative reform green light, and congress is given a job to do which is less noxious than the crapo plan and by the way, it will not be able to get its act together to do anything. I look at this blot and I smile TH could be correct in that Banks may have gotten a big win today. What I fail to connect is how that win interferes with stopping the sweep, which the memo today lays the ground for. The win for the banks may have been the future Congress involvement (competition, successors, explicit). The Admin actions anticipated by this memo aren't necessarily Bank related and could be tied to something more pressing: recapitalization.

And we only really need 1 thing to be done administratively to see the fruits of our patience, which appears to be close at hand after this memo. Yes, the implicit/explicit thing should not be underestimated. The explicit is a whole different animal... what to guarantee, narrow-broad, which securities, etc. I can see hearings after hearings on this. The implicit, in a way, seems straightforward. FHFA/Treasury have room to play a little and use it to replace the sweep.

As for today's hearing not sure if you all picked this little gem by Senator Warner minute 1:06:00 "... we are not doing this in a vacuum. The new FHFA Director has enormous broad powers.. matter of fact there was a segment from Politico today saying that Treasury may start offering executive actions as early as today, so the notion that this may be taken away from Congress is a concern,..." Will the WH really risk offending Congress on 3/31?

:D Smart!

I do not believe anything in this memo supports the idea that the sweep stops 3/31. Instead, I think it supports the idea that Congress is in play. There is hope, though. By far, the most favorable paragraph for us is Section 1, c). It establishes the basis for the dual track investorG was hoping for. We will have to wait until Treasury outlines specifically what is they can do w/o Congress and this will likely include how a recapitalization may be done (steps, time frame), with details on how warrants and Jrs. will be treated and how a compensation for an implicit guarantee might replace the sweep. My view is that sweeping will stop only after this outline clears Treasury's desk and is approved by Trump. Somehow, I have the feeling that Trump himself wants the credit for stopping it. The emphasis on the word 'competition' -it is both in the introduction as well as within sections of the memo-, tells us Trump supports Congressional involvement (change of charters). Within this context, the words "successors" and "explicit/implicit" may find a better interpretation. If the idea is to split reform Admin-Cong, both the implementation of the "explicit" part as well as the determination to change GSEs charters to allow for more guarantors fall on Congress' lap. The "implicit" part is then on the administrative side. As was mentioned before: compensation/implicit are incompatible by their nature. The very action of compensating eliminates implicitness. Why was this added? Likely, it opens the doors for replacing the sweep with a different compensatory mechanism, administratively (commitment fee + guarantee fee). It's the only hint I could find indicating the end of the NWS. What is troubling about this memo is that it directs Treasury to work on a multi-guarantor system directly colliding with much of what we heard today in the Senate hearing.. While we may not see it in our lifetime and while the companies may be fully recap before Congress initiates any dramatic change, questions is, will they be out of c-ship? And if c-ship extends, will a full recap be enough for the Jrs. to achieve par? I personally see them trading between $10 and $14 next quarter.

I do not think the sweep will go. Fast, at least. If investorG is correct that Mnuchin wants 1 last shot at Congress, the sweep gives him a powerful leverage to force reform, even dictate the terms. If so, we could see a partial removal next quarter as a last message to Congress. It makes too much sense for Mnuchin to want legislation. And the sweep -as a lever to force it-, is an integral part.