rros

That's not the administration skirting around the letter of the law, it was Watt. I don't think this is a good thing if it catches the attention of Congress and turns into a media narrative. Some there already think that FnF are too powerful, and this only reinforces that view. Or the view that FHFA is the one that is too powerful. Or unrestrained.

Isn't it amazing that every time there was an admin delay, we say "Now the thesis is back to courts", and every time there was a negative court ruling, we say "Courts don't matter. Now the thesis is back to admin reform"? ::) With that said, I do think Collins is promising. But we have been wrong all along the way. ::) Just to add some perspective. My cost basis on the Jrs. is 47 cents or about 2 cents on the dollar. If I were to sell today that would mean 1700% correctness. I would love to be wrong this way only 1 more time in my investing journey. rros, could please you elaborate on how 1700% were achieved? My uncreative mind has been stuck to buy and hold strategy. What made you confident is selling/holding/buying at different periods? I have never traded this. Only reduced position once when it looked like Hillary Clinton might win. I never rebuilt the position back. There was plenty of online chat on the Jrs. back then, when I bought in 2010. Research indicating there was value here was available. I remember in particular Wayne, who introduced us to the Jrs. with his "Alexander Hamilton" perspective. A blogger from Australia/New Zealand made information available that made sense, fundamentally and mathematically. Banks were unloading massive blocks for nothing, daily. We all thought of a 3 years holding period for a real estate turnaround with the companies cashing in their DTAs and loss provisions. To us, it was naively simple. Maybe that was the red flag we could not see. Sorry to disappoint, no real strategy or trading secrets... luck, maybe. That is, provided this trade doesn't implode tomorrow... or next month. I don't really have any particular insight to offer. I held through Lamberth while millions disappeared in front of my eyes. And I cried on my son's lap. He was 7 then.

mnuchin to date has been weak on housing finance. however, he's far smarter than me, so in order of likelihood imo: -- otting's comments and leaks were staged to spark congress to act. this may be working given the document released by crapo and 2 days of hearings upcoming. mnuchin might really want the paid-for explicit guarantee and perhaps is willing to accept the other stuff like multiple guarantors to try to get it through congress. the Democrats may just go along if the price is right on their programs. -- otting had his mnuchin nov-2016 moment and the leak blew everything up, back to the drawing board. -- after the collins arguments, mnuchin hit pause to hear the results because the lamberth and sweeney plaintiffs settlement ask requirements might be adjusted / finalized after this specific ruling is announced. -- or something else I'll take something else. I think mnuchin is the lead dog, Phillips serves to do Mnuchin's housing finance work, and no one other than mnuchin is going to make a decision. I also think mnuchin has been very busy on tax reform, sanctions, china, federal reserve etc and he simply hasn't had the time...and the GSEs can wait, politically as well as tactically. no need to rush given that both calabria nomination and collins decision will affect calculus. and if congress ever gets around to where they look like they may agree on something, that's fine as it lowers the temperature for internecine exec/congress squabbling. assuming Calabria is confirmed, collins is something of a positive and congress has hearings that get nowhere, how does this hurt the process if one waits for this to develop? sounds like a lot of excuses. he has the time for this, or at least to tell phillips what to do/say. He's not leading for some reason. Meanwhile, it appears he's sucking up another sweep this quarter which is contrary to his publicly stated priorities. The longer the wait to start this process, the closer to the election. It is what it is -- I simply may have misjudged his abilities and/or intentions. Would you consider the possibility that, just like the REPO market, both Treasury and the Federal Reserve now view the housing finance system as basically nationalized? Not officially, but enough to believe a privatization of Fannie and Freddie is actually a mockery.

Isn't it amazing that every time there was an admin delay, we say "Now the thesis is back to courts", and every time there was a negative court ruling, we say "Courts don't matter. Now the thesis is back to admin reform"? ::) With that said, I do think Collins is promising. But we have been wrong all along the way. ::) Just to add some perspective. My cost basis on the Jrs. is 47 cents or about 2 cents on the dollar. If I were to sell today that would mean 1700% correctness. I would love to be wrong this way only 1 more time in my investing journey. Hats off to you. Do you think the "house money" makes you less risk averse to a loss from these levels? Or is there loss aversion from threat of a big chunk of profit being taxed? If the security was available at today's prices, would you enter into the investment and build this level of allocation? Just curious. I have enjoyed your comments along the ride a lot, worth much more than 2c on the dollar, closer to priceless! Well.. I am far from being in the same league as those members here who write technically savvy, mathematically thorough, legally correct and well researched posts and answers. Those indeed are priceless. So thank you for overestimating me :) It's difficult to say where being risk averse is coming from. As you mentioned, the hatred of having to pay a small fortune to the IRS, the greed of perhaps leaving money on the table, the comfort of sitting on large paper profits... all play a part. Maybe it's inertia. Maybe obstinacy. But over the years and after seeing shares losing a lot of ground -on occasions- I came to the conclusion that at 60% of par it may not be worth to wait for full face value. The time and the battle... Believing there may be other "close to doubles" that can fill the gap of Jrs. at 60% helps keep greed in check. Or transplant it, I should say. Today I would not build the position I originally built back then. Not because of prices nor because risk/reward has changed. But because today's reality (and the information we acquired) is vastly different than the one we faced in 2010. All we had then was our (correct) interpretation of HERA, our correct interpretation of the SPSPAs and a leftist President who had been in office less than 2 years and appeared too timid in the aftermath of decades of Reaganomics. Now we are waking up to the fact the companies had been nationalized and neither courts nor the government seem to know where to go. Still, in this utter confusion I do see benign signs. Since Lamberth, we've had nothing but good news. Scratch that. News becoming better at a compounding rate. While the smallest victories may have gone unnoticed at first -Sweeney's discovery for one-, news from courts continued to build momentum to the upside in an ever so slightly upward slope. More recently, from Willet's dissent to the En Banc proceedings. Perhaps one day this curve goes parabolic. In the face of an improving rate of change of court news, under the belief that Otting, Calabria, Mnuchin and Mulvaney are beneficial to shareholders and being close to a price level I would consider satisfactory, would you recommend becoming conservative taking some chips off the table? In other words, do you think 60% is achievable sometime this year? Thanks for sharing. If I knew whether this will reach 60% of par, wouldn't that be great. Do I think so, yes more likely than not. My context in this is of a small private investor who is not at the negotiation table in a situation without margin of safety and dependent on the kindness of strangers who I can't bring myself to trust; with the legal system so far not standing behind me to serve its role of enabling trust in contracts. My asset allocation approach here is to put in only so much that if it reaches par on best case scenario, then it represents what I'd want at steady state in my portfolio; and so little that if it goes to zero or very low then I won't lose sleep. For me this is 2%, and at par 5%, leaving me with another 5% I can allocate after the binary outcome is over. One can argue using Kelly's formula would be another option, and reach a much higher allocation. I'd have to say I have subjectively felt much better after cutting down my allocation from 15% to 2% here in the last few months, but unlike you it was not a 1700% gain, only 150% and much of it helped offset another investment that didn't work out. After reading your post I feel I still have a lot to learn.

Oh, I see. No wonder there was a lot of expectation to get Calabria closure last Thursday. Does anyone know what the senate procedure is, to inject one FHFA director ahead of other judges waiting for closure? I am sure William Barr was injected into the head of that queue. After searching in Google, it seems like William Barr was nominated on December 7th, and got confirmed on Feb. 14th. Calabria was nominated on December 12th, so I'd think he would get confirmed by end of Feburary. Otting's original comment of 2-4 weeks may be because he expected Calabria to have been confirmed at that time. Why is Calabria confirmation taking so much longer than William Barr? Here, you can follow what happens in the Senate.

Isn't it amazing that every time there was an admin delay, we say "Now the thesis is back to courts", and every time there was a negative court ruling, we say "Courts don't matter. Now the thesis is back to admin reform"? ::) With that said, I do think Collins is promising. But we have been wrong all along the way. ::) Just to add some perspective. My cost basis on the Jrs. is 47 cents or about 2 cents on the dollar. If I were to sell today that would mean 1700% correctness. I would love to be wrong this way only 1 more time in my investing journey. Hats off to you. Do you think the "house money" makes you less risk averse to a loss from these levels? Or is there loss aversion from threat of a big chunk of profit being taxed? If the security was available at today's prices, would you enter into the investment and build this level of allocation? Just curious. I have enjoyed your comments along the ride a lot, worth much more than 2c on the dollar, closer to priceless! Well.. I am far from being in the same league as those members here who write technically savvy, mathematically thorough, legally correct and well researched posts and answers. Those indeed are priceless. So thank you for overestimating me :) It's difficult to say where being risk averse is coming from. As you mentioned, the hatred of having to pay a small fortune to the IRS, the greed of perhaps leaving money on the table, the comfort of sitting on large paper profits... all play a part. Maybe it's inertia. Maybe obstinacy. But over the years and after seeing shares losing a lot of ground -on occasions- I came to the conclusion that at 60% of par it may not be worth to wait for full face value. The time and the battle... Believing there may be other "close to doubles" that can fill the gap of Jrs. at 60% helps keep greed in check. Or transplant it, I should say. Today I would not build the position I originally built back then. Not because of prices nor because risk/reward has changed. But because today's reality (and the information we acquired) is vastly different than the one we faced in 2010. All we had then was our (correct) interpretation of HERA, our correct interpretation of the SPSPAs and a leftist President who had been in office less than 2 years and appeared too timid in the aftermath of decades of Reaganomics. Now we are waking up to the fact the companies had been nationalized and neither courts nor the government seem to know where to go. Still, in this utter confusion I do see benign signs. Since Lamberth, we've had nothing but good news. Scratch that. News becoming better at a compounding rate. While the smallest victories may have gone unnoticed at first -Sweeney's discovery for one-, news from courts continued to build momentum to the upside in an ever so slightly upward slope. More recently, from Willet's dissent to the En Banc proceedings. Perhaps one day this curve goes parabolic. In the face of an improving rate of change of court news, under the belief that Otting, Calabria, Mnuchin and Mulvaney are beneficial to shareholders and being close to a price level I would consider satisfactory, would you recommend becoming conservative taking some chips off the table? In other words, do you think 60% is achievable sometime this year?

Isn't it amazing that every time there was an admin delay, we say "Now the thesis is back to courts", and every time there was a negative court ruling, we say "Courts don't matter. Now the thesis is back to admin reform"? ::) With that said, I do think Collins is promising. But we have been wrong all along the way. ::) Just to add some perspective. My cost basis on the Jrs. is 47 cents or about 2 cents on the dollar. If I were to sell today that would mean 1700% correctness. I would love to be wrong this way only 1 more time in my investing journey.

I think your subconscious is really making you feel miserable for having sold. But don't worry. Maybe enough of retail gets scared that you get your chance. That's absurd LOL. Why do I feel miserable for having sold? Because at these prices you aren't happy and would like to see a hard dive -which so far- has been elusive. At times, you seem to be timing the market by your own admission (charts), while simultaneously finding a reason that will justify the decision. What is absurd about unconsciousness or issues you aren't even aware of? I am sorry. With the wide bid and ask I can't see getting in and out of the preferreds as an intelligent action. Unless you play the most liquid ones. Which happen to be an overcrowded trade.

I think your subconscious is really making you feel miserable for having sold. But don't worry. Maybe enough of retail gets scared that you get your chance.

Anybody expects: 1. a ruling between now and 3/31? 2. announcement by Otting/Calabria by 3/31? 3. a curve ball out of congress before 3/31. 4. a coordinated attack by fellow travelers for the next 2 weeks. Right now, we are about to hit the jackpot quarterly if prices stay here. But history has been of sudden deep reversals. Nerve-wracking spring break. Countdown -T 20160 (minutes).

Any thoughts on what approval from congress looks like? Surely they can only implicitly approve it by not explicitly denying it? Too few words a-la-twit by Gasparino. But it could mean "scalpel" as in really cautious or little, delicate approach... no-big-plan-nothing-to-worry-about. And approval to end c-ship may mean Calabria will seek some comprehensive legislation that will include wrapping things up. Meanwhile, it is possible he will simply recapitalize -partially or totally- the entities. And in the time frame required for this, work with Congress. RE increasing liquidation pref of Srs. by having FF retain full earnings. Why worry? When Watt/Tsy agreed to it the Jrs. ran. What matters really is that money stays with the companies regardless of how much Srs. balance increases. Why? Because if Srs. find -somehow- their way to the toilette, the money is already with FF. the flaw with moelis - and why it's likely just a marketing document to help draw attention to the matter - is that investors are unlikely to front the many tens of billions necessary for recap in a series of equity offerings without A) congressional stamp (permanence) or B) exit from conservatorship whereby the company's mgmt and boards are in charge. Or both A and B. And Mnuchin doesn't want to risk failure, the stakes are too high, which is likely one reason why he's acted so timidly on the matter. IMO the one exception to this view is if one or a couple large entities writes a giant check ($25-50bn) overnight at a low price that 1) gets the companies so far down the recapitalization path that its hard to turn back and 2) has such attractive risk-reward profile (ie low stock price) that the upside potential is so great to risk the investment losing material money if political (or economic) winds turn at some point in the future. If this scenario is even legally and logistically possible, where a huge chunk is raised overnight private equity style, then the returns to shareholders and govt warrants are likely reduced well below moelis numbers. Otherwise, I'm prepared for Congress (and perhaps Calabria if confirmed) to possibly play a larger role than expected. It is always difficult to tell whether you are gloomy, optimistic, outright negative, long or short. Not that it matters. But sometimes I am not sure where you are coming from. Though you have been very informative (thanks). I believe the shares are undervalued. How much so likely depends on the Collins ruling imo. The Sweeney and Lamberth situations are too uncertain and too far away for the plaintiffs to rely on. The constitutional angle (including Collins and Bhatti and Rop) seem like long shots. Thus, I expect current price goals of the main players in terms of a potential 'deal' to stay close to par value if we win Collins outright (and govt doesn't appeal?) and come down to 50-75pct of par if we lose. for common, collins is also crucial because a loss could lead to sr pref monetization in the form of extra govt shares and dilution, and vice versa. Thank you for taking the time to clarify your position. If I were a new investor with billions at stake I would absolutely want Congress involvement. I would want Congress to assure me in a bipartisan bill/law that I will never ever hear from them again when it comes to the GSEs.

Any thoughts on what approval from congress looks like? Surely they can only implicitly approve it by not explicitly denying it? Too few words a-la-twit by Gasparino. But it could mean "scalpel" as in really cautious or little, delicate approach... no-big-plan-nothing-to-worry-about. And approval to end c-ship may mean Calabria will seek some comprehensive legislation that will include wrapping things up. Meanwhile, it is possible he will simply recapitalize -partially or totally- the entities. And in the time frame required for this, work with Congress. RE increasing liquidation pref of Srs. by having FF retain full earnings. Why worry? When Watt/Tsy agreed to it the Jrs. ran. What matters really is that money stays with the companies regardless of how much Srs. balance increases. Why? Because if Srs. find -somehow- their way to the toilette, the money is already with FF. the flaw with moelis - and why it's likely just a marketing document to help draw attention to the matter - is that investors are unlikely to front the many tens of billions necessary for recap in a series of equity offerings without A) congressional stamp (permanence) or B) exit from conservatorship whereby the company's mgmt and boards are in charge. Or both A and B. And Mnuchin doesn't want to risk failure, the stakes are too high, which is likely one reason why he's acted so timidly on the matter. IMO the one exception to this view is if one or a couple large entities writes a giant check ($25-50bn) overnight at a low price that 1) gets the companies so far down the recapitalization path that its hard to turn back and 2) has such attractive risk-reward profile (ie low stock price) that the upside potential is so great to risk the investment losing material money if political (or economic) winds turn at some point in the future. If this scenario is even legally and logistically possible, where a huge chunk is raised overnight private equity style, then the returns to shareholders and govt warrants are likely reduced well below moelis numbers. Otherwise, I'm prepared for Congress (and perhaps Calabria if confirmed) to possibly play a larger role than expected. It is always difficult to tell whether you are gloomy, optimistic, outright negative, long or short. Not that it matters. But sometimes I am not sure where you are coming from. Though you have been very informative (thanks).

Sane is a good word... but his answer to 'when it all gets done?' did he interpret it as merely the recap? His answer pointed at a lengthy recapitalization process from 3 bill to 120/160 bill. But my intepretation of the question was more of the whole enchilada including exiting the c-ship. Anybody surprise he did not even consider the possibility of a faster recap by stock issuance or raising capital in other ways? Or even stock issuance will require 3 or 4 secondaries?

Any thoughts on what approval from congress looks like? Surely they can only implicitly approve it by not explicitly denying it? Too few words a-la-twit by Gasparino. But it could mean "scalpel" as in really cautious or little, delicate approach... no-big-plan-nothing-to-worry-about. And approval to end c-ship may mean Calabria will seek some comprehensive legislation that will include wrapping things up. Meanwhile, it is possible he will simply recapitalize -partially or totally- the entities. And in the time frame required for this, work with Congress. RE increasing liquidation pref of Srs. by having FF retain full earnings. Why worry? When Watt/Tsy agreed to it the Jrs. ran. What matters really is that money stays with the companies regardless of how much Srs. balance increases. Why? Because if Srs. find -somehow- their way to the toilette, the money is already with FF.

And... the wall keeps getting more expensive by the week. Didn't the wall max out at $5 bill only a few weeks ago? 5+3.6+6.7 = 15.3. At this pace even warrants won't be enough.

Thank you, Chris. Not a guarantee but this opens up the possibility of a more lenient approach when looking at Fannie and Freddie.

Does Otting's support of FSOC proposal of using an activities-based approach to identify SI non-bank financial companies help or hinder? On a quickie, I'd say it helps. Why would a monoline insurer with majority of assets being loans on single-family homes (risk-weighted at 50%) and no MBSs portfolio of its own (or minimal) be a SIFI? Wouldn't this move preempt such designation?

Getting back to business... we had some fireworks in Jan. (Otting) and a somewhat quiet Feb. Let's see what March brings.

BET I bet we see old 2014 highs by March 31st. Hello, Lamberth!

Who can write that about midas? That is insanity itself.

True... the hope is that $100 billion on the table for the taking will become irresistible.

If you are not at the table then you are on the menu. Him. Writing a bill that would have made shareholders whole. Two seats from T. Amazing some don't get the significance of this.

Well said, Luke.

Muscle... are you sure you are reading betting odds correctly? If confirmation moves along party lines- and we just had factual data on this-, odds favor Calabria becoming the next FHFA chief. Further, should that happen, Calabria will remember where the loyalty was and who he should respond to. Which, in turn, may mean a nightmare scenario for Democrats. So while this is a high-risk bet, odds aren't against. And I will go as far as saying Mitch McConnell is probably counting and securing votes as you read this. If confirmation isn't delayed, message to the WH may be we-have-a-winner.