rros

Although this is how it looked on the surface, my thinking after some digestion was that Democrats would fight against his confirmation throughout. Not that they are afraid of what Calabria could do. Simply they'd much rather extend -as much as possible- this soap opera till next elections. Being their hope -with a few sticks in the wheel- that the status quo remains and perhaps, just perhaps, it all falls unto their laps. Under this scenario, I highly doubt any Republican will join Democrats against Calabria.

The whole thing is irrelevant.

I have found Gasparino's article informative. Not that it says much, or is credible. But the fact that he mentions the WH moving into the lead. There is a chance this information is correct. Yet, a bit misunderstood. That the WH is -or might be- getting involved is a first. Mulvaney, as WH chief of staff, and Calabria, a former WH person himself, both with strong positions on GSEs matters (one wrote a proposed bill, the other one HERA) make Gasparino's unofficial rumors believable. What could be a misjudgment, in my view, is the idea that there is a conflict between Tsy and the WH regarding the direction this may go. Could Tsy instead voluntarily take a step back? Given all we know I find it hard to believe that there is any friction between them and while Gasparino presented the article as somewhat negative, my bias aside, I see it in a positive light.

FNMAS is going up way more than anything else, including FMCKJ, which makes me think it is because of that video https://www.realvision.com/tv/shows/trade-ideas/videos/a-new-fannie-mae-play Probably lazy funds saw that and started buying FNMAS without researching other preferred. if you are buying into GSEs only now, you will want to be able to get out fast. LIFO. late comers dont know the trade intimately, lazy or not, and will take a short term profit, so the most liquid series is the best. The LIFO crowd may also not be aware how difficult it is to fool a market maker. I wonder if MMs will really sell inventory at $10 to later have to buy it back at $20... In a way, I am happy with my illiquid preferreds. Nobody who wants out fast seems to be interested in them. Will market makers have less incentive to cut the price in half on exit day when nobody shows up at the door to sell? Market makers will have no problem selling at 10 and later buying back at 20. But there will be millions of trades before that happens. Usually this thing is like bid 9.98 ask 10.01, so they'll keep buying at 9.98 or slightly higher, and keep selling at 10.01 or slightly lower, and do this thousands of times per day. I understand how MMs make money and I understand they are not, most at least, speculating on a stock. Neither they may care about the enterprises they make markets for. But they also manage "inventory". And sometimes lose. Which they hate. And they often lose when faced with long term investors with strong hands because they are never able to replenish inventory at convenient prices. They are not going to be holding the bag on these ones.

FNMAS is going up way more than anything else, including FMCKJ, which makes me think it is because of that video https://www.realvision.com/tv/shows/trade-ideas/videos/a-new-fannie-mae-play Probably lazy funds saw that and started buying FNMAS without researching other preferred. if you are buying into GSEs only now, you will want to be able to get out fast. LIFO. late comers dont know the trade intimately, lazy or not, and will take a short term profit, so the most liquid series is the best. The LIFO crowd may also not be aware how difficult it is to fool a market maker. I wonder if MMs will really sell inventory at $10 to later have to buy it back at $20... In a way, I am happy with my illiquid preferreds. Nobody who wants out fast seems to be interested in them. Will market makers have less incentive to cut the price in half on exit day when nobody shows up at the door to sell?

Looks like everybody is piling on the most liquid ones fmckj and fnmas. Planning for an abrupt parachute drop, I suppose. It will be D-day!! D for $dolla$ or :) Donald :)

Looks like Moelis was active today and ACG Analytics was there.. https://twitter.com/ACGAnalytics/status/1097911134236102656

That was very good. Thank you, orthopa.

fwiw I don't think this is a silly question - unless Congress passes something permanent, there will be a large subset of investors who balk at fronting the $100bn+ in capital likely required for any recap. and from the administrations point of view, a failed deal is unacceptable. so they will likely go for the security blanket by using congress with Calabria's help (if confirmed) and see if a dedicated pile of money for affordable housing can bring them along. after all, many Dems recently voted for Trump's criminal justice reform and perhaps will also vote yes for paid family leave if it comes up this congress. once GSEs are out of conservatorship, HERA becomes a pure regulatory statute. potus warren would have no authority to "reverse decision and declare a large dividend to treasury". if still in conservatorship when potus warren takes office, it is hard to see how a 180 could be justified. perhaps however if this is a real concern to potential investors, treasury could insert a poison pill into its recap plan. there is always a solution...unless you are billy McFarland And adding to the pile... The authority for Treasury to invest in the GSEs terminated at the end 2009, as per HERA. So Treasury is really unable to buy any *future* security issued by Fannie and Freddie. Stressing the importance of eliminating the hanging threat of the Seniors. Once removed, it is over. Hopefully, replaced by a line of credit that relies on a commitment fee. But something must be done about the PSPAs so they become "the past" as the future -no possible investments- is already set. HERA has a subchapter where it authorizes the modification of the charters of each company to allow for a Treasury bailout. However, the authority given to Treasury was narrow and temporary. Once all this is fixed (terminated), there should not be any worries about future administrations reinstating a sweep or meddling with dividends. They can't.

Resolving this requires actions/events totally outside our control and outside the cold but certain logic of a bankruptcy court. Having been here a while through the ups and downs, with - in reality - almost zero leverage, I imagine 2/3+ would take a 50% payout on jpf's. I would. In which case pricing of around 30% of par is not out of whack. But of course we hope and talk our book and think we should get par. Just keeping it real lest we all run out and get even deeper into this. Even our most prolific GSE cheerleader Glen Bradford is running out steam and looking at stuff like shldq and ctl. After Glen sells, that's probably when there will be a deal. You're just messin' with us, so please say something useful or move on. If Bradford is considering shldq (i.e., the common), then he is not running out of steam; rather he has lost his mind and any value investing credentials he might claim. Messin' is not my intention. It's a note of caution that there's significant risk. This is much less predictable and has taken much longer than buying run of the mill chap 11 or near chap 11 bonds (done a number of times - ukraine, worldcom, conseco, etc). It's also my guess than many would take significantly less than par for the jprefs given these factors which suggests a price ceiling if one were to add. If I recall the Citi pref conversion was at 60%. Prudence and price information ... I dunno - doesn't seem useless to me but maybe everyone knows everything already. Glen (100% and margined) and Berkowitz (35% concentration and forced to liquidate half) may have lacked prudence. But it's not over as long as we survive. Cheers! I agree. Even in a positive scenario, political factors alone would likely dictate a cap (or conversion rate) at some level below par. everyone would need to sacrifice, and I believe the large holders know this and are fine with it. I don't want to debate this as it's a purely subjective view but imo forgone dividends aren't likely enough to satisfy the decision makers in the admin or congress. there's a reason why many smart investors wake up every day and decide to sell a lot of $ of jr preferred: because there's a wide range of outcomes even at this moment. and on a separate note, picking personal fights with widely-followed reporters isn't helpful. Although prudence and downplaying expectations is a smart way to look at this investment, there is another side too. The mortgage/loan market is a mess extending a dark cloud over the real estate market. Reading Christopher Walen's blog makes this apparent. As such, it may be the government who feels pressure to resolve pending stuff. Which may tilt the balance back to shareholders. After all, lawsuits are a real impediment to progress. So while shareholders may see obstacles to realize gains and may be feeling stretched, it is the government who may be facing a grave problem and an urgency.

These 2 versions have no "GSE", "jump", "fannie", "conservatorship", "preferred" or "warrant" in them. https://docs.house.gov/billsthisweek/20190211/CRPT-116hrpt9.pdf https://docs.house.gov/billsthisweek/20190211/CRPT-116hrpt9_u2-.pdf

He needs to show independence or independent judgment. In my view, that was a good answer given the circumstances. We know *his* plan is well capitalized institutions. And that he leaves competition and charter issues to Congress, which may never get done.

The way this has been playing out has depended mostly on narratives. If the Administration wishes to kill the rally, as Obama's Tsy would regularly do by issuing carefully crafted PRs or stating certain positions during hearings, tomorrow they will have their chance. It can happen. For whatever reason... Calabria's confirmation outcome, pacifying spirits, compromising attitude, etc. Instead, if the Administration doesn't care where shares are trading or doesn't care what opponents say/think re hedge fund vultures and are firm on their adopted plan Calabria may simply state his views and dodge any kind of question that may curtail his freedom of action and/or downplay the shareholders' issues. Tomorrow, for sure, we will see if they are friends or foes. I hope tomorrow is a definite departure from the Obama days.

All eyes on earnings, then.

When do you all feel we may reach an inflection point, the "point of no return"? a) Official announcement by Tsy designating a banker to restructure the companies: announces exercise of warrants placing a cap on price. b) We hear Parrot's head knocking the floor. c) Emily posts on the board she/(he?) has sold all shares and we may no longer hear from her(him?).

Not me, but if Trump is serious about getting FnF released then he can just veto any bill that has Jumpstart-like language in it. He can get administrative reform done before Congress gets a chance to override the veto, if they can even get enough consensus to do so. And that's why Corker inserted it in the end of the year omnibus bill. Any chance they throw this into the omnibus education bill being considered now?

lol the battle of the pencil pushers. Re Muolo: should we believe him this time?

Overall, it looks like they want to end this thing now. What is not clear is if they want to go the admin route alone and completely. It would make more sense from an investor's perspective -ours- to have definite legal backing so as to never see a nws again or, at a minimum, prevent whimsical actions from anyone in power down the road. After all, the biggest threat to us has been politicians. Consider the Trump team being on our side. Wouldn't themselves too like to see further investor protection? The administrative train alone may not be able to fulfill this. Thus, they may think it is essential from the perspective of shareholders (old and new) to see some bill. Perhaps even requested by big boys behind the scene. So Calabria said something like this in that interview "receivership as an incent for Congress to act". Which ties a bit to Otting's recent leakage as part of a spark. Interestingly, Crapo crap out his outline within weeks after that. So the "incentivizing" route could be part of the plan. Which means when Calabria's hearing comes, the word receivership may float around numerous times. And if I am right, while he may not defend shareholders he may follow the line of thinking he presented in that 2014 interview: no further damage. If receivership comes up don't let that scare you out of your position. Calabria appears to be in a different page re shareholders and will not look to create artificial damage that is not there and is not justifiable by present circumstances. In comparison to Obama's holy crusade that was more than willing to rewrite physics laws. Calabria is not going to go medieval on us.

Thanks for posting the video. Calabria is asked directly about shareholders at 1:55:00 and his response leaves the door wide open. It's worth listening to. Good catch, thank you. But for any icing on the cake the Srs. must go.

Thank you, Chris! Midas, thank you for clarifying it.

I understand. But how do they get out of conservatorship without capital? And how do they amass capital if the PSPAs aren't changed, which requires Tsy's consent? That is the 1st hurdle. Am I mistaken? I believe HERA says the conservator can only terminate the conservatorship once the companies have sufficient capital. So refinancing comes prior to ending the conservatorship. Which all leads to Rome: PSPAs.

PSPAs and Conservatorship are separate issues. FHFA placed them in conservatorship, not Treasury. So Treasury has no say in getting them out. However, Hank Paulson came up with a clever way to obtain leverage through the financing. Termination or any change to the PSPAs requires Treasury's consent. Thus, if Tsy doesn't agree to allow the companies to retain full capital it won't matter that FHFA has the sole authority to terminate the conservatorship. Unless it switches to receivership. Tsy is needed, in the end. Whoever concocted this, including the sweep, was a genius. Otting said key people are on the same page. If we go by his word, yes. Same plan, same thinking. But technically, UST and FHFA are independent and we just read emails exchanged by DeMarco and Geithner proving this. In some issues, FHFA and UST were in conflict. So we have to hope they remain on the same page, our page.

PSPAs and Conservatorship are separate issues. FHFA placed them in conservatorship, not Treasury. So Treasury has no say in getting them out. However, Hank Paulson came up with a clever way to obtain leverage through the financing. Termination or any change to the PSPAs requires Treasury's consent. Thus, if Tsy doesn't agree to allow the companies to retain full capital it won't matter that FHFA has the sole authority to terminate the conservatorship. Unless it switches to receivership. Tsy is needed, in the end. Whoever concocted this, including the sweep, was a genius.

For advocates of wall funding via warrants... From Bloomberg, today.

I don't even know if this is technically possible anymore. With 3 billion of net worth each, critically undercapitalized may not apply anymore. Instead, severely undercapitalized might apply which may require corrective measures as opposed to a straight receivership. Granted, I am guessing. I do not know the exact math only that the regulation that was suspended establishes different capital levels matching different levels of severity. Receivership would come into play in a legislative scenario, perhaps.