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Luke 532

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    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    Excellent point!

     

    Thinking more about the conservatorship lite option if that was the plan of action IMO it would be done by now. Why? What's the pushback from that? Plantiffs are already suing and you may get some pushback from small lenders and on twitter but no one on Congress is going to bust  your balls. This is hands down the easiest solution and I dont see a reason to wait and duck out after that. If anything the majority of Congress and the Biden admin would praise the move.  Protecting the taxpayer has been another one of Mnuchins goals and I dont know how a letter agreement with an increased liquidation preference protects the taxpayer with no private capital nor does it follow the Treasury Plan. Reasoning it out makes no sense where we are today. Lastly if any of the reporting lately is to be believed no way Wall Street is meeting with Mnuchin and the DOJ is reviewing a letter agreement. That's a quick agreement between Treasury and FHFA and would Calabria even agree to that? He has been pushing for huge changes. I would argue that Calabria wouldnt even sign that agreement as it goes against his mandate.

     

     

    Now on the other hand if you were going to do something a little rash waiting and ducking out is the way to go. No 4 hour hearings in front of congress explaining to those retards why you did what you did and Calabria can scream at the top of his lungs that capital is what is needed. As a regulator he is independent and insulated till the SCOTUS decision.

     

    Just thinking out loud here.

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    Market cannot be that retarded.

     

    What do you think Mr. Market is telling us?

     

    Remember that we're dealing with a business partner that has a mood disorder, most likely bipolar disorder.

     

    "Mr. Market who is your partner in a private business... the poor fellow has incurable emotional problems... At other times he is depressed and can see nothing but trouble ahead for both the business and the world." -The Intelligent Investor

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    no Wall Street bank is going to give treasury free advice, and treasury is not hiring a FA at this point.  these Wall Street banks visiting Mnuchin were MS and JPM. it makes sense for Mnuchin to have a come to Jesus chat with them to see how sure is sure.

     

    "I am the way to a PSPA, the truth is NWS ends, and the life of Fannie/Freddie is rejuvenated with a capital raise."  -Mnuchin 5:32

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    SCOOP—Wall Street bankers have met w @USTreasury in recent weeks to discuss GSE reform including creation of a framework for eventual recap and release from conservatorship. The framework could be announced through an amended PSPA or regulation $FNMA $FMCC more @FoxBusiness 345

     

    The plan is sitting on Mnuchin's desk right now ready to be signed.

     

    More: Wall Street bankers tell @FoxBusiness that the framework is on the desk of @stevenmnuchin1 and it has input from @MarkCalabria. No immediate comment from @USTreasury or @FHFA. Unclear if and when it will be released cc @FannieMae

    @FreddieMac $FNMA $FMCC will discuss at 345

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    That latest Bloomberg Intelligence piece sure reads like they are expecting a significant (if not full) write-down of seniors.

     

    New by the Wall Street Journal (Mr. Ackerman) https://www.wsj.com/articles/fannie-freddie-privatization-decisions-likely-to-be-left-to-biden-administration-11608028200

     

    Seems like we are getting lots of inputs on both sides.

     

    See Bloomberg Intelligence's take attached...

     

    More just now from Bloomberg Intelligence...

     

    1. Treasury's Stake Is Key Variable, Not Conservatorship End

    Key Points:

    Lack of contemporaneous consent order doesn't affect timeline of ultimate exit from conservatorship, in our view.

    4th Amendment still "likely"; scope is now key question

    "You need to raise third-party capital and you need to retain capital. That's, to me, the issue."

    "the Trump administration is likely to allow Fannie and Freddie to retain more of their own earnings, Mr. Mnuchin suggested"

    Additional Reading:

    "Fannie, Freddie Privatization Decisions Likely to Be Left to Biden Administration"

    ​​Fannie Mae PSPA

    Treasury Secretary Mnuchin's Dec. 15 acknowledgement that third-party capital may be necessary for Fannie and Freddie to exit conservatorship suggests to us a fourth amendment in which Treasury substantially writes down its senior preferred stake, albeit with additional compensation either in the form of more common equity or an ongoing fee. Mnuchin's comments highlight the uncertainty remaining in a process driven almost entirely by a single decision maker. Both a full writedown of Treasury's senior preferred stock liquidation preference and a simple agreement to allow the companies to continue retaining capital offset by increases to the liquidation preference lie within the scope of Mnuchin's comments. We continue to believe the administration will achieve a substantial fourth amendment. (12/15/20)

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    New by the Wall Street Journal (Mr. Ackerman) https://www.wsj.com/articles/fannie-freddie-privatization-decisions-likely-to-be-left-to-biden-administration-11608028200

     

    Seems like we are getting lots of inputs on both sides.

     

    See Bloomberg Intelligence's take attached...

     

    More just now from Bloomberg Intelligence...

     

    1. Treasury's Stake Is Key Variable, Not Conservatorship End

    Key Points:

    Lack of contemporaneous consent order doesn't affect timeline of ultimate exit from conservatorship, in our view.

    4th Amendment still "likely"; scope is now key question

    "You need to raise third-party capital and you need to retain capital. That's, to me, the issue."

    "the Trump administration is likely to allow Fannie and Freddie to retain more of their own earnings, Mr. Mnuchin suggested"

    Additional Reading:

    "Fannie, Freddie Privatization Decisions Likely to Be Left to Biden Administration"

    ​​Fannie Mae PSPA

    Treasury Secretary Mnuchin's Dec. 15 acknowledgement that third-party capital may be necessary for Fannie and Freddie to exit conservatorship suggests to us a fourth amendment in which Treasury substantially writes down its senior preferred stake, albeit with additional compensation either in the form of more common equity or an ongoing fee. Mnuchin's comments highlight the uncertainty remaining in a process driven almost entirely by a single decision maker. Both a full writedown of Treasury's senior preferred stock liquidation preference and a simple agreement to allow the companies to continue retaining capital offset by increases to the liquidation preference lie within the scope of Mnuchin's comments. We continue to believe the administration will achieve a substantial fourth amendment. (12/15/20)

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    As for the WSJ article, it seems to me that the entire conclusion that Mnuchin won't act before inauguration is based on the quote "In a Wall Street Journal interview, Mnuchin said he’s not going to pursue any actions that put taxpayers at risk or limit consumers’ access to home loans."

     

    That conclusion cannot be logically drawn from the quoted premise. Amending the PSPAs to eliminate the NWS and seniors neither puts taxpayers at risk nor limits access to home loans. Taxpayers would actually be more protected because those two things are necessary to raise third-party capital, and as long as the backstop remains in place access to home loans shouldn't be any different than it is now.

     

    +1

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    "Mnuchin Says He’s ‘Likely’ to Back Changes to Fannie and Freddie"

    https://finance.yahoo.com/news/mnuchin-says-likely-back-changes-000854956.html

     

    But the quote on SCOTUS case: “If they rule in Treasury’s favor it simplifies things,” he said. “If they rule against, it’s still going to end up in litigation.”

     

    Very important excluded quote from Mnuchin from the original Bloomberg article that Victoria Guida added later in a Twitter thread...

    The only thing missing here is that on SCOTUS he said: “It’s not the only issue but obviously to raise third party capital that issue has to be resolved.”

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    Listening to the SCOTUS arguments. It's funny how we have overestimated settlement odds prior SCOTUS. If we look back in October we all agreed that the worst outcome was a Biden victory and no settlement pre-SCOTUS oral arguments. Yet pfds have appreciated due to capital rule and PSPA hopes. Investing is hard.

     

    Agreed.  That's why buying at such a discount to par is a beautiful thing... can be wrong and still have your share price increase.

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