Luke 532

Calabria moments ago. Sounds like consent decree is all but a given at this point... "There will be a level of capital where we think it sufficient to let them out of conservatorship but are not adequately capitalized. During that they will operate under a consent decree." - @FHFA @MarkCalabria #mortgagesummit

Good to watch regarding Pollock from September 14, 2019: https://www.c-span.org/video/?464204-3/washington-journal-alex-discusses-potential-fannie-mae-freddie-mac-overhaul And this from October 25, 2019: https://www.realclearmarkets.com/articles/2019/10/25/eliminating_fannie__freddies_competitive_advantages_by_administrative_action_103956.html 10% moment from early 2018: https://www.rstreet.org/2018/03/06/fannie-has-reached-the-10-moment-after-all/

"To be frank, Treasury's Memorandum of Points and Authorities in Opposition to Plaintiffs' Motion to Compel Third-Party Discovery leaves the Court with more questions than answers." "Treasury also has the resources to complete the requested production, and the Court will not entertain the preposterous notion that an agency as large as Treasury lacks the manpower to complete this request."

Can't add attachments for some reason but Lamberth had this to say, according to Peter A. Chapman... Judge Lamberth released his opinion this afternoon and entered an order saying Treasury must produce the documents Fairholm's requested (or produce a privilege log identifying the documents it won't produce and the reasons why).

Freddie Mac retains McKinsey & Company to consult on capital management https://business.financialpost.com/pmn/business-pmn/freddie-mac-retains-mckinsey-company-to-consult-on-capital-management

+1. On my list of bearish events I have a nuclear bomb being dropped on Fannie headquarters rated as more likely than receivership.

Video: https://video.foxbusiness.com/v/6100433182001/#sp=show-clips

Prepared Remarks of Dr. Mark A. Calabria at SFA Residential Mortgage Finance Symposium https://www.fhfa.gov/Media/PublicAffairs/Pages/Prepared-Remarks-of-Dr-Mark-A-Calabria-at-SFA-Residential-Mortgage-Finance-Symposium.aspx SCOOP: In an exclusive interview w @FoxBusiness @MarkCalabria says it doesnt matter who is president, he will be looking to release GSE's from government control in 2021; says opposition from a Dem like @ewarren would be ignored more at 130 w @TeamCavuto $FMCC $FNMA @FannieMae

Consider the source, of course, but found this interesting coming from IMF (a long time adversary to shareholders)... https://www.insidemortgagefinance.com/articles/216273-analysis-maybe-its-time-for-uncle-sam-to-settle-with-the-gse-shareholders?v=preview If the Treasury Department ultimately decides to place Fannie Mae and Freddie Mac into receivership as a way to re-charter the two mortgage giants and sell a new class of stock, existing shareholders would be wiped out. That’s a given. But that wouldn’t end the three dozen or so outstanding lawsuits filed against the Treasury Department over the net worth sweep and likely would spur additional lawsuits. And with that thought in mind, it’s believed the Treasury Department has an open line of communication with the shareholder plaintiffs and may move eventually to strike a universal (shareholder) legal settlement as a way to clear the decks for an eventual initial public offering of stock. Sounds like a long shot? Not necessarily. For the full analysis, see the new edition of Inside Mortgage Finance, now available online.

Very interesting Tim Howard comment attached...

Not sure who Rob Zimmer is or if this info is valid, but ACG responded so I wanted to post it here... Post World Series chatter, aka back to biz, albeit "we are tired": Dana Wade to be nom to FHA. Risk-based part of GSE cap rule to be re-propped. don't throw the baseball at the messenger

thanks!

Anybody know when we might hear whether or not SC takes the case?

Nice work, allnatural!

.@FHFA @MarkCalabria @ #MBAAnnual19: "FHFA is also working on a capital rule that balances the imperative of protecting taxpayers, the mission of supporting liquidity, and the economic incentives of raising private capital." $FNMA $FMCC

Calabria today at MBA. Doesn't sound like they might revise the PSPA, sounds like they definitely will. Not that this is a surprise to anybody here, but nice to hear him say it to the MBA crowd. "I will continue to work with Secretary Mnuchin on further revisions to the PSPAs necessary to end the conservatorships."

FHFA Releases New Strategic Plan and Scorecard for Fannie Mae and Freddie Mac Plan: https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/2019-Strategic-Plan.pdf Scorecard: https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/2020-Scorecard-10282019.pdf

Interesting article on how using the threat of receivership might be to get a settlement done. https://www.housingwire.com/articles/did-mnuchin-and-calabria-cite-fannie-mae-freddie-mac-receivership-as-a-threat/ “Receivership would be the threat to get all of the parties to cut a deal.”

I believe Calabria will go with a 4%+ level. I hope he doesn't, but I think he will for the two reasons you mentioned above (level the playing field and bank-like capital levels).

Luke is this in an article? https://www.wsj.com/articles/the-white-house-wants-to-privatize-fannie-and-freddie-it-needs-wall-streets-help-11571845492

https://www.wsj.com/articles/the-white-house-wants-to-privatize-fannie-and-freddie-it-needs-wall-streets-help-11571845492 Attached...

People are likely going to freak out over the "wipe out shareholders" headlines, but if one listens to the context of this exchange it seems like nothing. "in 2008..." "if we have to..." Starts around 4-minute mark: https://www.c-span.org/video/?c4824072/affordable-housing-hearing-10222019-foster-calabria-exchange

Mnuchin calling BS on the title of the hearing (attached)...

Hearing: The End of Affordable Housing? A Review of the Trump Administration’s Plans to Change Housing Finance in America Tuesday 10:00am (Eastern), live link:

What We’re Hearing: Talk of a GSE Legal Settlement? / Using Consent Decrees / Goldman’s New Prime Non-Agency MBS / Fannie Exec Departs for Industry Vendor https://www.insidemortgagefinance.com/articles/216144-what-were-hearing-talk-of-a-gse-legal-settlement-using-consent-decrees-goldmans-new-prime-non-agency-mbs-fannie-exec-departs-for-industry-vendor?v=preview The Treasury Department is weighing a legal settlement with the junior shareholders in Fannie Mae and Freddie Mac stock. At least that was one rumor making the rounds this week in both New York and Washington. One veteran MBS source said talks between these investors (who sued the government over the quarterly profit sweep) have taken on a new urgency ever since the Trump White House released its housing-finance reform blueprint in early September. For more on the story, see Inside MBS & ABS, now available online… By the way, we ran the settlement rumor by a very large GSE (preferred) shareholder who did not respond to our inquiry…