Luke 532

Christian, thank you for your input. Do you think this leads to a settlement?

I've talked with him over e-mail... he's reading it now.

Carney's take... https://twitter.com/carney/status/1170104322945892353 Long-awaited $FNMA 10th Circuit en banc decision just dropped. Quick take-away: 1) Sends question of 3rd Amendment back to trial court. 2) Says FHFA director is unconstitutional but relief is prospective only; director now removable at will. Shareholders survived dismissal. --- I don't have a link to the opinions. Sorry. I'm sure one will be up in the usual places. There are tons of battling opinions in this thing on the constitutional question. More general agreement on the claim that Net Worth Sweep question is "plausible"--meaning, goes to trial. --- This creates a pretty severe split with several other circuits which upheld motions to dismiss. So the next step here is, presumably, the Supreme Court.

BLOOMBERG: *FANNIE-FREDDIE SHAREHOLDERS SCORE A WIN IN APPEALS COURT RULING PLAINTIFFS WIN COLLINS ON APA CLAIM, SURVIVE MOTION TO DISMISS! REMANDED FOR FURTHER PROCEEDINGS! JUDGE WILLET WROTE THE MAJORITY OPINION. NWS VIOLATED HERA. FINALLY! $FNMA

Apparently en banc is out according to Twitter. Away from computer so don't have the doc.

"Successful traders generate income. Successful investors generate wealth." -me Is George Soros a successful trader or investor? How about David Tepper? OK, you win. I still think you're missing ACG's point.

"Successful traders generate income. Successful investors generate wealth." -me

I agree. We recommend a closer reading of the government #GSE plan. Stocks should be trading up today on the news #endthesweep

Bingo! Well said.

https://www.bloomberg.com/news/articles/2019-09-06/fannie-freddie-slump-as-trump-plan-disappoints-wall-street Dick Bove: Investors in the preferred issues of both Fannie Mae and Freddie Mac are about to make a great deal of money.

As frustrating as the media can be, I always remind myself that fear and worry created by headlines is largely responsible for where I am today. It helps a ton on entry price and is irrelevant once you're already invested if you have the right mindset and temperament.

DRValue, very nice synopsis. Thank you.

Maybe I'm a Pollyanna, but I am overall pleased with the plan. Many of the stuff mentioned we already suspected/knew but it wasn't in an official document. Now it is, that is important. The most important near-term action I noticed is that it is very likely the capital buffer is increased (reduce NWS) in September. So the full sweeps may already be a thing of the past. This happens before the Sr. Preferred Agreement is amended. Calabria has said he wants to amend it only once. He previously said negotiations for adjustments would be in September/October. The plan released yesterday said they want to increase the capital buffer immediately to start the recap process while they figure out the Sr. Preferred Agreement amendment. Of course we'll get crazy price action as short-timers exit, and commons may get hit as heavy dilution is likely. But I don't concern myself with price action so it was probably a waste to even spend a few seconds to type these last two sentences.

P.4 The existing Government support of each GSE under its Senior Preferred Stock Purchase Agreement (“PSPA”) with Treasury should be replaced with an explicit, paid-for guarantee backed by the full faith and credit of the Federal Government that is limited to the timely payment of principal and interest on qualifying MBS. P.5 To ensure stability in the housing finance system pending comprehensive housing finance reform legislation, Treasury expects that it will be necessary to maintain limited and tailored Government support for the GSEs by leaving the PSPA commitment in place after the conservatorships. The Federal Government should be compensated for its continued support through the periodic commitment fee, as originally established by the PSPAs. Each GSE should be recapitalized with significant first-loss private capital so that Treasury’s ongoing commitment under each PSPA could be drawn upon only in exigent circumstances. To facilitate recapitalization of the GSEs, Treasury and FHFA should consider adjusting the variable dividend (also known as the “net worth sweep”) required by the terms of Treasury’s senior preferred shares, as well as the other approaches set forth in this plan. P.18 Pending legislation, the Federal Government should be compensated for the continued support of the GSEs through the periodic commitment fee, as originally established by the PSPAs. The amount of the periodic commitment fee should be set and adjusted from time to time considering, among other things, the remaining PSPA commitment and the equity financing, CRT, and other loss-absorbing capacity of the GSE. In connection with setting the periodic commitment fee, Treasury and FHFA should also consider adjusting the variable dividend required by Treasury’s senior preferred shares.

im reading it now--and its embargoed till 5 so i cant provide details--but unless im missing something this aint the greatest plan for holders of the common in $FNMA

Sources: @WhiteHouse pushing release @FannieMae @FreddieMac reform plan this week. details remain in flux could delay formal release. expected to explain why the govt should reduce its role in housing mkt. unclear how far plan will go in privatizing GSEs more now @FoxBusiness

https://twitter.com/IanMcKendry13/status/1169628731620638720 FDIC's McWilliams says the FDIC has been involved in GSE reform discussions with FHFA, Treasury and FSOC. "We will participate... making sure that our institutions are positioned the way it makes sense for them from the safety and soundness perspective"

Dick Bove update yesterday... Bove090419-GSE-Update-1.pdf

Today from Don Layton The 2018 GSE Stress Test Results: A Major Policy Success and Its Implications for the Proposed Capital Rule https://www.jchs.harvard.edu/blog/the-2018-gse-stress-test-results-a-major-policy-success-and-its-implications-for-the-proposed-capital-rule/

We're going to know a lot more about how this saga plays out in about 24 hours... #GSE plan to be released after market close tomorrow. Journalists to be briefed and embargoed until then.

Plan coming tomorrow... @SalehaMohsin Treasury talked w/ restructuring firm Houlihan Lokey about hiring it to advise on Fannie, Freddie, per sources. Treasury spokesman says there are no current discussions. Treasury's GSE report to be released tomorrow, sources say

Housing Finance Reform: Next Steps Tuesday Sept 10th https://www.banking.senate.gov/hearings/housing-finance-reform-next-steps Mnuchin, Calabria, Carson

https://www.realvision.com/tv/shows/interviews/videos/when-geopolitics-moves-markets 13:38 ED HARRISON: When you were talking about that, I noticed you were talking about some of the inside, the beltway DC talk, and off camera, we were talking about this. You had a story where you were talking to someone in DC, which is a ghost town, I live in DC, but that he was working late at night. Give me a little sense of how that all plays out. 14:00 DAVID METZNER: It's interesting, because there's so much going on, whether on trade, mortgage finance or form with the GSEs that if I'm invited to a reception, normally, they'll really want to go home. But every time I'm out, I learned something. I'll give you an interesting GSE story. Literally I had an event, again at the Trump Hotel, nonprofit, and a senior member of the administration's economic team. I said good work on the presidential memo. That was roughly end of March. 14:32 This gentleman grabbed my arm and said, David, don't you know that POTUS wants to privatize this? I'm like, he thought he didn't say anything important to me. I was like, shocked, because privatization of Fannie and Freddie means two things. It means you have to build capital through retained earnings and you have to settle the litigation. That's what the President wants. That means all his advisors that were rumored to be fighting have to do what the President wants, and they will do it. 15:03 ED HARRISON: That's something that you had told me earlier is, is that really, this is a thing if the President wants it, he's going to get it-- forget about what all these other guys are saying? 15:13 DAVID METZNER: Absolutely. There's no dissent in the White House among these advisors. They know they worked for the President. I've known Mick Mulvaney, who's the chief of staff. He's an interesting person, because he's chief of staff acting, he's the Prime Minister of the United States, he was supposed to run the government. As you know, a budget director, he's the CFO of the United States. He could be the most powerful person in the government since Kissinger was both Secretary of State and as the advisor.

UPDATE on the @WhiteHouse/@USTreasury plan to reform @FannieMae @FreddieMac — Administration pushing to release it this week but several issues are said to remain in flux that could delay. Will advise as I get more info $FNMA $FMCC

Plan will outline a path to privatization. What can the executive branch do and where do they need Congress. Building capital through retention of profits will listed as consistent with Exec Power and HERA. In other words, the NWS will be ending soon. For what it's worth, Gasparino agrees that this is what is happening. Based on what I have reported on the @USTreasury GSE plan this sounds accurate. BUT it also displays a kick-the-can approach so there probably won’t be a full reform in an election year