Luke 532

Seems to me like the timeline is getting extended (discouraging), but the likelihood of a favorable outcome is increasing (encouraging).

+1

Probably because markets are inefficient. Take advantage if you don't already have as much as you want.

https://twitter.com/ks_lyons/status/954055477352108033 Lylac Realty, LLC @ks_lyons Craig Phillips "no allergic reaction" to anything Watt suggested, "agree substantially" with his view.

Agree, it's possible. Just don't know how probable at this point.

We now have supportive quotes from David Stevens and Mark Zandi. The former wants FnF neutered and the latter wants them dead. Each are assuredly biased, but they both like Watt's proposal, leading me to believe they see FnF as being severely weakened by it. It's getting increasingly difficult to kill the thesis of the preferred shares.

I know this is from early 2017 but I received an e-mail alert from Congress.gov that read "H.R.491 - Let the GSEs Pay Us Back Act of 2017 (115th Congress) has changes in summaries."

Let the GSEs Pay Us Back Act of 2017 Sponsor: Rep. Capuano, Michael E. [D-MA-7] (Introduced 01/12/2017) Under an existing Preferred Stock Purchase Agreement, net income from the GSEs is directed to Treasury as a dividend but is not counted toward repayment of the GSEs' debt. The bill requires this agreement to be modifie d such that: (1) the amounts previously borrowed by the GSEs from Treasury shall be treated as a loan, in accordance with specified terms; and (2) payments made under the agreement by the GSEs to Treasury, including payments made prior to the agreement's modification, shall be treated as payments of principal and interest under such loan. https://www.congress.gov/bill/115th-congress/house-bill/491?loclr=cga-bill

Calabria earlier today... With regard to the administration’s position on housing finance and Fannie Mae and Freddie Mac, Calabria insisted he was not announcing anything for the time being, but, “We do want to see our state-owned enterprises move towards liberalization.” https://www.marketwatch.com/amp/story/guid/3F8481DA-FBCD-11E7-8AB6-ABAEF652B326?__twitter_impression=true

FHFA document attached... FHFA_Perspectives_on_Housing_Finance_Reform.pdf

Interesting timing of Watt's comments given the speech by Craig Phillips tomorrow. Not expecting much, but wouldn't be surprised if more details emerge.

Doh! My mistake... corrected the original post. Thank you!

https://www.bloomberg.com/news/articles/2018-01-17/fannie-freddie-regulator-calls-for-utility-mortgage-guarantors In a proposal obtained by Bloomberg News, Federal Housing Finance Agency Director Mel Watt wrote that he and agency staff believe the mortgage market should be supported by shareholder-owned utilities with regulated rates of return and an explicit government guarantee of mortgage bonds.

Thursday, January 18, 2018 12:00 PM - 1:30 PM EST Craig Phillips will discuss the state of financial regulation and housing reform in the Trump Administration. He will give the Administration’s views on the best path forward. http://www.whfdc.org/index.php?option=com_jevents&task=icalrepeat.detail&evid=42&Itemid=115&year=2018&month=01&day=18&title=financial-regulation-and-housing-reform-in-the-trump-administration-a-public-policy-luncheon-with-craig-phillips-counselor-to-the-secretary-us-department-of-the-treasury&uid=ac32398b1890bc28d64a3c2c708b76e8

I've found it useful throughout my career to spend zero mental energy on the stuff that doesn't matter. This falls in that category. Emily, as a college student I know you're early in your investing career, so I would like to suggest you focus your energies on what is important and nothing more. Ironically, somebody on a message board posting something that doesn't matter to me shouldn't result in me spending time to respond to it, but in this case my response might be beneficial to you.

For those that may have been concerned... from Peter A. Chapman: Judge Sweeney's order also denies without prejudice the government's supplemental motion to dismiss (Doc. 161) that attempted to segregate shareholders based on the dates they acquired their shares. Order attached 13-465-0396.pdf

+1

Former FDIC Chairman likes the Moelis plan... "There's a study out by the Moelis Group. It has very good suggestions, and a lot of people are working hard on it."

Colleague John Roberts rpts Trump plans to sign the stopgap government funding bill and the tax reform package tomorrow. PAYGO waivers were in the CR.

Moelis page 29... Q4 2017: Announce future, not immediate, exit from conservatorship Year 2020: GSEs emerge as rebuilt organizations and taxpayers profitably exit their only remaining financial crisis federal financial assistance program. +1 This is not going to be an immediate windfall when resolved. Will take long term investment to reap rewards, particularly if pref are converted to common. Perhaps, but page 29 of Moelis also states "agree to terms to equitize remaining SPS balance, and partially equitize JPS" (JPS being Junior Preferred Shares) around the same time an announcement that the conservatorship will be ended in the future. If they equitize them at par or close to it (as recent articles suggest) and then convert to common then it could be an immediate windfall for preferred shareholders. It includes footnote 3: Conversion price and terms can be pre-established (consistent with the approach used by Treasury in AIG), or can be set at the IPO price.

Moelis page 29... Q4 2017: Announce future, not immediate, exit from conservatorship Year 2020: GSEs emerge as rebuilt organizations and taxpayers profitably exit their only remaining financial crisis federal financial assistance program. Safety-and-Soundness-Blueprint.pdf

What Corker got for his "yes" vote... http://www.ibtimes.com/political-capital/donald-trump-gop-leaders-could-be-enriched-last-minute-tax-break-inserted-final Republican congressional leaders and real estate moguls could be personally enriched by a real-estate-related provision GOP lawmakers slipped into the final tax bill released Friday evening, according to experts interviewed by International Business Times. Sen. Bob Corker, who was considered a potential “no” vote on the bill, abruptly switched his position upon the release of the final legislation. Federal records reviewed by IBT show that Corker has millions of dollars of ownership stakes in real-estate related LLCs that could also benefit.

am i correct in saying that the bull case for the prefs now is that because of this tax bill the DTAs are worth less and thus they will have to take a write down and thus this will force trump/mnuchin to act to "set them free"? There is a ton more reason behind the bull case for prefs, but the direct and immediate impact of tax reform is that it forces Mnuchin/Watt to address the capital buffer issue with actions and not merely words (paraphrased... Watt: "dangerous to have no capital buffer." Mnuchin: "No more bailouts. GSE's won't be killed, aren't going anywhere."). Don't mistake that with being the entirety of the bull case for prefs.

Tax bill: http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-%20466.pdf

Thank you for posting that again. Much appreciated.