Luke 532

Joe Light article this morning... https://www.bloomberg.com/news/articles/2017-07-28/new-documents-give-hope-to-fannie-shareholders-seeking-redress

From Peter Chapman... A recording of the oral arguments presented to the Sixth Circuit today is now available at https://goo.gl/ZxmZxr at no charge.

Recording... July 26, 2017 Investors Unite Teleconference with Tim Pagliara and Cooper & Kirk Partner, Pete Patterson http://investorsunite.org/resources/ Questions/comments from Gary Hindes, Joe Light, etc.

Rosner and Bove were both on CNBC again just a few minutes ago. They did an amazing job and the host let them speak freely for a few minutes.

Yesterday... "Largest financial crime in the history of the United States" Both Dick Bove and Joshua Rosner said it in this interview, after documents were released last night proving the government lied, committed fraud, perjured themselves, etc. http://www.cnbc.com/video/2017/07/24/freddie-mac-going-anti-home-owner-by-investing-in-rental-property-rafferty-capitals-dick-bove.html Today... joshua rosner‏ @JoshRosner 28m28 minutes ago Recognizing there is more to discuss on GSE docs, @CNBCClosingBell was gracious enough to ask me to come back this afternoon to discuss.

https://howardonmortgagefinance.com/2017/06/26/the-right-choice-on-capital/comment-page-1/#comment-3927 jtimothyhoward July 24, 2017 at 9:09 am "There are a number of newly unsealed documents that make it unmistakably clear that Treasury entered into the net worth sweep because it knew Fannie and Freddie were about to begin reporting outsized profits, and believed that if they were allowed to retain the resulting capital it would weaken the case for winding them down and replacing them, which was Treasury’s objective. The new documents also reveal that in August 2008, BEFORE Fannie and Freddie were put into conservatorship, Blackrock wrote to FHFA saying that Freddie’s “long-term solvency does not appear to be endangered–we do not expect Freddie Mac to breach critical capital levels even in stress case.” This statement by a credible and knowledgeable third party (which had been a consultant to Freddie for years) calls into question the legitimacy and legality of FHFA’s decision to set up a reserve for Freddie and Fannie’s deferred tax assets in the third quarter of 2008 on the grounds that they would not be sufficiently profitable in the future, and it also explains why FHFA was so aggressive in boosting the companies’ loss reserves based on its own estimates of future losses, which turned out to be wildly inflated. And of course if Treasury and FHFA knew that Fannie and Freddie’s post-conservatorship losses were artificial, they also knew those non-cash losses would reverse at some point. Treasury’s public story about both the conservatorship and the net worth sweep is now publicly crumbling."

Rosner is a must follow on Twitter.

Gretchen Morgenson article out just now... U.S. Foresaw Better Return in Seizing Fannie and Freddie Profits https://www.nytimes.com/2017/07/23/business/fannie-freddie-treasury-lawsuit.html?smid=tw-share

That was my takeaway as well.

Proposed budget = privatized GSE's https://www.thestreet.com/story/14233125/1/fannie-mae-and-freddie-mac-would-be-privatized-under-proposed-house-budget.html

It is. It's folly to use a stock's price as a proxy for value.

what's the point in reissuing? rub more salt in the wound they opened? adam spittler‏ @aspit 1m1 minute ago Perry court re-issue removes language of damage calculation based on date of purchase, now damages fully transfer from Par. $fnma $fmcc

Perry vs. Mnuchin, decided February 21st, reissued today... https://www.cadc.uscourts.gov/internet/opinions.nsf/82D64389A0983CF585258160006833BC/$file/14-5243-1684473.pdf

This is a good point and one that I think those bearish on Fannie/Freddie due to a bad law being passed are overlooking/discounting. If any legislation that makes its way through Congress wouldn't protect tax payers and prevent future bailouts, in the eyes of Mnuchin, then he'd likely put a stop to it before it became law.

NAR Asks FHFA to Allow GSEs to Build Capital; Treasury and Panels Get CC’d https://www.insidemortgagefinance.com/imfnews/1_1137/daily/NAR-Asks-FHFA-to-Allow-GSEs-to-Build-Capital-1000041868-1.html Short Takes: Uncle Sam will be $5B Richer on Friday (GSE Money) /Zilch for the Others / Break Up Fannie and Freddie? / Something to Ponder / A Promotion at Guild Mortgage https://www.insidemortgagefinance.com/imfnews/1_1137/daily/corker-and-warner-want-to-break-up-the-gses-1000041873-1.html?ET=imfpubs:e9489:73599a:&st=email&s=imfnews

Corker and Warner... https://www.bloomberg.com/news/articles/2017-06-27/senators-said-to-consider-breaking-fannie-freddie-into-pieces-j4fa7uex

I believe it's pretty clear that Mnuchin will take action if Congress fails to do so. I don't think there's anything to wonder about regarding that. If you want to wonder, I would suggest spending that energy on what action Mnuchin will take and how it impacts shareholders. It's semantics. You shouldn't care and shouldn't spend a second sending a message.

This is precisely what you should want to happen. The inability of Congress to agree on a solution means Mnuchin will be "forced" to act. And if you believe Mnuchin is shareholder friendly, as I do, then I don't see a problem. And my answer is "I don't know" if you have a follow-up question on the who, what, when, where, why, and/or how.

Policymakers forget duty to protect taxpayers from financial failures by Josh Rosner http://thehill.com/blogs/pundits-blog/finance/339179-policymakers-forget-duty-to-protect-taxpayers-from-financial

See p 32 of hindes Jacobs reply brief: $4.9b for Fnma and $1.1b for fmcc "If such an approach were taken, Treasury’s liquidation preference would be reduced to $4.9 billion with respect to Fannie and $1.1 billion with respect to Freddie following the dividend payments made as a result of the Companies’ first quarter 2017 financial results." The dividend payments made as a result of Q1 would be the upcoming payment on June 30, 2017, correct? If so, then $6.0 billion still remains after the June payment.

Today's piece by Richard Epstein on Perry vs. Mnuchin: https://www.forbes.com/sites/richardepstein/2017/06/15/mnuchin-v-perrys-disastrous-damage-rules/#10b09b642d2e

Where did you see that? I think it's the comment below that is confusing at first glance and make it sound like Berkowitz sold some. But it is a comment from the author, not a quote from Berkowitz. The author is concerned with the position size, not Berkowitz. Although I believe Fannie and Freddie investors will be rewarded for their patience in the end, my concern was the size of the Fannie and Freddie position.

The stage is yours, Mr. Mnuchin... https://www.insidemortgagefinance.com/imfnews/1_1126/daily/No-Mortgage-and-GSE-Reform-This-Year-1000041676-1.html?ET=imfpubs:e9415:73599a:&st=email&s=imfnews June 13, 2017 No Mortgage/GSE Reform This Year, Maybe No Bill Either By Paul Muolo, pmuolo@imfpubs.com The mortgage industry has come to the conclusion that meaningful housing-finance reform is so elusive that any legislation being introduced is a long shot, even in the Senate Banking, Housing and Urban Affairs Committee, which seems to be more involved in the topic than any other panel on Capitol Hill. Over the past month, rumors have circulated that some senators on the committee, including Bob Corker, R-TN, have been discussing with fellow members what an outline for housing-finance reform might look like, but with nothing committed to paper. A spokeswoman for the committee told Inside Mortgage Finance that Chairman Mike Crapo, R-ID, “intends to hold more [government-sponsored enterprise] hearings before the fall,” but added there are “no other developments from us bill-wise.” At a recent housing-finance conference hosted by Bank of America Merrill Lynch, market participants discussed the conflicting views on the reasons behind slow movement of GSE reform. “Nonetheless, there was a consensus view that reform will not happen anytime soon,” BAML said in a summary of the meeting. For more details, see Inside Mortgage Finance, now available online.

I read this message board. I have running e-mail conversations with a handful of people. I read the proposals that are put out, but realize they are just that... proposals. And I sit and wait. It's important to realize as a young investor that much of investing is sitting and waiting and doing nothing. You do not need to constantly scrutinize an investment and read-up on it daily. Write down your thesis and read the stuff that impacts your thesis (whether positively or negatively), not stuff that doesn't. Sure, money being returned would be ideal and probably the right/moral thing to do. With that said, I do my best to separate ideal situations from probable situations.

Yes, that's correct. Books about investing written by millionaires and billionaires. It beats reading message board posts written by people that are not millionaires and billionaires.