Eye4Valu

My take for a while has been that our best shot legally is in the Court of Claims. It still makes sense to me that Mnuchin will eventually implement reasonable administrative reform that is positive for all stakeholders. If not, Sweeney is not a bad Plan B.

All except for Corker and Hensarling. Just kidding!

My guess would be because Mnuchin has a different plan in mind than the congressman, otherwise you would hear more support for their congressional proposals. Mnuchin does have more experience and knowledge in this department. Will be interesting to see what his thoughts are when he finally reveals them.

As usual, Tim Howard does the best job summing it up: "There are two issues here. The first is that until Fannie and Freddie are removed from conservatorship (or liquidated), or until the net worth sweep is declared illegal or cancelled, the budget document will show continued receipts from the sweep for the full ten years of the projection. There is nothing of any policy significance here; it’s just budgeting convention. As for the ten basis point increase in guaranty fees, unless there is some discussion about this elsewhere in the document (which I haven’t read, and don’t intend to), I would think that given the large amounts of red ink produced over the forecast horizon by the tax reform package and recent spending agreement, the budgeteers are looking for any credible assumptions they can make that will produce more revenue; every $25.7 billion they can put into their projections makes the projected deficit smaller."

What did Nancy say on the first page about the mortgage bill?

Mnuchin knows a lot about Fannie and Freddie, and the congressman simply don't know as much beyond the talking points and false narratives. The main thing is that Fannie and Freddie survive when "released" from "conservatorship." Like Tim Howard points out on his blog, you can talk a big game when you're a congressman proposing a bill that leaves all the heavy lifting to others at some later date. In actuality, their proposal would be very difficult and costly to implement. Mnuchin realizes that Fannie and Freddie provide an important countercyclical role, and are the main reason the 30 yr. mortgage is available. He knows they shouldn't go away. If the dems gain more seats in Nov., which looks likely at the present time, GSE reform becomes even more difficult for congress to resolve. You likely need an administrative solution here. Mnuchin is prepared to provide one, which keeps Fannie and Freddie, but it is a matter of timing and going through the motions with congress. I think Tim Howard also does a good job of evaluating the likelihood of a new FHFA director that is right leaning taking unilateral action to enact GSE reform. He doesn't view it as likely without Mnuchin's support. I conclude after thinking it through that Fannie and Freddie likely survive, but the timing is unpredictable.

Mnuchin is on the record stating that F&F should be preserved and removed from government control. He's not in it to fund Obamacare or slush fund, and he's not going to place them in receivership. When CW2.0 fails, which is likely soon, Mnuchin/Watt have the green light for administrative reform together. Mnuchin is not going to wait until November to look down at his cards or stare the other players down. He already knows what cards he has, and knows the other players have zilch. I expect administrative reform to take place this year based on utility model. That is Plan A. SCOTUS and Fed. Ct. of Claims are Plans B and C, respectively. CWdon't have a plan. Draft 29 or whatever it was is nonsensical.

low odds of the warrants included in the funding. quite low. it would be shocking, actually. On another front, from the latest AB article... . couple of weeks... from the horse's mouth. thanks. sounds like he's trying to get some momentum. if they get traction, we'll see what happens. if not, decent chance that mnuchin would wait to see what congress looks like for 2019 before launching admin action. You may very well be right, but he did say 2018 was the year to resolve the GSEs. Of course, he previously said second half of 2017.

No joke, some of these pols can't step down fast enough!

Perhaps the market realizes that the bill is unlikely to pass in its current form, and Corker sounds amenable to reworking it to something that will pass and benefit the jrs.

Wow, I would say that is a fair statement from Corker, and one I wasn't expecting.

We all know that for behavioral reasons investors pile in at the top, and ditch you at the bottom. Bruce is clearly in the dog house: http://news.morningstar.com/articlenet/article.aspx?id=845450 Question is, does that presage more pain, or outperformance?

I think CNBC did a good job with these graphics and descriptions of WEB. https://www.cnbc.com/2018/01/26/these-3-people-shaped-warren-buffetts-investing-style.html

It's only a question of the "right number!" https://www.cnbc.com/video/2018/01/10/warren-buffett-wed-buy-ge-at-the-right-number.html

Is he going to mention the shoddy mortgages he sold them while at MS?

So it appears administrative reform is still most probable? I would think Mnuchin would craft something more favorable than Corker/Warner. Scotus is still a big wild card out there.

Merry Christmas and Happy Holidays COBF!

$100B not being important to Trump? That will be a cold day in hell!

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. Agree. I guess I just mean it will take time to reap even larger rewards with common and dividends post conversion, if that is what happens. As I anticipate Fannie/Freddie will still have a large moat even with new competition, they seem like good long term holdings to reinvest dividends in.

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. Reinvesting the dividend should amplify those returns over time if that is indeed the outcome. This will be a life long investment for me if it works out.

"The Ginnie model is bound to meet resistance, however. In an editorial published on Wednesday, Dec. 13, Mortgage Bankers Association (MBA) President David Stevens argued against the Ginnie model. MBA favors a system that would convert Fannie and Freddie into private utilities, and allow for other chartered GSE-like entities to buy and securitize mortgages. The MBA plan, however, has the same big-picture goals as does the DeMarco-Bright plan." -Scotsman Guide So maybe David Stevens isn't the enemy?

it is highly unlikely -- even in a positive scenario -- that jr preferred holders receive par. if pressed, the moelis authors would likely admit the same -- they started at par for their request but know that the Congressmen will want some haircut in any potential deal. somewhere around two-thirds of par seems reasonable. I wouldn't dismiss the crapo news today. there are a lot of forces coming together that suggest an aggressive attempt to make a deal in congress during 1h 2018 before things shut down for the midterms. for those who think a strong attempt won't be made, that view suggests mnuchin is lying when he's said all along in 2017 that he wants to work with a bipartisan congress on housing reform. I think you're right and an attempt will and must be made, but Cherzeca is right on regarding the likelihood of passage, unless something very reasonable is worked out. One of the main reasons to be bullish here is that every single party is aligned on the solution, there is really no other way to resolve the situation without it working out for everyone. You need to preserve the 30 yr. and get them out of government control, but you need to protect the taxpayer, so you need private first loss capital. Treasury makes a big gain exercising the warrants and selling the shares back to the public. Shareholders recoup and can buy more. Win-Win. We share the same incentives for recap/release, reform/overhaul, or whatever you want to call it. The old us versus them mentality no longer applies IMO.

Mr. Market doesn't seem to think it's a big deal. Prefs are up on the news.

Dismissal is a nonevent. That case was always a long shot. We'll know how this ends in 2018. Mnuchin already stated that he won't get rid of Fannie or Freddie. The Treasury is not likely to pass up on the 100 billion. Even RNC is advocating for this. You need private capital as a buffer, so a shareholder friendly solution is most likely. We'll know by end of January if SCOTUS grants cert. SCOTUS would hear the case by end of summer if so. Last but not least is U.S. Court of Federal Claims, where jurisdiction for a monetary claim against the U.S. is proper. One or more of the foregoing avenues are going to decide this once and for all. I'm still bullish and don't care about the intermediate price action.

Why does this thread attract every troll west of the Mississippi?