SnarkyPuppy

Nobody else is skeptical of the corker plan hinted at by ackman? Implies that corker implements legislation which benefits trump (aligns to what Mnuchin wants, ergo what trump wants) after having a public battle against trump. Makes no sense. Unless- - corker cares more about $ and they've developed a plan which is win/win for bank lobbyists and shareholders - or, ackman doesn't have insight into the plan, but simply knows that Mnuchin is supporting corker and is implying that Mnuchin is shareholder friendly

Actually amazing that you are invested in this without knowing the difference between FHFA and FHA. Pretty sure Emily is a troll account.

I've always wondered- How is ackman discussing what is essentially private conversations about the future material events not considered dissemination of mnpi? Asssumung berkowitz, ackman, paulson can't sell even if they wanted to, if they have been made aware of any good OR bad news regarding the administration/legislations future intentions. Any thoughts on this?

Chapter 8 of my favorite investment book. :-) Mine too. But this isn't exactly off the beaten path and the price has skyrocketed multiple times on news. I was more curious if there was anything negative that was said by Phillips today that I haven't seen

So Mnuchin literally says he won't get rid of the GSEs. Ackman states that they've had private conversations w Corker/etc and an IPO (recap) is coming. And the stock price? Down. ?

How do you realistically keep the GSEs and ensure they are adequately capitalized? (Two things explicitly said by Mnuchin at this point) I hear ya, I'm just trying to spend my energy thinking of what strategy the gov't can conjure up that would leave shareholders high and dry. With that said, I think prefs end up doing very well. Couldn't agree more. Majority of posts here have been focused on upside.

How do you realistically keep the GSEs and ensure they are adequately capitalized? (Two things explicitly said by Mnuchin at this point)

Awesome

From 2014: “It’s a stretch,” said Lockhart, the former chief of the Federal Housing Finance Agency who is now vice chairman at WL Ross. “The stock and the preferred (stock) is worthless and should be worthless,” he told Reuters. “We have to figure out how to get the private market back into the mortgage market,” said Lockhart. “It’s going to be a question of how to do that without hurting the housing market. Obviously, a lot of that will be up to Congress.”

I keep feeling the need to point out that shareholders won in part and lost in part, which goes against the statement that SCOTUS represents shareholders' last hope. (Also, Jacob & Hindes, etc. that cherzeca pointed out.) Whether the claim for breach of contract will end up being large or small can be debated, but it's mildly important to keep the facts straight here. Also, the case that Fairholme appealed to SCOTUS was in the U.S. Court of Appeals for the D.C. Circuit dealing with the Administrative Procedures Act. It is wholly separate from the case that is being tried before Judge Sweeney's court in the U.S. Court of Federal Claims under a Takings Claim, so it doesn't really matter that discovery is ongoing in the U.S. Court of Federal Claims while Berkowitz et. al. petition for cert based on the APA claims. Agreed, regarding court cases how could someone completely forget Sweeneys and Hindes etc. I think the issue Watt/Mnuchin have to be weary of is any final solution that does not satisfy/quell lawsuits. What kind of a bind is the gov/mnuchin/FHFA in if shareholders win a case in any court and the GSEs have been reformed/restructured/received etc in a way negative to shareholders. One would think a final solution would include an agreement with shareholders and the big players would could be satisfied are well known. My contention with this argument is that the Trump administration will likely be on its way out / gone by the time any contingency payments need to be made (per the event you just described). We've seen how incredibly slow these cases move when the government focuses on its ability to delay.

I switched to use Bloomberg site. It's not too hard if you know a little VBA programming. I don't... do you have any resources / tutorials on this? I've built most of my personal account tracking using Yahoo's fubctionality...

Explain how Watt can call receivership when there are still 258 billion left in taxpayers backing. You meant forced R instead of mandatory? You read HERA. Again. R requires very specific and narrow events to be triggered. It is not a free willing tool to be used at will, but of last resort. Can you respond to the question posed about incentive alignment? i.e. Making junior prefs whole is immaterial in the grand scheme of next steps, but wiping them out effectively puts a dagger through trump/mnuchin close supporters, friends, and funding for the next election cycle

Does anybody else use the excel add-in "RCHGetYahooQuotes" to pull quotes? Has worked flawlessly for a long time and just suddenly stopped this week - a quick google/twitter search doesn't highlight anything.

Thesis (mine at least) isn't that it will be used as a currency. Bitcoin bull thesis is store of value / flight to safety (eg gold replacement). This is more of a scarce deflationary commodity than a currency. Other coins may have value (most won't) through use cases (e.g. You pay solar coin to use your neighbors excess solar capacity). I suppose this is more of a currency depending on how you look at it. It probably will be taxed if either thesis plays out. And if either thesis plays out, you'll have done well enough post-tax that not investing because of tax reasons would look silly.

Interesting. This continues to be a mindf*. Powell seems to be negative news. Stevens, Corker, and Henslaring leaving their positions positive.

You're a lawyer? Or just going off a feeling? :-X

Prepackaged deal approved. I tendered my position, bought a few extra shares today. From the disclosure statement: Buy now at $1.87 and you should receive $2 in a few weeks (assuming your broker doesn't fuck things up). Looks decent. Ang idea what the "shareholder release form" entails? Is this simply like a corporate action (eg gender) where you tell your brokerage to tender?

I know why - he doesn't know about it. Doubt it. Mnuchin has stated publicly that GSE reform is one of his top priorities. Trump Jr. has tweeted about it. I doubt that Trump doesn't know about it if it's a priority for his Secretary of the Treasury, his son knows about it, and the RNC has commented on it. He might not care, but he most surely knows. Couple this with Fox News asking about Fannie multiple times, to the point of directly asking about "Fanniegate", and then months of radio silence (seemingly purposeful)

I generally agree, but all of the above would also be consistent with moving towards MBA-type plan which may/may not wipe out shareholders (as irrational as it may be, if you watched the full congressional hearing w Watt, it is obvious that these morons would have no trouble winding down the GSEs and implementing MBA's end goal). I am just not fully comfortable with how this actually will play out in reality. The amount of negative feedback that Mnuchin (and watt) will receive both publicly and within congress will be enermous. Does it make sense for Mnuchin and trump to make what will be a perceived hostile move towards the majority of congress, when they need these guys to pass non GSE related legislation? Seems that everyone here is doing a great job reading between the lines (I mean that seriously, not in jest) but are discounting the overt forces at play and FHFA's anti- recap/release language. It seems the easiest approach is for Mnuchin to simply continue conservatorship or even worse, cede to an MBA type plan to win votes in more legacy defining areas of government (healthcare, tax, infrastructure). The incentives/reciprocity bias between trump/Mnuchin and berkowitz/Paulson have been discussed, but these may be less material than other hidden incentives at play. Mnuchin worked in mortgage finance for 30 years - is it unlikely that there are conflicting incentives with those who stand to benefit from an MBA type plan? I think directionally we are in a good spot, but I don't share then same level of optimism as you guys.

Written testimony from yesterday. https://financialservices.house.gov/uploadedfiles/hhrg-115-ba00-wstate-mwatt-20171003.pdf "As I mentioned at the outset, FHFA has explicit statutory obligations to ensure that each Enterprise “operates in a safe and sound manner” and fosters “liquid, efficient, competitive, and resilient national housing finance markets.” To ensure that we meet these obligations, we cannot risk the loss of investor confidence. It would, therefore, be a serious misconception for members of this Committee, or for anyone else, to consider any actions FHFA may take as conservator to avoid additional draws of taxpayer support either as interference with the prerogatives of Congress, as an effort to influence the outcome of housing finance reform, or as a step toward recap and release. FHFA’s actions would be taken solely to avoid a draw during conservatorship. "

You know, I'm rather glad you asked this. Until now I have been assuming that Mnuchin can unilaterally end the NWS (actually the entire SPSPA). But that came from this paragraph in the original SPSPA: It appears Mnuchin would need some court (any court!) to rule that any part of the agreement is either illegal or unenforceable. To my knowledge this hasn't happened yet. But I think rescinding and unwinding the entire agreement would entail a reset to before it was signed. Does that mean that Treasury would have to send back all dividend payments in excess of the original draw? I will need to go back and read the agreement and amendments with a fine-toothed comb to get a better idea of this. I thought I had done so in the past, but in that case I would have been able to answer your question more thoroughly! Mnuchin could always refuse the NWS payments, but it will take Watt's cooperation to actually end the conservatorship and declare the companies adequately reformed and capitalized. This won't be an entirely administrative solution because as of right now, Trump cannot remove Watt and thus Watt (who isn't part of the administration) will need to be on board too. This highlights the complexities of the legal situation and why we may have blind spots that have not been considered in our general "incentives" and "rational path forward" thesis. With that said (and not being a lawyer), the wording is "illegal OR unenforceable" and I'm not sure what can be contemplated to determine "unenforceable". Regardless, cancelling the PSPAs per the above language seems to void the warrants as well: "whereupon all transfers hereunder (including the issuance of the Senior Preferred Stock and the Warrant and any funding of the Commitment) shall be rescinded and unwound and all obligations of the parties (other than to effectuate such rescission and unwind) shall immediately and automatically terminate." How can Mnuchin enact such a decision? Or if Watt agrees they can simply cancel their contract bilaterally?

"Trump says Puerto Rico's debt will have to be wiped out" Does Paulson not own PR bonds?

My view is that Mnuchin/Watt will jumpstart the process with the creation of a buffer. Perhaps, a recap in disguise. Unless it is Corkerized with strings attached. Whatever shape this buffer takes will speak volumes. This, may or may not act as a push for legislative reform. If it does, reform may fall in line with the buffer tactic. If it doesn't, the buffer may prove to be just the initial step of a wider Mnuchin/Watt move. Meanwhile, and as time passes, Corker gets closer to the exit door. Watt has explicitly wrote multiple times that a buffer would not be a step towards recap/release. How do you balance that against the requirement for Watt to sign off on an administrative recap/release?

Not sure how you can be comfortable that a rational decision will be made after watching that circus of irrationally incentivized, morally hazardous, willfully incompetent group of legislators are at the helm. Counter argument is that there cannot be any movement forward given gross incompetence and inability to understand basic tenants of mortgage finance, and that will allow Mnuchin to administratively move forward. But these clowns are going to put up a very strong fight.

You know, I'm rather glad you asked this. Until now I have been assuming that Mnuchin can unilaterally end the NWS (actually the entire SPSPA). But that came from this paragraph in the original SPSPA: It appears Mnuchin would need some court (any court!) to rule that any part of the agreement is either illegal or unenforceable. To my knowledge this hasn't happened yet. But I think rescinding and unwinding the entire agreement would entail a reset to before it was signed. Does that mean that Treasury would have to send back all dividend payments in excess of the original draw? I will need to go back and read the agreement and amendments with a fine-toothed comb to get a better idea of this. I thought I had done so in the past, but in that case I would have been able to answer your question more thoroughly! Mnuchin could always refuse the NWS payments, but it will take Watt's cooperation to actually end the conservatorship and declare the companies adequately reformed and capitalized. This won't be an entirely administrative solution because as of right now, Trump cannot remove Watt and thus Watt (who isn't part of the administration) will need to be on board too. This highlights the complexities of the legal situation and why we may have blind spots that have not been considered in our general "incentives" and "rational path forward" thesis. With that said (and not being a lawyer), the wording is "illegal OR unenforceable" and I'm not sure what can be contemplated to determine "unenforceable". Regardless, cancelling the PSPAs per the above language seems to void the warrants as well: "whereupon all transfers hereunder (including the issuance of the Senior Preferred Stock and the Warrant and any funding of the Commitment) shall be rescinded and unwound and all obligations of the parties (other than to effectuate such rescission and unwind) shall immediately and automatically terminate."