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Fair enough. I'm genuinely curious what percentage chance you would place on them being nationalized? I know it's impossible to quantify odds with something like that, but what's your best guess? Thanks. If a Democrat wins the election --- whatever odds you place on that -- nationalization now appears to be the base case to me. I'd welcome other views but $45bn (if they get to that) doesn't seem like enough escape velocity even if there's a 4th amendment in the lame duck given the Dems preference for nationalization (and of course many R's dislike current structure). Maybe $75-100bn would be enough (?) but that would require a large private equity infusion in 2020 that I advocate but don't now expect. There's a roster of think tankers that are likely ready to take on this task in 2021 if assigned. The combined current market cap of jr pref + public common is not enormous, ~$18bn at the moment, and so your guess is as good as mine what value - if any - would flow to shareholders from the legal system or political settlement in a potential nationalization. Of course I believe a fair outcome allows shareholders to participate in the financial upside that the govt has achieved since 2012 (in addition to the indirect systemic benefits FnF provided in 2008-2012).

+1 I respectfully disagree. There is a reasonable chance the window has closed and the companies will be nationalized in 2021+. In that scenario the courts and/or a negotiated settlement would likely decide any potential value for shareholders, if any.

Likely you know the answer to this question with an election in 8 months and recent delay announcements. Our 2020 hopes seem to rest on Rule of Law's Seila analysis proving accurate. I wish everyone good luck.

Basically the all-important potential 4th amendment keeps getting delayed for either political or legal or greed reasons despite material leadership turnover risk. Shockingly Calabria even talked about another letter agreement extension which I guess is now the base case if Trump wins and Seila doesn't produce backward-looking relief that is also applicable to Collins. In this potential scenario, they'll likely want to hear the APA case resolution from SC before potential 4th amendment action. And if Trump loses, then then we enter the lame duck period having little leverage.

Calabria's bloomberg interview mentioned the Tsy lawyer's powers at the end, which was interesting. If we believe Thompson that a settlement is possible, Then it appears to me the bid-ask spread between plaintiffs and Tsy is too wide currently for action. Plantiffs' request likely comes down if: a) Trump loses (lame duck) b) Seila loses backward looking relief and/or c) we lose APA at SC Tsy's offer likely goes up if they lose Seila (indirectly) or they lose APA at SC. So we likely wait for more guidance from the above issues.

So they're putting the rule out for comment then. we were downgraded by the Admin many months ago. post-election, if at all. the sad thing is the market at these prices imo still doesn't even believe end of year; and who could blame them given what's transpired.

90% of me agrees, don't expect anything pre-election (at a minimum). the capital build amounts chosen in the letter agreements (relative to earnings paths) + repeated delays by calabria tell this story well. 10% holds out hope that the team is stronger than they appear and do the honorable thing: some deal this summer whereby the warrants are monetized up front in conjunction with a 4th amendment. the only support I have for this is the 'coming months' quote from calabria in the sep30 letter agreement.

Thank you. Is the SC more conservative than the 5th circuit en banc (7-9 outcome)? For a non-lawyer, the retrospective relief sounds somewhat arbitrary on what it applies to and could make for messier legal outcomes regarding other random decisions the cfpb / fhfa have made in recent years? retrospective relief is precisely not arbitrary...you give P the relief it is seeking. this is the traditional understanding of judicial power, to hear actual cases and controversies and apply the law to redress the P's injury, not to clean up some statute. forget about liberal v conservative, not a useful construct in this context, rather think in terms of scotus moving back to a more traditional scope of its power. this has been a big thing with Thomas and he has patiently urged the court to focus on limiting its own conception of judicial power which is very much in tune with the current makeup of court If they grant backward looking relief then what's to stop a flood of lawsuits from people who have felt wronged by the FHFA or CFPB for any other matter over the past few years? The answer is in ROLG's article. justice kagan authored recent Lucia opinion where she stated that litigants should be granted incentives to bring constitutional challenges to agency action by an agency suffering a constitutional defect...not to open up past instances of agency action where party did not raise constitutional objection at the time...no after the fact piggybacking. seila may be 6-3 in favor of P thanks. that seems relevant and modestly hopeful on Kagan / Lucia. because re-reading the section in Collins where the 5th circuit nine judges declined to provide backward relief, it made decent sense in a non-lawyer way - why just cherry pick on the 3rd amendment instead of others (which may have helped FnF) as invalid. if is it simply because they filed soon enough and all the others didn't without a firm/official rule on when something loses eligibility, that seems somewhat random in such important circumstances. thank you again.

apparently bloomie's ultimate goal is a fully govt owned GSE: if the Democrats are going to campaign on Trump releasing FnF -- which isnt impossible because the high level headlines of 'financial crisis' and 'hedge funds' can be effective -- then they might as well get going soon and have a legacy of doing the right thing in this situation.

Thank you. Is the SC more conservative than the 5th circuit en banc (7-9 outcome)? For a non-lawyer, the retrospective relief sounds somewhat arbitrary on what it applies to and could make for messier legal outcomes regarding other random decisions the cfpb / fhfa have made in recent years? retrospective relief is precisely not arbitrary...you give P the relief it is seeking. this is the traditional understanding of judicial power, to hear actual cases and controversies and apply the law to redress the P's injury, not to clean up some statute. forget about liberal v conservative, not a useful construct in this context, rather think in terms of scotus moving back to a more traditional scope of its power. this has been a big thing with Thomas and he has patiently urged the court to focus on limiting its own conception of judicial power which is very much in tune with the current makeup of court If they grant backward looking relief then what's to stop a flood of lawsuits from people who have felt wronged by the FHFA or CFPB for any other matter over the past few years?

Thank you. Is the SC more conservative than the 5th circuit en banc (7-9 outcome)? For a non-lawyer, the retrospective relief sounds somewhat arbitrary on what it applies to and could make for messier legal outcomes regarding other random decisions the cfpb / fhfa have made in recent years?

if that was their intention why would they wait until the peak of election season for a politically risky headline(s) when they could do the same thing now (assuming the SC held Collins)? The only reason I could see is if they successfully cobble together a large private placement at the same time with a broadly respected investor(s), and that deal was not available now. I don't believe the capital rule or seila outcome is a prerequisite for a potential 4th amendment.

your missing the point. you have to understand the read through from seila to collins. rule of law guy will be writing on this soon I will look out for it. It's been 3.5 months for Judge Atlas without a peep. Does she wait for the final accept / decline from the SC? Do Senior Judges take longer for action?

The Supreme Court still likely has a few weeks left to take the Collins case and complete it this term (by jul1). It's not unreasonable that they should take this case. However if they follow current conventional wisdom and pass for now, we then wait for Seila's result to determine Calabria's likely fate. If Calabria's equivalent wins and is entrenched for the full 5 year term with firing only for cause, then the pressure for rapid action (all things equal) seemingly declines because even if Trump loses there's still time for a potential 4th amendment late this year and then Calabria takes over the plan execution in 2021+. However if Seila decides Calabria is exposed, there's very large risk to shareholders because a potential 4th amendment + consent decree package is possibly reversible by a new admin + FHFA head. Two caveats to this may be: if they pull off a large offering (ideally with a democrat investor) which makes it too far to turn back and/or calabria or his deputy can last longer through 2021 than expected due to some technicalities. Given the makeup of the SC are there any good guesses on the Seila outcome? The Fifth circuit seems pretty clear (12-4) that he needs to be fire-able? Obviously people would guess better post the oral arguments.

thanks. no potential 4th amendment until post election, if ever. unfortunately the leaders deemed it too hot for them to handle despite the cover from the Collins appeals court.

Probably delay anything material until July when the likely next decision point occurs post-Seila. That's consistent with the stock price and Calabria's repeated misleading statements on timing of capital rule and especially financial advisors. "... Calabria's repeated misleading statements... " Finally, someone who has noticed. I let go of most of my position -held since 2010- last summer after he flip-flopped. The fact that he reconsidered his views or showed cracks in his stance back then was the last -shockingly disappointing- straw. For me. I kept a few up until recently. But finally accepted the fact that those of us who had to withstand the advent of the NWS may never see justice. What I am left with is both a personal error in judgment -correctly assessing the difficulty of fighting the US government- but also an unpleasant taste for its inner workings. Specially, a leftist administration. Good luck to everyone. in Calabria's defense, he's probably just following instructions from mnuchin and trump. I view his competency level without interference as far higher than the slow play and misdirection we've seen over the past few months. the main issue appears to be that trump and mnuchin weren't strong enough to move this forward once the appropriate cover came from the Collins appeals court to simply do the right thing.

Probably delay anything material until July when the likely next decision point occurs post-Seila. That's consistent with the stock price and Calabria's repeated misleading statements on timing of capital rule and especially financial advisors.

so someone has to say it so let it be me....bove is a jerk well past his prime, if he ever had a prime. he doesnt understand the GSE litigation, he doesnt understand the GSEs' cash flow and financial merits (moat etc), and he doesnt have a fully funded retirement account, hence he has to post drivel well past his use-by-date. Here's the deal (quoting Biden LOL): Collins is live in district court since scotus has put cert petitions on hold. Mnuchin will face the biggest judgment against the US in its history falling in his lap. wakie up time while I agree Bove's analysis doesn't always make complete sense, his stock calls have ended up being decent for the most part -- including his last one that if the SC passed on the case the shares would decline.

Legal appears to be a dud for 2020: Sweeney and lamberth are 2021-2022+. bhatti is most likely a loss. rop is dormant. Atlas hasn't even started with plenty of delay tactics possible. The lawyers think the SC is punting on APA during this term. There's some small chance the Seila ruling in June allows for major remedies but doubtful. It's highly likely nothing materially positive happens until July at the earliest. If Calabria's position becomes at risk post-Seila, maybe we get some action this summer if the team is still intact and committed to getting things done. If he's constitutional for 5 years with firing only for cause, then probably nothing material (potential 4th amendment) until post election, either in the lame duck (trump not victorious) or 2021 (trump wins).

The last arguments for this SC term appear to be the end of April. So while in limbo I'd guess we'd have between now and say the end of February for our case to be taken with results possibly released in this term by Jul-1, as the govt requested. Moving into March and after, if the SC takes the case we're likely looking at a December 2020 - June 2021 ruling.

It appears likely that the SC is taking the case with no appearance on today's denial sheet. In that likely case, I believe the Mnuchin-Trump team have underperformed the honorable path so far by letting it get to this somewhat binary point but here we seem to be...good luck everyone.

Well it seems like putting the cart before the horse at the moment with the delays but if they get going I'd expect most of the ~ $125bn or so in capital needed to come from retained earnings and private investments compared with the re-IPO. Also, many potential investors understand the situation to build rather than dispense capital for a few year period, plenty of companies come out the gate not paying dividends for some time if there are good reasons not to.

I took the "prevailing market prices" part of Phillips's exchange comment to refer to the common share price, i.e. the juniors will be offered a conversion at a common share price based on that in the market at the time of conversion. Citi offered their prefs a conversion at 85-95% of par at $3.25, where $3.25 was the average of the previous 22 trading days' common closing prices. That's what I'm expecting with FnF, and is the basis for the tweet I made earlier today. Shorting the commons to buy prefs, driving the common price down for a bigger conversion ratio, and then covering the short with some of the converted shares is highly tempting if there is a strong reason to believe that FnF's conversion will work like Citi's. https://twitter.com/midas79_/status/1201551381733281792 imo it's apples / oranges bc -- among other reasons -- the government wasn't aligned with commoners in Citi the same was as it is here with $50bn+ in potential equity value from warrants. I do agree that the Jr pref has some litigation and perhaps precedent advantages in this potential negotiation. the relationships to me are a wash due to possible public perception problems. I sincerely hope that all 3 buckets don't get greedy, there's likely a lot of potential market cap to share with each (and the new investors as the 4th) if it's done right. actually this is wrong. there are many similarities. see pps 14-16 of https://fas.org/sgp/crs/misc/R41427.pdf some similarities, more differences. a) I believe the government converted their TARP preferred to common at the same time and same terms as other preferred securities (much of which they were actually not senior to) --- going into the negotiation they were actually on the same team as the other preferred, which is not the case here on the warrants. and b) there was hysteria back then to increase the common equity component of capital vs preferred and so they needed a big bang to incentivize the prefs to convert; I agree in this instance there would need to be incentivization, I'm just suggesting I wouldn't advise par / $3 (8x+) as a likely ratio in this potential scenario.

I was guessing more it would be voluntary exchange process rather than spending the effort to get 2/3 in so many classes. They could likely clear out the bulk of the $33bn this way. If they ever offered you a package whereby they honorably retired the sr pref and suggested you convert at a ratio near or slightly above moelis, while at the same time Calabria said many years before dividends resume -- would you say I'll keep my dividend-less jr pref even if the big guys went through with the voluntary exchange that they theoretically negotitated?

I took the "prevailing market prices" part of Phillips's exchange comment to refer to the common share price, i.e. the juniors will be offered a conversion at a common share price based on that in the market at the time of conversion. Citi offered their prefs a conversion at 85-95% of par at $3.25, where $3.25 was the average of the previous 22 trading days' common closing prices. That's what I'm expecting with FnF, and is the basis for the tweet I made earlier today. Shorting the commons to buy prefs, driving the common price down for a bigger conversion ratio, and then covering the short with some of the converted shares is highly tempting if there is a strong reason to believe that FnF's conversion will work like Citi's. https://twitter.com/midas79_/status/1201551381733281792 imo it's apples / oranges bc -- among other reasons -- the government wasn't aligned with commoners in Citi the same was as it is here with $50bn+ in potential equity value from warrants. I do agree that the Jr pref has some litigation and perhaps precedent advantages in this potential negotiation. the relationships to me are a wash due to possible public perception problems. I sincerely hope that all 3 buckets don't get greedy, there's likely a lot of potential market cap to share with each (and the new investors as the 4th) if it's done right.