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There are some very specific and relevant recommendations in there. What we need to ask is: how much of what Phillips is saying is just his view compared to what Treasury is actually thinking? Phillips: "I also believe that there is not only consensus but complete cooperation between all the relevant parties, particularly Secretary Mnuchin and Director Calabria. I am very supportive of the recommendations in the Treasury report and believe they are possible to achieve." Sounds like they are all harmonizing Kumbaya. unfortunately the only complete cooperation we see right now is mnuchin spending the last 3 months appealing the Collins ruling while Calabria muzzles his prior honorable commentary and remains a party of the anti-shareholder litigation.

I think those hoping for something like an 8-10x exchange ratio for jr pref to common are likely to be disappointed. If we even get to the point of a deal / exchange, the Jr pref has less leverage than most assume given the govt's warrants and commoners interests are likely aligned plus the threat of not turning on the non-cumulative dividends for many years (I don't think a common dividend is necessary to sell shares). Moelis was more like 3x. If they would fairly retire the sr pref I guess the jr pref holders would take something near or slightly above Moelis.

Big day today, our SC filing is due. Should be interesting to see if the lawyers indirectly ask for the SC to take up the APA given Calabria and Mnuchin shockingly defend the NWS day after day in court and publicly.

Today's WSJ article confirms (to me) the accuracy of the July12 Bloomberg article (admin wary of moving before the election) and explains why Calabria has been instructed to delay. I expect the SC to take the APA case. Despite the technical reasons why they wouldn't, it's big, ripe, and split regional court views. In the event we lose the APA case (or I'm wrong and the SC doesn't take the case) and also if Trump does not win in 2020: how confident could we be that any actions -- potential 4th amendment and potential consent decree plan -- that Mnuchin could possibly take in his final 2 months and Calabria perhaps a tad longer (maybe through his deputies until a new FHFA person confirmed) would stick?

With all due respect to a very talented analyst (and I can't view the tape), the summer of 2020, a few months before the election would be the least best time politically for a non-court decided write down of the sr pref. Logic suggests that if it even happened it'd be either soon (but they couldn't muster the courage) or post-election -- either lame duck or 1h2021 depending on the outcome.

The catalyst I see is the only one that really matters to pref holders: settlement. Can happen at any moment without warning. Thanks, Luke. Sure, it's possible. But not likely over the near term. First, there's waiting for the SC ruling on whether it takes Collins. Second, why slow play the capital rule finalization (post comments) until 2h 2020+ if you intend to settle in 1h 2020? Calabria's more talented than taking 15 months from his start to get the capital rule in place -- it's clear to me that he's been told to slow play. Trump probably sided with the Kudlow and political wing during the summer. I'm guessing Calabria is sympathetic to us and has tried to soften the timing delay announcements over the past 2 weeks by a) including consent decree statement last week and b) scheduling the capital rule disappointment on same day of what he perhaps hoped was a good day with Sweeney. Our response due to the SC in Collins next Friday should be interesting. I wonder if our lawyers have tilted towards the higher risk higher potential reward outcome of directly or indirectly asking the SC to take the APA (and constitutional).

For those still excited about the near term outlook -- what specific catalyst do you see? The only ones I can identify are a) valuation and b) the SC response (which could be good or bad I guess). I see no visible 1H 2020 positive solution on: Capital plan finalization (long process), sr pref adjustment, Sweeney / lamberth. If the SC doesn't take Collins then any potential positive from Atlas seems headed for appeals delay. Base case, to me: everything slow played until election. Trump wins, execute a plan in 2021. Trump loses, hope for some lame duck action on consent decree or PSPA adjustment.

We are actually at a buying point. Similar to Nov 2017 and 3 more instances. Possibly but likely will take a lot more shareholder turnover before any confidence in a bottom. There are plenty of hedge fund holders who probably aren't interested in waiting on the new timeline and/or courts.

Muscleman -- I'm guessing you're out there -- well done. you kept your composure and call in the face of unnecessary hostility and were proven correct. The team appears to have lazily punted. The summer articles about this issue being too-hot-to-handle politically pre-election were likely correct. I believe the shares represent great value. but it's not our time for a positive resolution. good luck!

there are also fundamental reasons regarding capital raise timing why the jr pref would underperform common lately apart from the other perhaps valid distressed items you cite.

+1. +1 I agree that the last 12 months have been positive however does current situation has more risk or less risk compare to 12 months ago? Do we have more variables now that has to go right compare to 12 months ago? Literally everything about this has been directionally derisked relative to 12 months ago. I think the current situation is a combination of continued terrible reporting/analysts, uncertainty on specific timelines, and movements in quotes affecting opinions. Long term investors who own these securities are not touching their positions. The remaining effective “free float” is volatile given the free float is dominated by LIFO investors and short term traders who aren’t able to look out 3-5 years, and are unfamiliar with the practical constraints involved in removing F&F from conservatorship. Add in some uncertainty and confusion caused by scotus cert request, uncertainty on specific capital requirements, uncertainty on specific mechanics of recap, and the initial scary optics associated with the short term increase in liquidation preference on top of the fact that we are late cycle- and it’s not difficult to understand why there’s been an impact to the quotes. But it’s important to understand whether any of these are critically impactful to solving for the practical constraints involved in raising private capital and ending conservatorship. FNMAM ($50 par value, 5.81% fixed) closed with a quotation of $18.00. I think sellers are absolutely nuts if they are selling these things because there is uncertainty regarding whether this is resolved in 2022 or 2023. At $18, if it takes 5 years your cagr is 22.6%. If it takes 10 years your cagr is 10.8%. Risk = permanent loss of capital, which isn’t relevant to whether this is resolved 3, 4 or 5 years from now. this analysis would make good sense if par value was guaranteed -- which is not the case even in 2022-2023+. Calabria's lazy time line introduces arguably unnecessary political and economic risk for the reasons we all know well. I'm guessing Calabria was surprised at the 2 day drawdown bc he thought the consent decree info would overwhelm the timing delay.

IMO while Sweeney and Lamberth may or may not serve as backups for the real plan and some unknown level of leverage for a potential settlement, I'm guessing based on current experiences that it would take many years from now for a fully-appealed final decision here, even if we somehow won with damages.

seems somewhat clear that if the SC takes the case (either APA or constitutional or both), then everything stops until June 2020 (I assume they could still fit this case during this term?). and if they don't take the case, the debate is over would Mnuchin seek a deal in 1h 2020 or is he/Trump too scared of this issue and would -- if they even do anything at all -- wait until after the election for any potential 4th amendment etc... I wish everyone good luck -- looks like we'll need some. I just dont know whether treasury really wants APA claim to be argued so much or just cert granted to set up a settlement negotiation posture. Possibly but to me the base case is trump punted. Most likely nothing is happening unless court driven over the next 51 weeks (at least). they likely view 1.5 years of retention of capital + a potential 4th amendment in the lame duck (if that) as enough if they lose the election. very weak imo because they know full well the nastiness of the NWS. but it is what it is. Probably there are many out there (I'm on the fence) that root for the SC to take it up.

seems somewhat clear that if the SC takes the case (either APA or constitutional or both), then everything stops until June 2020 (I assume they could still fit this case during this term?). and if they don't take the case, the debate is over would Mnuchin seek a deal in 1h 2020 or is he/Trump too scared of this issue and would -- if they even do anything at all -- wait until after the election for any potential 4th amendment etc... I wish everyone good luck -- looks like we'll need some.

The Collins en banc ruling was clear - as of now he can be fired by the Prez, right? Why does Calabria pretend otherwise? Has he even appealed the Collins verdict to the SC? It seems he's counting on either a) a R 2020 election victory b) the SC to rule in his favor in the CFPB (or Collins) case pre-election c) a Dem to keep him in 2021 and/or d) a R 2021 Senate who stalls on confirming a new head such that his deputy is indefinitely in charge to carry out his original plan. None of the above 4 seem re-assuring against his weak timeline. So either he's lazy (not likely), has some ulterior motive, or perhaps is being threatened by trump / mnuchin to fall in line or lose his job.

The timeline discussed today by Calabria is embarrassing for the combined GSE reform team and more relevantly for those of us who have had confidence in that team. The first potential step (of many) out of this morass is admitting that we have been wrong and muscleman has been right. Good luck, everyone!

The securities prices remain entrenched in their five month (so far) long bear market. I wonder what muscleman is currently seeing in the charts, he's had the hot hand of late.

Calabria, to date has been the reverse of typical: solid action, erratic talk. I'd rather that than the reverse and so I'll root for more of the same despite its uncomfortableness. Good luck everyone!

Video: https://video.foxbusiness.com/v/6100433182001/#sp=show-clips thanks. he was nearly asking for private investment / placement in 2020. IMO this is necessary, the consent decree arena is a little messy and probably a backup, if that. It's hard at best to potentially raise 50-100bn at once in a re-IPO. Also, it makes it easier to possibly write down the sr pref (most or all) if it's done in conjunction with a large private equity injection (i.e. it was necessary to get the $ and probably would involve legal settlements). The opposing view to this is the real chance that the SC takes up the APA and we wait until June for direction. good luck everyone.

wouldn't the SC decide whether to take the APA case before anything material happens in Atlas' court? and if the SC takes the case then Atlas stops working? I could see the objective here would be to not slow down Atlas' initial proceedings but that doesn't seem too relevant. obviously I could be missing something or a lot.

Tsy likely rejected settlement talks to date because it makes it easier to write down a $190bn asset if a) the courts tell them to (5th circuit) and b) the SC tells them they won't hear the case within the next 12-24 months (which is still TBD) when they want to get FnF out of conservatorship (mnuchin's recent words). It would probably be good news imo if the SC rejects the Collins APA appeal. If it does take it up, which is probable, a settlement before a June SC verdict is possible but would likely depend on the plaintiffs willingness to give up a little (and the lawyers not trying to be heros).

while we might root for the SC to not take the APA case, there's a good chance they will. this is what the SC was made for, a huge case with split lower courts in need of timely resolution. I fear some (plaintiffs laywers perhaps or ultra die hards) will welcome the SC APA case on the NWS but there's likely 4 solid votes against us and it's hard to rely on a clean conservative sweep when so much is at stake -- hopefully there's a settlement.

i'd guess we'll know if SC takes the case before anything relevant happens in atlas' court.

Optics are sufficient rationale, I think. Good points but ideally he is looking to monetize 'a portion' of the SPS rather than the full amount bc the latter makes the situation fairly unworkable. Or he is simply looking to negotiate against any Collins tax credit requests and the plaintiffs are acting unnecessarily greedy. Or, less likely, purely optics.

I guess the SC will take up the APA case, it appears to be their destiny and the time is ripe. The constitutional appeal from the plaintiffs will probably be denied due to the CFPB grant. At that point, it would likely be up to the plaintiffs to potentially accept a reasonable settlement deal in 1q (in conjunction with a 4th amendment) to keep the train running or let everything ride on the SC. hopefully greed - on all sides - doesn't get in the way of a great deal.