investorG

it doesn't matter, if it goes anywhere, gse reform is almost certainly going through congress (at least at first). with the Flynn news, at a minimum, the administration will not want to piss off congressional republicans who could control his fate. a lot of 'tim howard -- administrative actions' hopes need to be tamped down imo. I find the preferred to be a little (relatively) safer now than the commons, fwiw. especially since none of the house republicans have latched onto (or even mentioned) the RNC - moelis plan during the 4 hearings.

the article seems incomplete at best. what's the point of a 2bn buffer when you're facing a 10bn writedown in the same quarter if tax reform passes? my best guess is light's trying to stir up trouble a) with corker to derail tax reform or b) to get a jumpstart extension before year end. I take this at face value. The bigger story seems to be the disagreement between FHFA/Treasury. I am thinking -regardless this is true or theatrical- if a cushion comes as a result of a disagreement then it is good news. If it comes as an accord, bad news. A disagreement implies the desire by Watt -and resisted by Treasury- to rebuild some capital, any. If it happens and with another year to his term, Watt may push for much greater cushion and much greater capital. While Treasury may continue to play the same "resisting role". I would like this set up. It moves in our direction while Treasury can't be totally blamed. fwiw, i'd go with your first instinct not to trust joe light. he's no dummy. this is a maximum sensitive time for tax reform and the expiry of jumpstart. he likely wanted to create friction. he hides behind unnamed sources, and mentions that 'fhfa officials' (not watt) have made the request. he also edited the story after the open to mention the stock price rise and hedge fund ownership. he's either a hired gun or a bad guy.

the article seems incomplete at best. what's the point of a 2bn buffer when you're facing a 10bn writedown in the same quarter if tax reform passes? my best guess is light's trying to stir up trouble a) with corker to derail tax reform or b) to get a jumpstart extension before year end.

mnuchin has laid the groundwork that he's the boss in this area. he's currently however in a year-long quiet period on the matter. crapo merely reads some lines given to him by his junior aide which jives with the lobbyists who buy the aide's dinners and wine. the key question, for me, is what does mnuchin really want, besides the 2 standard lines he's given to date. I liked the response of not agreeing to dismantle FnF a couple weeks ago.

It appears... on your face, Sleet! I actually see dismissals against share price resilience as encouraging news. It may mean participants have already made up their collective minds that the outcome lays squarely on Mnuchin. I can't see Crapo moving legislation that will not be in line with Admin. the scoreboard isn't in our favor currently

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.

once Ginsburg failed his moral compass test, only the supreme court could possibly save us in the courts. all the other judges simply hide behind his reputation. put simply, the 3rd amendment fails all tests of honor in our country. fwiw, my thesis, ever since the February disappointment, was the court cases are important only as placeholders to drag this out to a legislative or administrative solution while providing shareholders some modest negotiating leverage. tomorrow we'll gap down and then we'll see where we stand in the afternoon and the rest of this week. the preferreds are down 20pct in a month, price level does matter.

ok, i'm prepared for someone to wake up tomorrow and sell the preferreds I own trading at 18-19pct of par closer to zero. for this investment, 2017, 'yikes' is spot-on!

fwiw Bloomberg said the hedge fund positions were distributed to the investors rather than berko selling them and then sending the cash to the investors.

on abnormally high volume, so either someone knows something or a fund is liquidating, or both my hope is that berkowitz's 400mm hedge fund, which was distributed to LPs last month, was loaded with these, and the end holders are bailing. my reality sensor tells me that its more than that, and we'll find out why soon enough.

wow, 20pct drawdown in a couple weeks. it appears someone knows something that we don't.

highly unlikely. mnuchin, if he stays strong, has leverage to get most of what he prefers because it's likely the congress flips democratic in 2019 -- the bank cartel should root for action in 2018 even if it's not their best case outcome. because if not it will be mnuchin, Maxine waters, Capuano, Sherrod brown, Sherman, etc in the lead in 2019.

Ackman talking favorably again about Corker/Warner is bizarre. mnuchin wants to work with congress in 2018. corker and warner are the influencers in the senate, along with crapo and brown. i'm grateful to ackman for this.

could be also: berkowitz liquidated / distributed a $400mm hedge fund 1 month ago, likely a meaningful portion of that was FnF preferreds - perhaps many of the investors in that vehicle have been exiting.

I believe Mnuchin has a specific plan - why else would watt have backed off after a forceful comment about the airbags this summer. I believe we will find out this plan in 1q 2018. wisely, mnuchin -- after overstepping last nov -- likely looked at the landscape in early 2017 after the court case was lost, and decided he would get zero upside in talking positive about the GSEs until a) jumpstart expired and b) tax reform is completed (or fails). so likely he put a gag order on himself and his team and trump for 2017. trump loves real estate. mnuchin, when pressed, has signaled he likes FnF. the campaigna and staff connections are there. I believe we'll see a completely different attitude come 2018. however someone with a lot bigger position than me (the mkt) strongly disagrees with my view -I'd place the securities ~ 50pct above current prices as the current (not end) fair value. good luck everyone!

making two (uncertain) assumptions - tax reform passes next month and the powers in charge do not prefer an actual draw from treasury occurring - then wouldn't there need to be some sort of 4th amendment in the first quarter of 2018? looking back at 2009, if there's a deficit in a quarter, it's announced at the earnings release ~5 weeks after quarter-end (early feb) with a request for the funds by the end of that next q (mar-31).

Bad news without a doubt. No capital buffer unless Watt decides to withhold and increase liquidation preference. Heck, no administrative-only reform at all given that the executive branch isn't bipartisan. Seems to me like Mnuchin is saying that he isn't going to do anything at all until Congress passes something forcing him to. he has said since his confirmation hearings that he wanted to work with congress on this in bipartisan manner. granted I was hoping for it at some point but administrative action is much less effective as a long term solution than legislative. whenever tax reform is finished, win or lose, I expect to see an active mnuchin - phillips on this matter, the reverse of radio silence in 2017.

good observation. i'm not sure about the answer but I believe mnuchin-watt have an undisclosed plan to avoid a 20bn draw.

acknowledging it's a big priority is good news for those who: a) believe he will try legislatively before resorting to administrative action b) believe he cannot in any way upset congressional republicans at the moment there could be more selling from those who were hoping for a magic wand on jan1, but the foundation has been laid and it's > 50pct odds to me that it's happening in 2018

Because there is already a ruling by the Appeals court, now at Lamberth's, protecting specific rights of preferred holders. not really; the case was only remanded; and in a victory the reward is likely below the current market pricing.

the utility model has material promise politically, economically, and for our securities imo. it likely preserves the 2 companies, their shareholders, and infrastructure. it simply regulates the hell out of them, leading to lower earnings than before. no balance sheet simply means the portfolio side of the business is mostly wound down. if this article is literally true, which is debatable, I believe the common and preferred shares should be far higher today - despite the execution risk and time value - and even higher than that over time.

Maybe Admin wants Corker's support for tax reform so he's playing nice for the time being. the tim howard / message board / twitter crusade for pure recap and release is being deflated currently. mnuchin has said he wants to work with congress on this in early 2018. the house is having 3-4 hearings in a very short period of time. options / consensus seem to be narrowing. of course corker would be involved if something is done congressionally in 2018, although his power will likely be diluted from before. one interesting thing after last night, the Congress may very well switch to Democratic control in 2019. This could motivate the House Repubs (banks) to get something middle of the road done in 2018 vs risking getting left out thereafter. I still don't understand why there's so much selling based on the recent news flow. one thing i'm thinking is that any prospective buyers think they have time to wait and are expecting / avoiding likely negative court results over the very near term.

if you remove the extremes of pure recap / release + wallison / PATH act, to me the big debate that mnuchin - phillips will likely drive is either a) competition through multiple guarantors or b) utility model with expanded risk transfers.

with all due respect there aren't many well followed 400pct near term investment opportunities out there where 'the writing is on the wall.' someone who is not dumb is waking up every day thinking its a good time to sell the less liquid jr preferreds @ 20pct of par.

Explain how Watt can call receivership when there are still 258 billion left in taxpayers backing. You meant forced R instead of mandatory? while possible it would be fairly unprecedented to throw companies making $20bn into receivership, as you well know. ultimately we're making a bet on mnuchin and trump's desires (among other factors also). the US deficit is 2bn per day. the combined market cap of all public FnF securities at current levels is around 12bn. my bet is that mnuchin / trump aren't eager to crush the owners of the GSE securities, many of which are his supporters (icba, Paulson, berkowitz) to save the equivalent of 6 days of deficit. time will tell.