COBFInfinity

Maybe if you don't care how many years it takes. I care how many years it takes to get my preferred to par value. I also don't see any outside capital being raised for a very long time in this scenario. Mnuchin says he wants outside capital. Your argument is that he doesn't care whether that happens in 2021 or 2031. Possible, but makes no practical sense,

Maybe if you don't care how many years it takes. I care how many years it takes to get my preferred to par value.

It is probably correct that nothing has changed about Mnuchin/Calabria plan. But our guess of what that plan is keeps changing. Since we don't know, the price goes low. I disagree. Until this article, Mnuchin has been on record stating they are deliberating on the issue. Then these statements appear from a late in the day interview in the article - he would have known it will end up on the front page of the WSJ. Puzzling but definitely a negative coming from him (alternative being silence). WHY? Did talks breakdown? Was a decision to punt reached with concern for impact on the financial system? What changed for him to give these statements? Mr Market letting prices freefall along with volume indicate some are getting the message. Look at the actual quotes from Mnuchin in the article. He doesn't say he's not going to do act at all. He just "suggests" that there won't be a consent decree ending the conservatorship. So I don't actually know that his plan has changed. If you gave me two options right now: 1) consent decree with Snr Pfd outstanding or 2) no consent decree with Snr Pfd written off, I'd choose option 2 and assume the GSEs will be released at some point. The market seems to be giving a lot of weight to 3) no consent decree and no Snr Pfd. If that happens, then we are fools for having believed anything he said for 4 years.

It is probably correct that nothing has changed about Mnuchin/Calabria plan. But our guess of what that plan is keeps changing. Since we don't know, the price goes low.

My weak buy setup got nullified by the end of yesterday. Surprised to see the big gap down today. Trump has far more urgent things to worry about than releasing FnF, and if the Supreme Court can rule the Texas vs PA case like that, it can cover its eyes on FnF scandal as well. Lol, you show up after a long absence with a buy signal and support for a fascist coup. The next day after a big drop, you're look, "Just kidding - there was no buy signal. Still dig that fascist coup, though." Please go back and read my prior post. I said I showed up again because after May 2019, I finally got another buy setup, but it is really weak and I am not taking it. You seem to be a Biden supporter. Is that true? I am surprised to see any Democrats believing in law and order for FnF while covering their eyes for all the lawless things that Obama has done over the years. ;) I oppose the theft of the Net Worth Sweep AND I oppose the acts of a career criminal fascist. This is only hard to comprehend if you support the career criminal fascist.

My weak buy setup got nullified by the end of yesterday. Surprised to see the big gap down today. Trump has far more urgent things to worry about than releasing FnF, and if the Supreme Court can rule the Texas vs PA case like that, it can cover its eyes on FnF scandal as well. Lol, you show up after a long absence with a buy signal and support for a fascist coup. The next day after a big drop, you're look, "Just kidding - there was no buy signal. Still dig that fascist coup, though."

I wish Mnuchin would stop talking and just do something, whatever it is. However, my general take is this: Four years ago, Mnuchin arrived on the scene and said, "I'm the quarterback, I'm going to get this done." Today, he says, "I'm the punter, it's not my problem."

Some theoretical possibilities: - Plaintiffs were asking too much pre-SCOTUS hearing (i.e. the full boat, sr pref write down Plus overage) due to over-confidence - He doesn't intend to settle. Rather enter into a PSPA amendment with Calabria outside of legal world - Good public policy for SCOTUS to decide on FHFA head constitutionality even if PSPA amendment meets Collins' demands re: NWS and sr pref - He thinks trump might still win Or, more pessimistically, he plans to do nothing on Sr pref between now and jan20. Thanks for the thoughts. - Were there any actual negotiations where plaintiffs asked for anything? I expect none of us on this board calling for par value is actually Bruce Berkowitz. -But this gets to my concern that no settlement might mean he is willing to let the lawsuits play out, meaning he may not be interested in putting his thumb on the scale enough to write down the Sr Pfd. -Not sure that Mnuchin would care much about FHFA structure constitutionality. -Assuming for a moment that Mnuchin thinks Trump might succeed in stealing the election, why does that make him want SCOTUS case to go forward?

What is underneath my concerns is that I can't figure out why Mnuchin wanted the SCOTUS hearing to occur, then come out and say he's likely to do a PSPA amendment. Was it just to add political cover so that he could write down Sr Pfd? If so, do we actually believe he got that cover? Sure, tough questions were asked of the government, but they were asked of plaintiffs, too. And people like John Carney (him again) or still saying today that nothing has changed - shareholders will lose. So does anyone have a compelling logic as to why the SCOTUS hearing went forward if Mnuchin is going to give us what we want anyway? I'm at a loss.

Anything is possible. But I'd recommend reading footnote 30 of the August 2020 CBO report on recapitalizing the GSEs through Admin options. Also some of Craig Phillips' comments. of course, however, could act isn't the same as will act... Hey, we're all in the same boat hoping here, but I have reasonable doubt as to what will be executed. By far, the most tempting thing said by any of the major players over the past two years was Calabria saying that after the next PSPA amendment, the lawsuits will "go away". In our minds, we know that the lawsuits only go away if the Senior Preferred is written down (at least in part, if not in whole) and we know Calabria is a smart guy with smart people working for him, so we assume that he understood that. But is it possible he didn't? What if thought just ending the NWS without a Sr Pfd writedown was good enough to end the lawsuits? I think it's certainly possible that we have all read more into these bits and pieces than we should have. To be clear, I haven't sold a single share. I think there's a pretty good chance my Jr Pfd go to par in the next couple years. But if we're wrong, we are going to be holding this bag for many more years. Seems logical for a healthy discount to par. If there is a PSPA amendment that wipes out the Sr Pfd, I think the Jr Pfds go straight to 70% of par. That would still leave a discount for the uncertainty as to when Jr Pfd might get exchanged into common or the unlikely scenario where dividends are turned back on.

I don't know. There is a lot of uncertainty left here. Who remembers the General Growth bankruptcy? I bought some stock fairly late in the bankruptcy process, but by then the fog had cleared and it seemed pretty obvious that the equity was worth way more the market price. I think I made 300% in less than six months. I would argue the GSEs still have a lot more fog clouding their futures than GGP did when I bought it, so is it unreasonable for junior preferred to still have 200% upside? I bought into the GSEs because of the legal angle - it seemed so obvious that the NWS would be overturned. But I've been waiting for 6 years already and, as discussed here already, if we "win" in SCOTUS it will likely still mean a few more years in court. So without a PSPA amendment, I can't really say today's prices are wrong. And Mr. Market is obviously demanding action, not talk, out of Mnuchin. He's been talking now for 4 years and we've got little to show for it. He put out a lengthy Treasury plan and signed an interim agreement w/ FHFA to suspend the net worth sweep. He's going to sign the PSPA amendment and the market knows it. Ok, but's what's in the amendment? What if the NWS is ended, but the Senior Preferred isn't written down? If you are 100% sure what's going to happen, you have me beat by about 70%. Prices go down in this case. Lol, that explains why no one is paying more today, doesn't it?

I don't know. There is a lot of uncertainty left here. Who remembers the General Growth bankruptcy? I bought some stock fairly late in the bankruptcy process, but by then the fog had cleared and it seemed pretty obvious that the equity was worth way more the market price. I think I made 300% in less than six months. I would argue the GSEs still have a lot more fog clouding their futures than GGP did when I bought it, so is it unreasonable for junior preferred to still have 200% upside? I bought into the GSEs because of the legal angle - it seemed so obvious that the NWS would be overturned. But I've been waiting for 6 years already and, as discussed here already, if we "win" in SCOTUS it will likely still mean a few more years in court. So without a PSPA amendment, I can't really say today's prices are wrong. And Mr. Market is obviously demanding action, not talk, out of Mnuchin. He's been talking now for 4 years and we've got little to show for it. He put out a lengthy Treasury plan and signed an interim agreement w/ FHFA to suspend the net worth sweep. He's going to sign the PSPA amendment and the market knows it. Ok, but's what's in the amendment? What if the NWS is ended, but the Senior Preferred isn't written down? If you are 100% sure what's going to happen, you have me beat by about 70%.

I don't know. There is a lot of uncertainty left here. Who remembers the General Growth bankruptcy? I bought some stock fairly late in the bankruptcy process, but by then the fog had cleared and it seemed pretty obvious that the equity was worth way more the market price. I think I made 300% in less than six months. I would argue the GSEs still have a lot more fog clouding their futures than GGP did when I bought it, so is it unreasonable for junior preferred to still have 200% upside? I bought into the GSEs because of the legal angle - it seemed so obvious that the NWS would be overturned. But I've been waiting for 6 years already and, as discussed here already, if we "win" in SCOTUS it will likely still mean a few more years in court. So without a PSPA amendment, I can't really say today's prices are wrong. And Mr. Market is obviously demanding action, not talk, out of Mnuchin. He's been talking now for 4 years and we've got little to show for it.

My view is simple whether you are using a yield curve model or anything else to try to forecast the economy - you probably need to throw out the 2020 data. My other view is that the economy and markets are pretty unpredictable, so you shouldn't rely on those models too much anyway. I am of the view that U.S. stocks are probably higher today than they would have been without COVID. I think that is fundamentally insane, yet here we are.

You could make the argument that we were heading into a recession regardless. PMIs had been sub-50 globally for some time. Manufacturing had already been in a multi-month contraction. Who is to say that had covid-19 never occurred, that we wouldn't have found ourselves in a recession by this summer anyways? There's always a catalyst. Covid-19 is no different. Something always happens that we can blame the recession on, but it's the environment that makes us vulnerable to that shock. An inverted yield curve, declining PMIs, manufacturing weakness, global trade thrown into disarray/uncertainty, make us vulnerable to whatever shock comes - whether that be covid, or s string of corporate defaults, or a currency shock, etc. The vulnerability makes that a recession versus a wall of worry that we climb over. Seems like a bogus argument for 2020. The economy could have been at max strength, but still would have been hammered due to COVID shutdowns. We can all play the guessing game of whether a U.S. recession would have rolled in by now anyway, but the idea that the economy was fragile and COVID was just the tipping point? That's implausible. Simple way to look at it is that a huge number of countries had a COVID recession - were they all going to have a recession anyway? Clearly not.

Yes, but is he going to resolve them or let the courts carry it out for years to come? Obviously, we know he didn't just decide today what he's planning to do, so why let the case go to SCOTUS? I think he wants to punt on dealing with the Senior Preferred balance. I hope I'm wrong.

"Mnuchin Says He’s ‘Likely’ to Back Changes to Fannie and Freddie" https://finance.yahoo.com/news/mnuchin-says-likely-back-changes-000854956.html But the quote on SCOTUS case: “If they rule in Treasury’s favor it simplifies things,” he said. “If they rule against, it’s still going to end up in litigation.” I get the sense that Mnuchin is willing to amend PSPA, but doesn't intend to settle cases OR write down the Senior Preferred. Of course this would completely counter his claim that he wants "to set them on the right direction" because the cloud of uncertainty will remain and no outside capital can be raised.

John Carney (no longer at WSJ, but matched their overall views throughout) is still on Twitter today saying that he thinks the NWS was legal. A lot of them bought into the ridiculous logic of Lamberth that the only thing that mattered in HERA was the use of the words may vs. shall, and they're sticking with it. Geez, every company should just start sticking vague words into their prospectuses and then screw investors later if it's that easy.

The problem with that idea is that Mr. Market will probably reduce your position for you before you get a chance. Interesting where we're at now. Maybe I should wait 24 hours to post this, but it seems pretty darn likely that SCOTUS argument will occur on the 9th. And my hunch was wrong - preferred prices are higher than they were in late October even without the pre-SCOTUS settlement we've been hoping for. Just shows again that predicting price movements doesn't work very well. Orthopa, however, is on the record saying he/she would heavily decrease exposure if SCOTUS is argued. Are you sticking with that view?

I added emphasis. The logic for a common stock dividend is that more investors will buy the stock, making it easier to raise capital. I don't know if that will be part of the plan early on or not, but if so the preferred go to par early, not late.

It's nothing new to anyone here, but I am still astonished at the many parties interested in the GSE conservatorship, but don't have the slightest concern for shareholder rights or are antagonistic to shareholder rights. I am so naive that I thought those rights would matter.

The Washington Federal case to overturn the conservatorship has always been viewed as a long shot, but these are some smoking guns right here:

The very low yielding (in some cases, 0%) preferreds have closed most of the price gap with those with 5-6% yields. It sure looks like some form of equal treatment is being considered more likely by the market. I've never owned those low yields, but if I did I sure would be trying to swap into some of the higher yields at this point just in case the dividend rates end up mattering.

Someone is hitting most of these bids. Someone else wants to get out. That's what makes a market, I guess.

Interesting action in $50 preferreds to start the morning. Someone has bid exactly $17.50 for exactly 4,285 shares each (comes to just under $75,000 each) on FREJO, FMCKK, FREJP, FMCCO, FMCKP, FREJN, FMCCH. I've been watching these tickers a long time and have never seen such coordination across issues. Someone wants to get in.