merkhet

Literally every news outlet. Here's the Journal: https://www.wsj.com/articles/house-set-to-pass-bill-rolling-back-wall-street-rules-1496914205 But hey, I'm sure you know more about the chances of the bill passing through the Senate in its current form than the author and main proponent of the bill. You should send Hensarling a note. Let him know everything is fine.

It's not expected to pass the Senate in its current form -- though I'll be curious to see what parts of this bill are retained in the Senate version.

this would meet MBA halfway, by providing treasury support for alternative monoline guarantors, which could be set up by banks in addition to the moelis blueprint-reformed GSEs. It only sort of fixes MBA's issue, though, because it would be enormously difficult to start up a private label security business while Fannie and Freddie are around. Effectively, it is a cosmetic compromise.

I suppose that could be accomplished by taking out the "SPSA residual guaranty" (i.e. the "government capital" that sits on top of the private capital stack from the presentation) from the Moelis blueprint and turning that into some sort of a "commitment fee" funded guaranty mechanism that is accessible to everyone, including the reformed Fannie & Freddie.

It's tough to tell. Having the ICBA come out in support of the Moelis plan was definitely good, but the Senate Banking Committee could honestly go any direction it wants to with this. It's possible that we get some sort of compromise plan between the Moelis & MBA POVs, but it's not immediately clear what that would look like.

It's a pretty good plan. Now we wait to see if anyone in the government bites. I'm also interested to see whether anyone else endorses this plan, like the ICBA, etc.

How has no one mentioned Sears by name yet?!?

I would second the Real Estate Game recommendation.

https://www.bloomberg.com/news/articles/2017-05-16/fannie-freddie-won-t-be-freed-without-congress-regulator-says

My main Q for TRUP is that, as an insurance company, its growth is bottlenecked by the reserves they need. I've heard the company described as a subscription company -- which seems dangerous when you don't consider that those subscriptions... eventually have cash outflows.

Unfortunately, there are laws preventing these kind of made for litigation cases.

it could absolutely affect his 2018 re-election prospects from a primary challenge or less likely the general. and it would be helpful to the admin reform efforts if he dropped his aggressively antagonistic stance. the courts for many years have inexplicably proven incapable of delivering justice, so what do you expect these passionate advocates to do -- simply play nice and sit on relevant info when the other team is aggressively dirty? I expect them to be smart enough to play a better game. As of right now, both sides of the aisle are pissed off at "the hedge fund guys who think they can just come in and swing their dicks around." (paraphrased) Think about it this way. They played really hard against Corker and, rumor has it, they were able to keep him from getting Secretary of State. Okay, cool. Has this caused him to "drop[] his aggressively antagonistic stance?" No? Perhaps the beatings should continue until morale improves then.

I honestly don't know why #fanniegate continues to poke Corker. It's not like they're going to get him to withdraw the letter he sent to FHFA. It's doubtful that they're going to be able to get him replaced (either now or even 2018), and all it does it piss off Senators & Congressmen on both sides of the aisle. (Setting aside whether their notions of being "above" these kind of attacks to their reputation are antiquated or not.) It smacks of a pissing contest between large institutional managers & political power players. And worse, it is counterproductive!

+1

Basically describes the $VRX thread.

IIRC, Buffett's fund was 40% AXP during the Salad Oil Scandal. He was 75% personally in GEICO at some point though, but that's personally.

Agree that it's vague. FSOC covers a lot of entities.

Yes, basically. Except it's the breach of implied covenant for the dividends and not the breach of K for liquidation preference. I hold preferred shares purely because of the political / rational solution which seems inevitable. But am I reading you correctly that you believe the appeals decision in aggregate was a net positive for pref holders? No, not a net positive. One claim, the APA claim, was shot down. The other claim, the breach claim, was allowed to go through. So one negative and one positive. But not a net positive.

Yes, basically. Except it's the breach of implied covenant for the dividends and not the breach of K for liquidation preference.

I wasn't talking about the Delaware case. I was talking about how the U.S. Court of Appeals for the D.C. Circuit misapplied Delaware law in the Perry case. He also did not say that the stock price in 2012 would be a key factor in determining damages. Starting @ 34:47 "...we would need experts to look at what they think present value of future income streams could have been had there not been a NWS would be one way to do it. The Government will argue in the Takings case... We would not accept this and we would resist it but the government will say in the takings case that the value of what was taken if there was a Takings is measured by the value the day before the taking and they'll look at what the stock was trading for back then which was not very high. So there's a whole range of numbers." Hume said that the government would argue that the value would be based on the stock price in 2012. But, of course, the government would argue that. The government would also argue that the correct damages should be zero, but that's certainly not a key factor in determining damages. And finally, the APA is only the meat on the bones for common shareholders. Not so for preferred shareholders. You should really re-listen to the audio file.

did you listen to the Hamish hume call? the breach claims will take a year at least, discovery, motions, etc. takings longer in sweeney. and the end result is either a loss or a win where --- absent any other solution --- the damages could very well be a less than the current securities value. in addition, if someone didn't buy pre-2012, then they might be shut out in the takings claim. they need to go through with the cases to keep some leverage in any political negotiations and in case all political solutions fail. but the call to me suggested all the legal juice is in the APA injunction for the NWS where we need a texas or Midwestern judge to see the craziness of the 3rd amendment. i'd welcome any thoughts where i'm wrong. Yes, I listened to the call. Most of your comment is merely that it might take longer. That has little to do with whether it incentivizes Ps to beg to settle as that has more to do with the fundamentals of the breach claims than how long it takes them to litigate it. (Again, I feel the need to point out that I hold only preferred shares. It's probably true that the common shareholders would beg to settle at this point.) Moreover, you should re-listen to Hume's discussion on page 69. He specifically talks about why he thinks the court is wrong. Alternatively, you could read what the court wrote and see where they misapplied Delaware law. Either method should bring you roughly to the same conclusion.

Hillhouse was seeded by Yale. It's pretty well known. Zhang Lei worked at Yale prior to starting Hillhouse.

I have no idea why you guys think Ps would beg to settle now.

That's how I read Section 2.1, but if someone has a different read, I'd be open to hearing it. https://www.treasury.gov/press-center/press-releases/Documents/warrantfnm3.pdf

The reason I say that common & warrant positions are not necessarily pari passu is because of the issue of order of operations. Can the warrants get a better result than the common? The answer is yes -- by simply converting last. First dilute the common using junior preferreds. (The actual amount of conversion doesn't matter. Give them 20% of the eventual company and the common 0% or give junior preferreds 10% and common 10%. Set the slider wherever you want.) Then convert the warrants and dilute both the junior preferred and common. Alternatively, you can dilute the common by doing a two-step recap. Raise outside capital and dilute commons. Then convert the warrants to dilute both new capital and old capital. Notably, you can even set this at a price that makes the outside capital relatively happy. Let's assume $75 billion of capital requirements. So then you can raise $15 billion from outside capital to dilute the old common to almost nothing. Then you can immediately use the warrants at an upwards adjusted strike price to have the government inject $60 billion to the company. New capital owns 20% of the company, government owns 80% of the company, and old common owns very little. Now it doesn't have to be that drastically bad for old common -- but my point is that the assumption that the common shareholders stand in the same place as the warrant holders may not necessarily hold true. And, of course, this is why I prefer the preferreds. (No pun intended.) The preferreds at least have legal claims that can be used as leverage -- the common no longer has any leverage.