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FNMA and FMCC preferreds. In search of the elusive 10 bagger.


twacowfca

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Guest cherzeca

realistically whats more likely: the judges have not made a decision or they are waiting until after the election knowing that this decision will attract attention, whatever way they rule?

 

i think there is a dissent being written, and that is just a complete add on to the time a unanimous opinion takes. plus it will take what should be a little amount of time for majority to respond to dissent.

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Guest cherzeca

Is anyone concerned about the Sammons appeal to move the Sweeney Case to a different court?  To an untrained eye, the brief makes some compelling points. Curious what those more familiar with the legal system think.

 

sammons is a total no worry.  that ship (article III v I judges) has sailed.  seal that silver mine.

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how is everyone thinking about the election's impact on GSE securities?  my take is below.

 

the better Democrats do in Congress, the better

 

for president, it's not completely clear but I think trump is more constructive:  a) greater chance for settlement in Nov/Dec since Hillary cant pardon, if needed    b) greater chance for an announcement to build capital starting in Nov/Dec to help protect the GSEs (I don't think Obama will recap or release, those are too big of moves to make in a lame duck setting)    c) he has some advisers who are pro-GSE  and d)  he's a businessman and will likely want to monetize the $150bn+ warrant value

 

anyone have strong views?

 

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A part of me thinks this might be settled before Hillary takes office.

 

 

 

Edit: A large part of my reasoning comes from this latest shareholder lawsuit that got dropped with prejudice....If my reasoning is right, big if, the shareholders really have no reason to settle and if they loose then why drop?Why not at least finish this out and if its a loss then yhy not take it the next step. Also, that conference call a week or so ago with the lawyers from investors unite(I think one of them was an actual lawyer from  they seemed pretty sure of themselves. Also, the govt has 62 reasons to settle.....

 

 

Edit 2: The govt has 56 reasons and one of the lawyers was a partner with Cooper and Kirk.

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how is everyone thinking about the election's impact on GSE securities?  my take is below.

 

the better Democrats do in Congress, the better

 

for president, it's not completely clear but I think trump is more constructive:  a) greater chance for settlement in Nov/Dec since Hillary cant pardon, if needed    b) greater chance for an announcement to build capital starting in Nov/Dec to help protect the GSEs (I don't think Obama will recap or release, those are too big of moves to make in a lame duck setting)    c) he has some advisers who are pro-GSE  and d)  he's a businessman and will likely want to monetize the $150bn+ warrant value

 

anyone have strong views?

 

 

Sherrod Brown is the ranking Democrat in Senate Banking, so he is in line to become chair if the Dems win the Senate. That's huge, he's one of our biggest allies. It would also castrate Sen. Shelby, current chair and man behind the "gov can't sell its shares without congress" rider in the omnibus spending bill, who is our second or third biggest enemy.

 

In the House, Maxine Waters is the ranking dem on House Financial Services. If by some miracle the dems took the house, she'd be chair. She too is one of the GSEs biggest allies.

 

Even with only Senate Banking under control, this essentially eliminates the possibility of legislation winding down the GSEs. The concern at that point, as far as the shareholders go, would be that they go the opposite direction and effectively nationalize. That would be very hard to do given the size of the balance sheets and the absolute uprising there would be from congressional republicans, but if they were able to pull it off, I think they'd basically have to buy out the prefs. The commons don't have nearly as bright a future in that scenario.

 

However, assuming Hillary wins, it's very likely that her administration (Treasury and her economic staff) would be very anti-GSE. Larry Summers, Gene Sperling, etc.

 

Don't underestimate how much political resistance there will be to restoring them even if the dems are in charge. The system really was pretty screwed up, and few people want to see the kind of corruption that was going on come back. With a government guarantee as the basis for your business model comes the need to PROTECT that guarantee, and the only way to do that is lobbying and playing politics. No one in congress wants F&F to start that up again.

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Brown, settlement talk, Waters, Investors Unite audio...

 

Brown...

Sherrod Brown is the ranking Democrat in Senate Banking, so he is in line to become chair if the Dems win the Senate. That's huge, he's one of our biggest allies. It would also castrate Sen. Shelby, current chair and man behind the "gov can't sell its shares without congress" rider in the omnibus spending bill, who is our second or third biggest enemy.

 

Again, I know I sound like a broken tape at this point, but with the scathing Sweeney order to unseal the seven documents, the pending motion to compel in front of Sweeney, the pending Perry decision & the fact that they, stupidly, tried to consolidate cases through the MDL in DC without waiting to see who the judges were in DC... I can't imagine that the government isn't looking at a settlement.

 

+1.  Add to it that the gov't asked for terms awhile back, Sherrod Brown's comments, Berkowitz's comments, Political Alpha's piece as reported by Politico, etc...

 

Sherrod Brown/Bruce Berkowitz comments:

Brown 12/18/2015...

https://www.congress.gov/congressional-record/2015/12/18/senate-section

Mr. BROWN. I will say to my colleague from New York that it does not.

That is not the effect of the language. Any number of decisions could

be made after that date, when a new Congress and a new President will be in place. Nor does this provision have any effect on the court cases and settlements currently underway challenging the validity of the third amendment. As the Senator from Tennessee said yesterday, "this legislation does not prejudice'' any of those cases.

Berkowitz 2/23/2016

At 33-minute mark of the call: https://engage.vevent.com/index.jsp?eid=4711&seid=18

 

"In late 2015 there were settlement communications between plaintiffs and the government.  But frankly, given how deep treasury has dug in its heels and has tried to hide the truth by withholding evidence, it remains unclear to me whether treasury is capable of having an earnest conversation."

 

Gov't asking for terms:

Jon Prior (Politico) tweet on 2/24/2016:

"Treasury, DOJ made no offer last fall, asked for terms."

 

Political Alpha as reported by Politico 4/2/2016:

http://www.politico.com/tipsheets/morning-money

IS WALL STREET SLEEPING ON GSE REFORM? — Via Political Alpha: “While the 10/19/15 coordinated policy response by the White House and Treasury to our 10/5/15 note, ‘White House Looking into Ending GSE Conservatorship,’ had supposedly put the issue over rebuilding capital at the GSEs to bed, contacts tell us that the debate is still very much alive and ongoing inside the Obama Administration.

 

“Moreover, the discussions have moved to Federal Housing Finance Authority (FHFA), which has the authority to act unilaterally and is now actively reviewing its options and likely to act much sooner than Wall Street is expecting to begin the next major housing reform initiative: rebuilding capital at the GSEs.”

 

Waters...

In the House, Maxine Waters is the ranking dem on House Financial Services. If by some miracle the dems took the house, she'd be chair. She too is one of the GSEs biggest allies.

 

http://www.marketwatch.com/story/maxine-waters-we-are-a-long-way-from-fannie-freddie-reform-2015-07-09

 

Maxine Waters: "Of course, Fannie and Freddie look pretty good. Not only have they been performing well, but they have paid back all of the money to the Treasury and they continue to earn money. So that makes them look very, very good."

 

Investors Unite audio...

Also, that conference call a week or so ago with the lawyers from investors unite(I think one of them was an actual lawyer from  they seemed pretty sure of themselves. Also, the govt has 62 reasons to settle.....

 

Edit 2: The govt has 56 reasons and one of the lawyers was a partner with Cooper and Kirk.

 

Audio recording: http://investorsunite.org/iu-audio-cleanup/

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https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/52089-gse-report.pdf

 

The Effects of Increasing Fannie Mae’s and Freddie Mac’s Capital. CBO

 

Seems many are getting their thoughts out there today.  Perhaps something is brewing beneath the surface...

 

CBO: Fannie Mae and Freddie Mac should keep $5 billion in profits per year.  Illustrative option vs. policy option … October 20, 2016 Jacob Gaffney

http://www.housingwire.com/articles/38332-cbo-fannie-mae-and-freddie-mac-should-keep-5-billion-in-profits-per-year

 

Budget office: Letting Fannie, Freddie raise capital would reduce bailout risk by Joseph Lawler (@JOSEPHLAWLER) 10/20/16 4:58 PM

http://www.washingtonexaminer.com/budget-office-letting-fannie-freddie-raise-capital-would-reduce-bailout-risk/article/2605163

 

GSEs need greater taxpayer protection upfront, Congress BlogiconCongress Blog feed October 20, 2016, 08:20 am by Lindsey Johnson

https://origin-nyi.thehill.com/blogs/congress-blog/economy-budget/301880-gses-need-greater-taxpayer-protection-upfront

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From Peter Chapman yesterday...

A new lawsuit challenging the Third Amendment was filed today.  The lawsuit is captioned Collins v. FHFA and was filed in the Southern District of Texas.  Proceeding under the Administrative Procedures Act, the Shareholder-Plaintiffs ask the Court to vacate and set aside the Net Worth Sweep.

FNMAS_Collins.pdf

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I would go, but for the $2,895 entrance fee.

 

I don't blame you.  Probably nothing of substance will be said, and if something is said we'll likely get wind of it. 

 

 

Maybe I'm wrong that nothing of substance will be said. Probably nothing, but an interesting tweet today from Fannie Mae...

 

Fannie Mae Verified account

‏@FannieMae

 

We're @ #MBAAnnual16 & we have a BIG announcement. Get the scoop @ the GSE session featuring our CEO Tim Mayopoulos, 11 a.m. tomorrow.

 

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given the current context, it's fairly insensitive to many of the long term shareholders to put out a twitter announcement like this.

 

Well, I mean, it's not like this is the only thing of Fannie's plate. They have an actual business to run. Whether our lives revolve around the Fannie litigation/recap situation has no bearing on whether theirs does.

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Still, it sounds as though they are making it harder for "putbacks" to occurs (reps and warranties), which isn't great for GSE equity investors.

 

Separately, I watched the Hamilton (PBS) doc online last night. It's excellent (as is the musical), but I didn't really like the comments by Hank Paulson and Geithner. Hamilton's plan to have the federal gov't pay back the states' debt may have in some sense been the first "bailout," but at least he didn't pick winners and losers. Unlike Paulson and Geithner, who were punitive to FnF and AIG.

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An emergency motion to see a settlement between two private parties... huh?

 

From Peter A. Chapman...

"FHFA filed an emergency motion this afternoon asking Judge Moreno to compel the Edwards Plaintiffs to give it a copy of their settlement agreement with PwC, and FHFA wants a copy by Oct. 28.  A copy of FHFA's emergency motion is attached to this e-mail message."

16-cv-21224-0052.pdf

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An emergency motion to see a settlement between two private parties... huh?

 

From Peter A. Chapman...

"FHFA filed an emergency motion this afternoon asking Judge Moreno to compel the Edwards Plaintiffs to give it a copy of their settlement agreement with PwC, and FHFA wants a copy by Oct. 28.  A copy of FHFA's emergency motion is attached to this e-mail message."

 

The FHFA wants to see the settlement between two private parties(Edwards v. PWC). Most likely to see how they want to precede elsewhere.

 

Off Subject: John Lester is 32 and getting paid $20M, for christ sake learn to throw the ball to first base!!!

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Fairholme submitted an emergency order to Judge Sweeney yesterday evening seeking enforcement of her Sept. 20 order directing the government to produce the 56 documents she said aren't privileged.  Fairholme wants to share these 56 documents with the D.C. Circuit.  The government intends to ask the Federal Circuit to review Judge Sweeney's Sept. 20 order.

13-465-0344.pdf

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Since September 20, 2016, when this Court granted Plaintiffs’ motion to compel with respect to all 56 documents that it reviewed in camera, Defendant has repeatedly delayed complying with this Court’s order. On September 29, 2016, Defendant requested, and Plaintiffs agreed, to allow Defendant an additional 10 days to consider whether to seek further review of the Court’s decision. After that time had expired on Tuesday, October 11, Defendant granted itself a further extension over Plaintiffs’ objection until Friday, October 21. On October 21, Defendant informed Plaintiffs that it would not comply with the Court’s order until at least Tuesday, October 25. With those further extensions having now expired, Defendant today informed Plaintiffs that it intends to seek further review of the Court’s decision “in a matter of days.” When asked whether Defendant would seek further review with respect to all of the documents the Court ordered produced, counsel for Defendant said that she was “not at liberty to say at this time.” Counsel for Defendant further stated that she was unable to represent whether Defendant has made a final decision about whether to challenge all aspects of the Court’s ruling and could not commit to seeking further review by any specified date.

 

God, what assholes.

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