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

[Desert_Rat]

Agreed.

 

If conversion to common, their max cut could be 79.9%, is that right? I never understood that. To me, 50.1% makes a controlling owner who needs to express liabilities on own balance sheet. but nope (obviously).

 

If that, there's also issue with jr preferred accepting low cut. More lawsuits.

[SnarkyPuppy]

https://www.icba.org/news-events/latest-news/2017/04/19/media-advisory-icba-capital-summit-may-1---3

[Luke 532]

https://www.icba.org/news-events/latest-news/2017/04/19/media-advisory-icba-capital-summit-may-1---3

 

Mnuchin and Hensarling are the speakers at the ICBA May 1-3 event.

[Desert_Rat]

https://www.pscp.tv/w/1mnGeEMpZpAGX

 

14:22 mark

[Luke 532]

https://www.pscp.tv/w/1mnGeEMpZpAGX

 

14:22 mark

 

Mnuchin on Bloomberg

 

Starts around 14:20 mark... https://www.pscp.tv/w/1mnGeEMpZpAGX

I may have missed a few words here and there as I typed this while listening...

 

Interviewer: "US needs to get Fannie Freddie out of gov't ownership.  What is your plan to get the gov't out of housing and what would be the effect on mortgage rates."

Mnuchin: "Many meetings.  Housing reform is a priority of mine.  Existing system of Treasury as gigantic line to Fannie/Freddie and operating these the way they are, we are determined to change that and not have that continue for the next 4 years.  The fundamental principles is to have proper housing finance in this country.  We've had liquidity for the 30-year mortgage, has been very important for the middle income in terms of being able to have home ownership and home ownership and building, as you know, is a very big part of the U.S. economy.  The number one issue is we want to make sure we have proper liquidity in the housing markets. The other number one issue, and I wouldn't even call these one and two in any particular order, I'll just call them top two, is we can't put the taxpayers at risk. So we can't have a system where there's a bailout of housing finance.  We are looking at housing reform.  We've spoken to different people, I think there's a lot of different good ideas.  This is something we'll be working on in the second half of the year once we get further down tax reform to focus on our housing policy."

 

Interviewer: "Have you talked with Ben Carson on those plans?"

Mnuchin: "Absolutely.  We are going to work very closely with him.  Although the major focus is on Fannie Freddie we are concerned with the growth of FHA loans. And we want to be very careful in fixing Fannie Freddie that we don't create a bigger problem at FHA.  Whatever the solution we're not going to push down on this and pops up on the other side of FHA.  So we're looking at this and working with HUD on comprehensive housing issues to make sure we have liquidity and we have safety."

 

 

[orthopa]

It seems like as hypothesized my many in Nov the fate of FnF ultimately may fall into the hands of Mnuchin. Question is whether or not shareholders are taken care of.

 

I know the answer is probably obvious as the questions in these interviews are prepared but why hasn't anyone asked about shareholders yet. Mnuchin has reiterated the same thing multiple times over now.

[Midas79]

For all the focus on the judicial and executive branches, the legislative branch also has the potential to blindside us. Nothing has been done on that front in almost 9 years, but that's no guarantee that we won't see shady political maneuverings (led by Crapo, Corker etc.) to pull the rug from under the administration if they think that Mnuchin will act without them. This could lead to an interesting, if heart attack-inducing for investors, race between Congress and Mnuchin to get something done before the other does.

 

Congress moves much more slowly but its actions are far more powerful. We need to root for legislative gridlock. We also must continue to hope that Mnuchin's relative silence on the issue is cover for introducing a sweeping (ha!) solution all at once.

[undervalued]

Do you believe that this administration will do anything? I am so skeptical.

Mark Twain said  "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."

 

I believe this admin will do something but will it work out at the end to the way you expected? Probably not. So don't put all your money in this one trade.

[orthopa]

Why arent MBA, etc presenting proposals to Congress? They are being presented to Mnuchin correct?

 

Seems like the FNFA and Mnuchin are working separate from Congress in light of the Corker letter. Is Mnuchin really planning on a legislative process? Does'nt seem like it. That zero capital date is coming really fast.

[Guest cherzeca]

Why arent MBA, etc presenting proposals to Congress? They are being presented to Mnuchin correct?

 

Seems like the FNFA and Mnuchin are working separate from Congress in light of the Corker letter. Is Mnuchin really planning on a legislative process? Does'nt seem like it. That zero capital date is coming really fast.

 

after letting ryan drop ball with healthcare, i get the impression that the trump administration is going to prepare its own policy/reform plans independently of congress. now with most issues, congress has to pass the law, but with fannie/freddie, mnuchin has made clear that he is aware that administration can go forward with fhfa and without congress.  so i think mnuchin is letting congress do their work on housing while he is doing his work; whether there will be common ground i imagine no one knows for sure now

[SnarkyPuppy]

https://www.bloomberg.com/news/articles/2017-04-27/fannie-and-freddie-back-in-the-black

 

"In the middle of the debate is Mel Watt, the Obama appointee who heads the FHFA and essentially controls Fannie and Freddie. Watt has the authority to order the companies’ boards of directors to suspend the dividend payments. He came close to doing so at the end of March, just before Fannie and Freddie’s last payment was due, according to people familiar with the matter. A group of senators wrote Watt a letter that week, warning him against stopping payment, and Watt decided to make it."

 

and

 

"Mnuchin put one of his counselors, Craig Phillips, in charge of the situation. In meetings, Phillips has floated ideas as wide-ranging as putting the companies into receivership, which could wipe out investors, as well as legislation to replace or supplement them with a new system, according to people familiar with the matter. Clarity on what the administration wants to do could be a long way off."

[muscleman]

https://www.bloomberg.com/news/articles/2017-04-27/fannie-and-freddie-back-in-the-black

 

"In the middle of the debate is Mel Watt, the Obama appointee who heads the FHFA and essentially controls Fannie and Freddie. Watt has the authority to order the companies’ boards of directors to suspend the dividend payments. He came close to doing so at the end of March, just before Fannie and Freddie’s last payment was due, according to people familiar with the matter. A group of senators wrote Watt a letter that week, warning him against stopping payment, and Watt decided to make it."

 

and

 

"Mnuchin put one of his counselors, Craig Phillips, in charge of the situation. In meetings, Phillips has floated ideas as wide-ranging as putting the companies into receivership, which could wipe out investors, as well as legislation to replace or supplement them with a new system, according to people familiar with the matter. Clarity on what the administration wants to do could be a long way off."

 

 

Hmm....... Does Craig's wide-ranging ideas contain one that look like ICBA's? It sounds ridiculous to propose that a highly profitable company should declare bankruptcy.

 

I heard Mike Pence is the banker's friend. But I see that the community bankers and big banks are quite divided on this issue. Does anyone know if Pence is the friend of the community banks or the large banks?

 

 

 

[muscleman]

https://www.bloomberg.com/news/articles/2017-04-27/fannie-and-freddie-back-in-the-black

 

"In the middle of the debate is Mel Watt, the Obama appointee who heads the FHFA and essentially controls Fannie and Freddie. Watt has the authority to order the companies’ boards of directors to suspend the dividend payments. He came close to doing so at the end of March, just before Fannie and Freddie’s last payment was due, according to people familiar with the matter. A group of senators wrote Watt a letter that week, warning him against stopping payment, and Watt decided to make it."

 

Sounds like Watt doesn't have the guts to really do what he is supposed to do.

[Mephistopheles]

https://www.bloomberg.com/news/articles/2017-04-27/fannie-and-freddie-back-in-the-black

 

"In the middle of the debate is Mel Watt, the Obama appointee who heads the FHFA and essentially controls Fannie and Freddie. Watt has the authority to order the companies’ boards of directors to suspend the dividend payments. He came close to doing so at the end of March, just before Fannie and Freddie’s last payment was due, according to people familiar with the matter. A group of senators wrote Watt a letter that week, warning him against stopping payment, and Watt decided to make it."

 

Sounds like Watt doesn't have the guts to really do what he is supposed to do.

 

The interesting thing is that he actually considered suspending the payments.

 

It's only a matter of time before the matter becomes really pressing.

[Luke 532]

House Rules Committee meets on Tuesday regarding the Fannie/Freddie Open Records Act (attached).

 

And here's the link to follow the billl: https://www.congress.gov/bill/115th-congress/house-bill/1694/cosponsors?q=%7B%22search%22%3A%5B%22hr+1694%22%5D%7D&r=1

 

H. Res. 280: H.R. 1694 - Fannie and Freddie Open Records Act of 2017 passes US House (Rule vote) by 226-192.

[Luke 532]

Joseph Lawler‏Verified account @josephlawler 6m6 minutes ago

 

Hensarling says he shares Crapo's optimism that Fannie/Freddie reform can be done this year, says he is "very anxious" to return to it

 

[Luke 532]

Plaintiff Outlines Plan for Potential Fannie/Freddie Settlement

http://ctfn.news/plaintiff-outlines-plan-for-potential-fanniefreddie-settlement/#

[stevevri]

House Rules Committee meets on Tuesday regarding the Fannie/Freddie Open Records Act (attached).

 

And here's the link to follow the billl: https://www.congress.gov/bill/115th-congress/house-bill/1694/cosponsors?q=%7B%22search%22%3A%5B%22hr+1694%22%5D%7D&r=1

 

H. Res. 280: H.R. 1694 - Fannie and Freddie Open Records Act of 2017 passes US House (Rule vote) by 226-192.

 

That was a rules vote (confused me earlier too... weird congress procedures). The actual vote passed 425-0. See: https://pbs.twimg.com/media/C-cdFzQUMAAUVUD.jpg:large

[Luke 532]

My bad.

[muscleman]

Plaintiff Outlines Plan for Potential Fannie/Freddie Settlement

http://ctfn.news/plaintiff-outlines-plan-for-potential-fanniefreddie-settlement/#

 

Can't read the content. Mind posting here?

[waynepolsonAtoZ]

Single-family serious delinquency rate for Freddie 92 basis points, lowest since June 2008.

 

http://www.freddiemac.com/investors/volsum/pdf/0317mvs.pdf

 

http://www.freddiemac.com/investors/volsum/pdf/0608mvs.pdf

[Luke 532]

FNMAS halted (regulatory, not volatility).  Likely nothing as other prefs and common are still trading.

[undervalued]

http://www.rollingstone.com/politics/news/taibbi-trump-named-craig-phillips-to-fix-wall-street-w479332

[SnarkyPuppy]

https://www.bloomberg.com/news/articles/2017-04-27/fannie-and-freddie-back-in-the-black

 

"Mnuchin put one of his counselors, Craig Phillips, in charge of the situation. In meetings, Phillips has floated ideas as wide-ranging as putting the companies into receivership, which could wipe out investors, as well as legislation to replace or supplement them with a new system, according to people familiar with the matter. Clarity on what the administration wants to do could be a long way off."

 

This continues to worry me.  Receivership -> create new legal entity ala MBA proposal.  Seems this Craig Phillips is not the best person to be in charge. 

[rros]

https://www.bloomberg.com/news/articles/2017-04-27/fannie-and-freddie-back-in-the-black

 

"Mnuchin put one of his counselors, Craig Phillips, in charge of the situation. In meetings, Phillips has floated ideas as wide-ranging as putting the companies into receivership, which could wipe out investors, as well as legislation to replace or supplement them with a new system, according to people familiar with the matter. Clarity on what the administration wants to do could be a long way off."

 

This continues to worry me.  Receivership -> create new legal entity ala MBA proposal.  Seems this Craig Phillips is not the best person to be in charge.

Also,

 

receivership > liquidation preference > Jrs. at par (provided Trump does away with the Srs. on Jan 2018.