Flynnstone5 Posted May 12, 2017 Posted May 12, 2017 The biggest key point I noticed was Watt clearly drawing a line between GSE reform and that of Housing reform. It sounded to me like Watt was saying that we've already implemented necessary GSE reform so your focus (congress) should be on housing reform and don't confuse the two. In essence, go screw Corker, focus your time on other areas because you're not playing a key role when it comes to GSE's. Let's hope Mnuchin finally makes some crystal clear statements that benefit our positions as shareholders. End this bullshit, all the trying to read between the lines and make inferences from vague statements.
Luke 532 Posted May 12, 2017 Posted May 12, 2017 The real Tim Howard on yesterday's hearing (emphasis added is mine)... "I liked the fact that Watt argued and laid the groundwork for suspending Fannie and Freddie’s net worth sweep payments beginning next month. Unlike the March 31 payments, I think the companies now WILL retain the earnings they otherwise would have paid to Treasury on June 30, and will continue to retain them until they build up a capital cushion that Watt feels is sufficient. I do not believe Watt would have been so direct with Senate Banking Committee members about the need to suspend sweep payments to build capital had he not had the backing of Treasury Secretary Mnuchin." https://howardonmortgagefinance.com/2017/04/25/narrowing-the-differences/#comments
Luke 532 Posted May 12, 2017 Posted May 12, 2017 The real Tim Howard on yesterday's hearing (emphasis added is mine)... "I liked the fact that Watt argued and laid the groundwork for suspending Fannie and Freddie’s net worth sweep payments beginning next month. Unlike the March 31 payments, I think the companies now WILL retain the earnings they otherwise would have paid to Treasury on June 30, and will continue to retain them until they build up a capital cushion that Watt feels is sufficient. I do not believe Watt would have been so direct with Senate Banking Committee members about the need to suspend sweep payments to build capital had he not had the backing of Treasury Secretary Mnuchin." https://howardonmortgagefinance.com/2017/04/25/narrowing-the-differences/#comments Assuming the NWS is paused/stopped in June, what do you all perceive as the major risks going forward for preferred shareholders? I'm intentionally not including my opinion in this post as I don't want to influence thoughts/opinions/comments. Thanks in advance for commenting!
Flynnstone5 Posted May 12, 2017 Posted May 12, 2017 The real Tim Howard on yesterday's hearing (emphasis added is mine)... "I liked the fact that Watt argued and laid the groundwork for suspending Fannie and Freddie’s net worth sweep payments beginning next month. Unlike the March 31 payments, I think the companies now WILL retain the earnings they otherwise would have paid to Treasury on June 30, and will continue to retain them until they build up a capital cushion that Watt feels is sufficient. I do not believe Watt would have been so direct with Senate Banking Committee members about the need to suspend sweep payments to build capital had he not had the backing of Treasury Secretary Mnuchin." https://howardonmortgagefinance.com/2017/04/25/narrowing-the-differences/#comments Assuming the NWS is paused/stopped in June, what do you all perceive as the major risks going forward for preferred shareholders? I'm intentionally not including my opinion in this post as I don't want to influence thoughts/opinions/comments. Thanks in advance for commenting! I'd say the risks are they propose a plan that doesn't re-instate divs for a long period of time or that maybe they force a shitty conversion deal. I'm more optimistic though that they would rather pay us off so they can re-issue new jr. Look forward to hearing everyone's opinions.
rros Posted May 12, 2017 Posted May 12, 2017 The real Tim Howard on yesterday's hearing (emphasis added is mine)... "I liked the fact that Watt argued and laid the groundwork for suspending Fannie and Freddie’s net worth sweep payments beginning next month. Unlike the March 31 payments, I think the companies now WILL retain the earnings they otherwise would have paid to Treasury on June 30, and will continue to retain them until they build up a capital cushion that Watt feels is sufficient. I do not believe Watt would have been so direct with Senate Banking Committee members about the need to suspend sweep payments to build capital had he not had the backing of Treasury Secretary Mnuchin." https://howardonmortgagefinance.com/2017/04/25/narrowing-the-differences/#comments Assuming the NWS is paused/stopped in June, what do you all perceive as the major risks going forward for preferred shareholders? I'm intentionally not including my opinion in this post as I don't want to influence thoughts/opinions/comments. Thanks in advance for commenting! The main risk is always Corker coming out with some piecemeal legislation. But he won't show his hand until after he sees the new arrangement. Then, he may try another wrench. I hope Treasury works with Watt and they make the simplest of the moves: just cancelling the buffer reduction and not adding any limits or anything silly and definitely not going back to the 10%. That would mean simply scratching 1 line of the 3rd amendment and adding an agreement w/Treasury not to get paid. Then, on Jan 1st, 2018 all that has to happen is Trump dismissing the Srs. as in government has been paid. Which will force to deal with the commitment and a replacement of capital for the companies. Then, Watt may request FF to come up with recapitalization plan. Congress can then reform all they want.
Williams406 Posted May 12, 2017 Posted May 12, 2017 I observed several senators on both sides of the GSE issue referencing conversations they had recently had with Watt. Lots of off-the-record conversations at lunches, meetings, cocktail parties, etc. Hearings like yesterday's are where you try to get your opposition, on-the-record, boxed in by having them state they will or won't do something. Crapo was trying to get Watt to commit to the idea that stopping the NWS wasn't a precursor to recap/reform/release. Like Mnuchin during confirmation hearings talking bipartisan solutions while refusing to relinquish the option of unilateral action. I'm not sure how to assess the risk of disruption to the housing finance market from a Treasury draw, but I've always thought a draw would be an unforced error for the administration. If that occurred, you should try arranging to receive a buck for every time you hear "bailout" in the news. I think the chance of Watt acting alone here are slim to none. Risks for preferred shareholders? The equity cushion--even with the cessation of the NWS, if that's the only step taken--will remain thin for a while. Settlement offer for some fraction of par where Treasury negotiates hard. Resolution could still be far off even if there is intent to recap/reform/release on the part of administration.
waynepolsonAtoZ Posted May 12, 2017 Posted May 12, 2017 I would like to opine that the real Tim Howard's interpretation, i.e., ending the dividend as of next quarter is WAY optimistic. Not sure what will happen though viz-a-viz actions by Watt or Mnuchin.
rros Posted May 12, 2017 Posted May 12, 2017 I observed several senators on both sides of the GSE issue referencing conversations they had recently had with Watt. Lots of off-the-record conversations at lunches, meetings, cocktail parties, etc. Hearings like yesterday's are where you try to get your opposition, on-the-record, boxed in by having them state they will or won't do something. Crapo was trying to get Watt to commit to the idea that stopping the NWS wasn't a precursor to recap/reform/release. Like Mnuchin during confirmation hearings talking bipartisan solutions while refusing to relinquish the option of unilateral action. I'm not sure how to assess the risk of disruption to the housing finance market from a Treasury draw, but I've always thought a draw would be an unforced error for the administration. If that occurred, you should try arranging to receive a buck for every time you hear "bailout" in the news. I think the chance of Watt acting alone here are slim to none. Risks for preferred shareholders? The equity cushion--even with the cessation of the NWS, if that's the only step taken--will remain thin for a while. Settlement offer for some fraction of par where Treasury negotiates hard. Resolution could still be far off even if there is intent to recap/reform/release on the part of administration. I think we will never, ever hear the word "shareholders" as the process unfolds. Instead, it will all be about taxpayer protection and no more bailouts. Shareholders will be made good as default and that will happen before any reform takes place as Mnuchin stated capital is needed before reforming. This would discard any settlements, make equity good and get the Jrs. to face value way before there is any dividend or full cushion. This may also mean that reform will be almost complete administratively with just a few touches, perhaps, by Congress (charters). I know I am a kool-aider but whatever. Wayne, "way optimistic" really? Watt said either with or without Treasury. Said he may have to dance alone if Treasury doesn't join. That sounded just as pure determination.
Desert_Rat Posted May 12, 2017 Posted May 12, 2017 The real Tim Howard on yesterday's hearing (emphasis added is mine)... "I liked the fact that Watt argued and laid the groundwork for suspending Fannie and Freddie’s net worth sweep payments beginning next month. Unlike the March 31 payments, I think the companies now WILL retain the earnings they otherwise would have paid to Treasury on June 30, and will continue to retain them until they build up a capital cushion that Watt feels is sufficient. I do not believe Watt would have been so direct with Senate Banking Committee members about the need to suspend sweep payments to build capital had he not had the backing of Treasury Secretary Mnuchin." https://howardonmortgagefinance.com/2017/04/25/narrowing-the-differences/#comments Assuming the NWS is paused/stopped in June, what do you all perceive as the major risks going forward for preferred shareholders? I'm intentionally not including my opinion in this post as I don't want to influence thoughts/opinions/comments. Thanks in advance for commenting! I'd say the risks are they propose a plan that doesn't re-instate divs for a long period of time or that maybe they force a shitty conversion deal. I'm more optimistic though that they would rather pay us off so they can re-issue new jr. Look forward to hearing everyone's opinions. Although we should now be worth more (maybe 50% of face?) my concern remains the same, that housing reform will not occur and we'll remain in limbo.
investorG Posted May 12, 2017 Posted May 12, 2017 The real Tim Howard on yesterday's hearing (emphasis added is mine)... "I liked the fact that Watt argued and laid the groundwork for suspending Fannie and Freddie’s net worth sweep payments beginning next month. Unlike the March 31 payments, I think the companies now WILL retain the earnings they otherwise would have paid to Treasury on June 30, and will continue to retain them until they build up a capital cushion that Watt feels is sufficient. I do not believe Watt would have been so direct with Senate Banking Committee members about the need to suspend sweep payments to build capital had he not had the backing of Treasury Secretary Mnuchin." https://howardonmortgagefinance.com/2017/04/25/narrowing-the-differences/#comments Assuming the NWS is paused/stopped in June, what do you all perceive as the major risks going forward for preferred shareholders? I'm intentionally not including my opinion in this post as I don't want to influence thoughts/opinions/comments. Thanks in advance for commenting! I'd say the risks are they propose a plan that doesn't re-instate divs for a long period of time or that maybe they force a shitty conversion deal. I'm more optimistic though that they would rather pay us off so they can re-issue new jr. Look forward to hearing everyone's opinions. preferred risks: --- trump kicked out --- mnuchin's plan surprisingly doesn't include GSEs --- dumped into receivership which creates uncertainty / timing risk --- the ackman / icba plan of building capital over time and not paying dividends for years set against obviously many positives. i'm surprised the security prices are this low after yesterday's hearing, it could be the first item on the above list impacting things.
Desert_Rat Posted May 12, 2017 Posted May 12, 2017 To add to risk #1 above: What value will preferreds have if country is burned to ground? 8) MAGA 8)
waynepolsonAtoZ Posted May 12, 2017 Posted May 12, 2017 Wayne, "way optimistic" really? I'll still stick to an EOY ETA. Year-end is when the book equity capital is zeroed out. I'm really just responding to the real Tim H's timing, i.e., June 2017. Once the dividends have been announced, which they have, I think there is a zero chance that they will not actually be paid into Tsy. Thus, I think the real Tim H was "way optimistic." Not paying an announced dividend would be a really radical thing to happen. I know I am a kool-aider but whatever. I didn't disagree with anything you said in the first paragraph of your post. Thus, shareholders won't be talked about, but in order to attract new capital existing shareholders will be treated more or less fairly.
rros Posted May 12, 2017 Posted May 12, 2017 Wayne, "way optimistic" really? I'll still stick to an EOY ETA. Year-end is when the book equity capital is zeroed out. I'm really just responding to the real Tim H's timing, i.e., June 2017. Once the dividends have been announced, which they have, I think there is a zero chance that they will not actually be paid into Tsy. Thus, I think the real Tim H was "way optimistic." Not paying an announced dividend would be a really radical thing to happen. I know I am a kool-aider but whatever. I didn't disagree with anything you said in the first paragraph of your post. Thus, shareholders won't be talked about, but in order to attract new capital existing shareholders will be treated more or less fairly. That actually makes sense and you are right, both companies have already stated how much they will be sending to Treasury after June. Yeah, it will be a shocker if Watt reverses that.
orthopa Posted May 12, 2017 Posted May 12, 2017 Wayne, "way optimistic" really? I'll still stick to an EOY ETA. Year-end is when the book equity capital is zeroed out. I'm really just responding to the real Tim H's timing, i.e., June 2017. Once the dividends have been announced, which they have, I think there is a zero chance that they will not actually be paid into Tsy. Thus, I think the real Tim H was "way optimistic." Not paying an announced dividend would be a really radical thing to happen. I know I am a kool-aider but whatever. I didn't disagree with anything you said in the first paragraph of your post. Thus, shareholders won't be talked about, but in order to attract new capital existing shareholders will be treated more or less fairly. How does Watt do his job as he states he plans to do if he lets the capital go to zero. He just spent 2 hours telling us it shouldn't. In my mind that means zero on 1/18 never happens. He also smerked when asked about a minimal buffer discussion with treasury. Watt and Mnuchin both know how much of a buffer they want.
hardincap Posted May 12, 2017 Posted May 12, 2017 Assuming the NWS is paused/stopped in June, what do you all perceive as the major risks going forward for preferred shareholders? I'm intentionally not including my opinion in this post as I don't want to influence thoughts/opinions/comments. Thanks in advance for commenting! i haven an opinion, but would like to hear yours first :)
rros Posted May 13, 2017 Posted May 13, 2017 Wayne, "way optimistic" really? I'll still stick to an EOY ETA. Year-end is when the book equity capital is zeroed out. I'm really just responding to the real Tim H's timing, i.e., June 2017. Once the dividends have been announced, which they have, I think there is a zero chance that they will not actually be paid into Tsy. Thus, I think the real Tim H was "way optimistic." Not paying an announced dividend would be a really radical thing to happen. I know I am a kool-aider but whatever. I didn't disagree with anything you said in the first paragraph of your post. Thus, shareholders won't be talked about, but in order to attract new capital existing shareholders will be treated more or less fairly. How does Watt do his job as he states he plans to do if he lets the capital go to zero. He just spent 2 hours telling us it shouldn't. In my mind that means zero on 1/18 never happens. He also smerked when asked about a minimal buffer discussion with treasury. Watt and Mnuchin both know how much of a buffer they want. By far, the best we can hope for is that all the details remain ambiguous. It was great to see Watt dodging many bullets like the amount of buffer or how to handle a DTA reduction if tax plan goes through or past Treasury talks. All the while pointing at taxpayer protection, investors' loss of confidence, sound and solvency of companies, liquidity of the mortgage market or whatever reasoning-of-the-day happens to be, as long as we remain invisible. The best route for us here is that they dismantle this thing one piece at a time. First, nullifying the buffer reduction and allowing retaining earnings. Then, dealing with the Srs. and the commitment, etc. So it will be less painful and threatening to the opposing congressmen/women who -as Watt wisely stated, remain in charge of housing reform, whatever that is-. By the time the dismantling is at a point of no return they will be scratching their heads... We do not want a Hank Paulson blast on the floor.
Desert_Rat Posted May 13, 2017 Posted May 13, 2017 Here's a thought. Since optics could be pose a problem and everything this admin does is vilified by anti-American MSM, Mnuchin should demand Watt make future dividend payments. That way Watt can sue treasury, some Obama appointed flunky fed judge can rule for him, and #fakenews can emphasis how greedy Mnuchin was to continue stealing from FnF. Weeks later Mnuchin rips up PSPA and we all go home happy I should have gone into politics.
SnarkyPuppy Posted May 15, 2017 Posted May 15, 2017 Phillips is speaking today at a conference. Parrot is also speaking at the same conference. https://mobile.imn.org/conference/Credit-Risk-Transfer-Symposium-2017
Luke 532 Posted May 15, 2017 Posted May 15, 2017 Steve Eisman, the real life fund manager depicted by Steve Carrell as Mark Baum in The Big Short, disclosed today in CNBC that he owns Fannie stock.
DocSnowball Posted May 15, 2017 Posted May 15, 2017 Steve Eisman, the real life fund manager depicted by Steve Carrell as Mark Baum in The Big Short, disclosed today in CNBC that he owns Fannie stock. Bruce Berkowitz will play the lead when a movie is made on this lol
orthopa Posted May 16, 2017 Posted May 16, 2017 Corker says the white house is in a "downward spiral". Pretty critical for someone who is working with the administration on Housing Reform no? Also the snipet from Craig Phillips discussion at the conference yesterday said no further details on the "administrations preferred plan" for FnF and housing reform. No mention of congress there. Something does seem to have changed Mr. Corker.
Luke 532 Posted May 16, 2017 Posted May 16, 2017 Corker says the white house is in a "downward spiral". Pretty critical for someone who is working with the administration on Housing Reform no? Also the snipet from Craig Phillips discussion at the conference yesterday said no further details on the "administrations preferred plan" for FnF and housing reform. No mention of congress there. Something does seem to have changed Mr. Corker. He was also publicly critical about Trump 2 weeks ago. He probably realizes his GSE plan isn't looking very likely and he's lashing out as any toddler would when they don't get their way. Two weeks ago... Trump should stop tweeting so much — these 'interjections are harmful,' says powerful GOP Sen. Corker I highly doubt Corker would risk upsetting Trump by saying something like this if he liked what was going on behind the scenes.
rros Posted May 16, 2017 Posted May 16, 2017 Corker says the white house is in a "downward spiral". Pretty critical for someone who is working with the administration on Housing Reform no? Also the snipet from Craig Phillips discussion at the conference yesterday said no further details on the "administrations preferred plan" for FnF and housing reform. No mention of congress there. Something does seem to have changed Mr. Corker. What he really said: replace WH for Trump.
Desert_Rat Posted May 16, 2017 Posted May 16, 2017 What he really, really said: 'We can't handle this outsider determined to undermine our cushy (and ineffective) political system'
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