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

[Luke 532]

Powell picked for Fed...thoughts?

[investorG]

https://www.housingwire.com/articles/41714-mark-calabria-trump-administration-committed-to-ending-conservatorship?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire

What is difficult is getting them out of conservatorship without rewarding evil speculators. Treasury does not want that no matter who the ocassional pencil pusher, Geithner, Lew, Mnuchin is.

 

I believe mnuchin will push whatever plan he prefers irrespective of legacy treasury views.  I do expect eventual additional competition in some form, based on prior statements and republican views;  this likely should not prevent the common and preferred securities from performing from current levels. when the implicit guarantee for the companies likely goes away, and things likely shift to an explicit govt backstop paid-for guarantee, it's hard to not offer other companies the option to compete.  the question is, if things are regulated in a utility format, is it reasonable to expect other entrants to realistically compete with FnF. 

 

while we all want immediate results, I think it's best to judge mnuchin's rhetoric and actions starting on jan1 after jumpstart and after tax reform wins or fails -- it's no secret that they need to avoid upsetting as many republicans as possible to get their most important priority (taxes) done, and that most R's do not favor recapping and releasing FnF absent material reform first.

 

[Midas79]

while we all want immediate results, I think it's best to judge mnuchin's rhetoric and actions starting on jan1 after jumpstart and after tax reform wins or fails -- it's no secret that they need to avoid upsetting as many republicans as possible to get their most important priority (taxes) done, and that most R's do not favor recapping and releasing FnF absent material reform first.

 

But how does this jive with the RNC resolution? The resolution means there is at least some support in Congress for actually respecting shareholder rights. What remains to be seen is how much Trump and Mnuchin actually care about what the resolution says, and in Trump's case how much input he had into actually crafting it.

[investorG]

while we all want immediate results, I think it's best to judge mnuchin's rhetoric and actions starting on jan1 after jumpstart and after tax reform wins or fails -- it's no secret that they need to avoid upsetting as many republicans as possible to get their most important priority (taxes) done, and that most R's do not favor recapping and releasing FnF absent material reform first.

 

But how does this jive with the RNC resolution? The resolution means there is at least some support in Congress for actually respecting shareholder rights. What remains to be seen is how much Trump and Mnuchin actually care about what the resolution says, and in Trump's case how much input he had into actually crafting it.

 

based on the last couple of congressional hearings, it does not appear the RNC resolution (moelis plan) has caught on inside the legislative branch, unfortunately. 

 

i'm not sure how much mnuchin / trump care about us minority shareholders.  my hope and bet is that they do care, out of American principle and due to relationships, and that in 2018 they will express this view.

[Guest cherzeca]

https://www.housingwire.com/articles/41714-mark-calabria-trump-administration-committed-to-ending-conservatorship?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire

What is difficult is getting them out of conservatorship without rewarding evil speculators. Treasury does not want that no matter who the ocassional pencil pusher, Geithner, Lew, Mnuchin is.

 

if we are talking about hedge funds buying assets cheap, then mnuchin is an evil speculator.  this is precisely why i believe he will look at the issue without any of the anti-speculator bias that clearly prospered among nitwits like lew.

[Luke 532]

if we are talking about hedge funds buying assets cheap, then mnuchin is an evil speculator.  this is precisely why i believe he will look at the issue without any of the anti-speculator bias that clearly prospered among nitwits like lew.

 

+1

[rros]

https://www.housingwire.com/articles/41714-mark-calabria-trump-administration-committed-to-ending-conservatorship?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire

What is difficult is getting them out of conservatorship without rewarding evil speculators. Treasury does not want that no matter who the ocassional pencil pusher, Geithner, Lew, Mnuchin is.

 

if we are talking about hedge funds buying assets cheap, then mnuchin is an evil speculator.  this is precisely why i believe he will look at the issue without any of the anti-speculator bias that clearly prospered among nitwits like lew.

I hope you are right, Chris. What I really meant is that once in government, you become government. Thus, Mnuchin is not really Mnuchin anymore. He may have morphed -and his views- into government and government views.

 

Everyone goes in thinking they can change things. Then, deep state gets you.

[Luke 532]

Housing reform talk going on live... https://financialservices.house.gov/

[investorG]

Housing reform talk going on live... https://financialservices.house.gov/

 

for message board and twitter vocalists aiming for the old system, implicit guarantee, they didn't need a bailout, etc--- it appears time to give up that ghost.

 

an explicit paid for guarantee is the future, I believe.  probably on the securities, possibly on the guarantors.  utility model. 

 

I don't think its unrealistic to expect legislative action in 2018, understanding others like tim howard disagree.  the House financial services committee having 3 of these in 3 weeks (another one next week) suggests to me that mnuchin - phillips instructed them to get up to speed on the matter.

 

any thoughts on whether we can get a 4th amendment (which settles lawsuits) prior to legislative reform action / failure?  a dta writedown + jump start expiration could be a catalyst in early 2018?

 

[rros]

Housing reform talk going on live... https://financialservices.house.gov/

 

for message board and twitter vocalists aiming for the old system, implicit guarantee, they didn't need a bailout, etc--- it appears time to give up that ghost.

 

an explicit paid for guarantee is the future, I believe.  probably on the securities, possibly on the guarantors.  utility model. 

 

I don't think its unrealistic to expect legislative action in 2018, understanding others like tim howard disagree.  the House financial services committee having 3 of these in 3 weeks (another one next week) suggests to me that mnuchin - phillips instructed them to get up to speed on the matter.

 

any thoughts on whether we can get a 4th amendment (which settles lawsuits) prior to legislative reform action / failure?  a dta writedown + jump start expiration could be a catalyst in early 2018?

The only saving grace to this story would be Mnuchin's belief -which he repeated in more than one ocassion- that reform is only possible after companies have been recapitalized. Does this translate into a 4th A that ends the lawsuits? dunno.

[Guest cherzeca]

https://www.housingwire.com/articles/41714-mark-calabria-trump-administration-committed-to-ending-conservatorship?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire

What is difficult is getting them out of conservatorship without rewarding evil speculators. Treasury does not want that no matter who the ocassional pencil pusher, Geithner, Lew, Mnuchin is.

 

if we are talking about hedge funds buying assets cheap, then mnuchin is an evil speculator.  this is precisely why i believe he will look at the issue without any of the anti-speculator bias that clearly prospered among nitwits like lew.

I hope you are right, Chris. What I really meant is that once in government, you become government. Thus, Mnuchin is not really Mnuchin anymore. He may have morphed -and his views- into government and government views.

 

Everyone goes in thinking they can change things. Then, deep state gets you.

 

right.  i'd say we have already seen this as mnuchin has transformed from the guy post-election who said gse reform was easily/quickly done into the guy who says that it is a 2018 item.  two things seem interesting to me: as mnuchin has waited a year to address gse reform, or fixing as he says, the jumpstart act will have expired and FnF will have paid back treasury money at original 10% rate.  so gse reform should indeed be easier to in 2018, especially if corker and hensarling are properly viewed as lame ducks

[investorG]

https://www.housingwire.com/articles/41714-mark-calabria-trump-administration-committed-to-ending-conservatorship?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire

What is difficult is getting them out of conservatorship without rewarding evil speculators. Treasury does not want that no matter who the ocassional pencil pusher, Geithner, Lew, Mnuchin is.

 

if we are talking about hedge funds buying assets cheap, then mnuchin is an evil speculator.  this is precisely why i believe he will look at the issue without any of the anti-speculator bias that clearly prospered among nitwits like lew.

I hope you are right, Chris. What I really meant is that once in government, you become government. Thus, Mnuchin is not really Mnuchin anymore. He may have morphed -and his views- into government and government views.

 

Everyone goes in thinking they can change things. Then, deep state gets you.

 

right.  i'd say we have already seen this as mnuchin has transformed from the guy post-election who said gse reform was easily/quickly done into the guy who says that it is a 2018 item.  two things seem interesting to me: as mnuchin has waited a year to address gse reform, or fixing as he says, the jumpstart act will have expired and FnF will have paid back treasury money at original 10% rate.  so gse reform should indeed be easier to in 2018, especially if corker and hensarling are properly viewed as lame ducks

 

going out on a limb here but perhaps duffy (the subcommittee chair) is viewing 2018 legislation as a springboard to the overall financial services committee chair in 2019.  he's young, ambitious, speaks well, and also is a trump fan.  while he's not going back to the old system, he seems engaged and maybe even flexible (compared with the old guard at least) by going along with the narrative that some govt guarantee is needed.  in the end, though, we really need to hear from mnuchin unchained from the tax reform straightjacket, when he feels freer to speak his mind.

[Guest cherzeca]

any sane view of the effectiveness of congress in passing any kind of legislation the past year, and gse-related legislation over past 9 years, might lead one to think that an administrative solution might be viewed with some favor by all concerned

[rros]

any sane view of the effectiveness of congress in passing any kind of legislation the past year, and gse-related legislation over past 9 years, might lead one to think that an administrative solution might be viewed with some favor by all concerned

We never speak about the market. Indexes have been rising relentlessly since September. I wonder how much longer we have to wait to see an end to the corporate profits rise. Markets will not wait till this happens. Will break down in anticipation. When this happens and all markets tank, including housing, what will be the fate of Fannie and Freddie and our fate? Are Treasury/Trump waiting to see a collapse to wrap up the whole thing into a receivership? Or are they waiting for a collapse to justify a forced recapitalization? The longer we all wait, the scarier it gets. I'd say we are pretty close to a peak in the markets with downside economic momentum in early 2018, as narrow money indicates. Besides the legal outcomes and the political issues we may soon have to consider the stock market as another variable affecting outcomes.

[investorG]

any sane view of the effectiveness of congress in passing any kind of legislation the past year, and gse-related legislation over past 9 years, might lead one to think that an administrative solution might be viewed with some favor by all concerned

 

important changes have been made.  in the prior 9 years, the congressional republicans advocated literally shutting down FnF, while the democrats were supporters of the companies.

 

currently, listening to the tone of the 2017 hearings, the republicans have moved much closer to center.  they only seem to want more competition / private capital and an end to the prior regime of implicitly guaranteeing the 2 companies.  so I don't think it's non-sane to suggest a legislative solution is greater than 50pct odds.

 

for those who think an administrative solution is the only workable outcome, I believe this is a 2019-2020 event.  while i'm hoping for a 4th amendment asap, mnuchin will likely try hard legislatively in 2018 and then possibly wait until a fresh congress (perhaps with democrats in control) in 2019 for another try.  as our opponents have correctly said, administrative solutions are frail and easily reversible under new Treasury / FHFA regimes = inferior outcome.

 

[orthopa]

How does the corporate tax rate go to 20% and a 4th amendment isn't immediately made to prevent another draw. What happens first the GSEs dont pay the div and or tax legislation goes through. I don't know what the percent chance is legislation goes through before year end but no way GSEs can build enough capital to prevent a draw unless tax legislation goes into the middle of next year or later.

[Guest cherzeca]

How does the corporate tax rate go to 20% and a 4th amendment isn't immediately made to prevent another draw. What happens first the GSEs dont pay the div and or tax legislation goes through. I don't know what the percent chance is legislation goes through before year end but no way GSEs can build enough capital to prevent a draw unless tax legislation goes into the middle of next year or later.

 

watt has been clear he doesnt want to see another draw.  i agree that the size of the tax effect on the deferred tax assets is too large to counteract by dividends withheld over the next couple of quarters.  so i agree there will have to be a 4th A or there could be an accounting level action...meaning that the assets that give rise to the deferred tax assets can be sold (perhaps from fannie to freddie and vica versa) in order to eliminate the deferred tax asset accounts.  this is very esoteric stuff that i dont really understand but there was some discussion on the real tim howard's site awhile back that queried this.

[Fat Pitch]

Unless Perry or Berk gets cert from SCOTUS, the GSEs are going into r-ship to get liquidated of old claims and recapitalized on clean balance sheets. The writing is on the wall unless you believe in some grand lets rescue shareholders scheme.

[Luke 532]

Unless Perry or Berk gets cert from SCOTUS, the GSEs are going into r-ship to get liquidated of old claims and recapitalized on clean balance sheets. The writing is on the wall unless you believe in some grand lets rescue shareholders scheme.

 

Well, if that were to happen, the junior prefs would get called at par as long as Mnuchin declares senior prefs are paid in full.  If he doesn't declare senior prefs paid in full then it's a huge mess and there are even more lawsuits on his hands... one of which (Perry) has already said prefs have claim.

[investorG]

Unless Perry or Berk gets cert from SCOTUS, the GSEs are going into r-ship to get liquidated of old claims and recapitalized on clean balance sheets. The writing is on the wall unless you believe in some grand lets rescue shareholders scheme.

 

if they go this route, which I believe is possible but not probable, then most likely they throw a bone to the jr preferred and common -- there is lots of flexibility to how they handle it. especially in context to the current combined market caps of ~5bn for common + ~ 7/8bn for jr pref. 

 

I personally don't think mnuchin and trump - two people who have made it big through capitalism - are sitting up thinking about trying to squeeze every last dime for the govt from minority GSE shareholders.

 

[investorG]

How does the corporate tax rate go to 20% and a 4th amendment isn't immediately made to prevent another draw. What happens first the GSEs dont pay the div and or tax legislation goes through. I don't know what the percent chance is legislation goes through before year end but no way GSEs can build enough capital to prevent a draw unless tax legislation goes into the middle of next year or later.

 

I don't have an answer to this but i'm confident mnuchin has a plan, good or bad.  my best guess is watt was ready to drive alone in the summer.  and then mnuchin told him not to.  and then watt didn't act but kept talking about it ---- so logic tells me there's some plan that watt and mnuchin know about.

[rros]

Unless Perry or Berk gets cert from SCOTUS, the GSEs are going into r-ship to get liquidated of old claims and recapitalized on clean balance sheets. The writing is on the wall unless you believe in some grand lets rescue shareholders scheme.

Explain how Watt can call receivership when there are still 258 billion left in taxpayers backing. You meant forced R instead of mandatory?

[Fat Pitch]

R-ship is just a process of wiping the balance sheet clean to recapitalize. Read HERA it is specifically stated that r-ship is to remove claims and then can transfer charters to a new entity and forbids any prior claims from transferring over.

 

Look shareholders lost in court so SCOTUS is last hope. If denied cert why on Earth would they give shareholders anything? Sure we won a tiny claims damage that Lamberth will award .01 cents as damages and be done with it. Berk punted to SCOTUS before discovery was finished... there's no smoking gun in the documents.

 

Unless Perry or Berk gets cert from SCOTUS, the GSEs are going into r-ship to get liquidated of old claims and recapitalized on clean balance sheets. The writing is on the wall unless you believe in some grand lets rescue shareholders scheme.

Explain how Watt can call receivership when there are still 258 billion left in taxpayers backing. You meant forced R instead of mandatory?

[Guest cherzeca]

Unless Perry or Berk gets cert from SCOTUS, the GSEs are going into r-ship to get liquidated of old claims and recapitalized on clean balance sheets. The writing is on the wall unless you believe in some grand lets rescue shareholders scheme.

 

fatpitch indeed. more like HBP.

 

this from today's WSJ:  "President Trump on Thursday chose Jerome Powell to run the Federal Reserve, but the other big winner is Steven Mnuchin. The Treasury Secretary lobbied hard for Mr. Powell on grounds that he was more open to Administration influence than the other leading candidates. This may be unfair to Mr. Powell, but it does raise questions about Mr. Powell’s independence and capacity for the job."

 

so mnuchin is getting more influence with potus.  i like that.

[Guest cherzeca]

R-ship is just a process of wiping the balance sheet clean to recapitalize. Read HERA it is specifically stated that r-ship is to remove claims and then can transfer charters to a new entity and forbids any prior claims from transferring over.

 

Look shareholders lost in court so SCOTUS is last hope. If denied cert why on Earth would they give shareholders anything? Sure we won a tiny claims damage that Lamberth will award .01 cents as damages and be done with it. Berk punted to SCOTUS before discovery was finished... there's no smoking gun in the documents.

 

Unless Perry or Berk gets cert from SCOTUS, the GSEs are going into r-ship to get liquidated of old claims and recapitalized on clean balance sheets. The writing is on the wall unless you believe in some grand lets rescue shareholders scheme.

Explain how Watt can call receivership when there are still 258 billion left in taxpayers backing. You meant forced R instead of mandatory?

 

hey hit by pitch, what do you think of hindes/jacobs, ropp and bhatti cases, since you seem to know so much of things judicial?