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

[Eye4Valu]

May be irrelevant to the situation, but didn't know this.

 

https://www.usnews.com/news/business/articles/2018-03-08/what-swamp-lobbyists-get-ethics-waivers-to-work-for-trump:

 

"Brian Callahan, the top lawyer at Treasury, was granted a waiver concerning issues involving his former position as general counsel at Cooper and Kirk PLLC. The law firm represents Fairholme Funds, which recently filed a lawsuit against the Treasury Department and the Fair Housing Finance Agency.

 

McGahn's waiver allows Callahan to participate in discussions about policy decisions pertaining to housing finance reform, even though "some of these discussions could at some point touch upon issues that might impact the litigation."

 

http://www.govexec.com/oversight/2017/06/newly-released-agency-ethics-waivers-leave-much-unanswered/138528/

 

"Brian Callahan, whom Trump named as deputy general counsel at the Treasury Department, won a letter from Treasury’s designated agency ethics official, Rochelle Granat, saying, “This memorandum documents that I have granted you a limited authorization pursuant to the Standards of Ethical Conduct for Employees of the Executive Branch (Standards) to allow you to participate fully in policy matters related to housing finance reform even if an issue arises that might impact pending litigation in which your former employer, Cooper & Kirk PLLC, represents one of several plaintiffs. Notwithstanding this limited authorization, you have elected to refrain from any participation in the management of the litigation, including any communication with your former employer concerning this matter.”

[Guest cherzeca]

May be irrelevant to the situation, but didn't know this.

 

https://www.usnews.com/news/business/articles/2018-03-08/what-swamp-lobbyists-get-ethics-waivers-to-work-for-trump:

 

"Brian Callahan, the top lawyer at Treasury, was granted a waiver concerning issues involving his former position as general counsel at Cooper and Kirk PLLC. The law firm represents Fairholme Funds, which recently filed a lawsuit against the Treasury Department and the Fair Housing Finance Agency.

 

McGahn's waiver allows Callahan to participate in discussions about policy decisions pertaining to housing finance reform, even though "some of these discussions could at some point touch upon issues that might impact the litigation."

 

http://www.govexec.com/oversight/2017/06/newly-released-agency-ethics-waivers-leave-much-unanswered/138528/

 

"Brian Callahan, whom Trump named as deputy general counsel at the Treasury Department, won a letter from Treasury’s designated agency ethics official, Rochelle Granat, saying, “This memorandum documents that I have granted you a limited authorization pursuant to the Standards of Ethical Conduct for Employees of the Executive Branch (Standards) to allow you to participate fully in policy matters related to housing finance reform even if an issue arises that might impact pending litigation in which your former employer, Cooper & Kirk PLLC, represents one of several plaintiffs. Notwithstanding this limited authorization, you have elected to refrain from any participation in the management of the litigation, including any communication with your former employer concerning this matter.”

 

his linkedin resume shows he was at C&K only a few months, but as partner after a stint on senate staff.  former dc circuit clerk and...gibson dunn associate. 

[Eye4Valu]

May be irrelevant to the situation, but didn't know this.

 

https://www.usnews.com/news/business/articles/2018-03-08/what-swamp-lobbyists-get-ethics-waivers-to-work-for-trump:

 

"Brian Callahan, the top lawyer at Treasury, was granted a waiver concerning issues involving his former position as general counsel at Cooper and Kirk PLLC. The law firm represents Fairholme Funds, which recently filed a lawsuit against the Treasury Department and the Fair Housing Finance Agency.

 

McGahn's waiver allows Callahan to participate in discussions about policy decisions pertaining to housing finance reform, even though "some of these discussions could at some point touch upon issues that might impact the litigation."

 

http://www.govexec.com/oversight/2017/06/newly-released-agency-ethics-waivers-leave-much-unanswered/138528/

 

"Brian Callahan, whom Trump named as deputy general counsel at the Treasury Department, won a letter from Treasury’s designated agency ethics official, Rochelle Granat, saying, “This memorandum documents that I have granted you a limited authorization pursuant to the Standards of Ethical Conduct for Employees of the Executive Branch (Standards) to allow you to participate fully in policy matters related to housing finance reform even if an issue arises that might impact pending litigation in which your former employer, Cooper & Kirk PLLC, represents one of several plaintiffs. Notwithstanding this limited authorization, you have elected to refrain from any participation in the management of the litigation, including any communication with your former employer concerning this matter.”

 

his linkedin resume shows he was at C&K only a few months, but as partner after a stint on senate staff.  former dc circuit clerk and...gibson dunn associate.

 

Conflicted and connected.

 

[orthopa]

This looks to be relevant

 

http://www.businessinsider.com/ken-moelis-million-dollar-coin-flip-with-donald-trump-2017-7

 

Maybe gives a little idea as to why Paulson was in on the Moelis plan and how the name Moelis came out of no where with a grand plan for housing reform.

 

We can speculate as much as we want but the intertangled web of connections and relationships is starting to become quite obvious. Even more so who is on the outside (AEI, MBA, corker, hensarling) and who is on the inside.

[DRValue]

This looks to be relevant

 

http://www.businessinsider.com/ken-moelis-million-dollar-coin-flip-with-donald-trump-2017-7

 

Maybe gives a little idea as to why Paulson was in on the Moelis plan and how the name Moelis came out of no where with a grand plan for housing reform.

 

We can speculate as much as we want but the intertangled web of connections and relationships is starting to become quite obvious. Even more so who is on the outside (AEI, MBA, corker, hensarling) and who is on the inside.

 

I'd say it's very relevant. This "investment" sometimes feels like the ultimate coin flip.

[Guest cherzeca]

This looks to be relevant

 

http://www.businessinsider.com/ken-moelis-million-dollar-coin-flip-with-donald-trump-2017-7

 

Maybe gives a little idea as to why Paulson was in on the Moelis plan and how the name Moelis came out of no where with a grand plan for housing reform.

 

We can speculate as much as we want but the intertangled web of connections and relationships is starting to become quite obvious. Even more so who is on the outside (AEI, MBA, corker, hensarling) and who is on the inside.

 

I'd say it's very relevant. This "investment" sometimes feels like the ultimate coin flip.

 

so far, heads we win, tails you lose.  waiting for a new coin

[rros]

Posting comments from article on American Banker on explicit guraantee.

 

Mine: Even with implicit guarantee, these large banks that MBA represents, took taxpayers to toilet by causing financial crisis, with an explicit guarantee, our country will be begging China to rescue us. No to explicit guarantee.

 

 

“Brought to you by the cowards who don't want to have any skin in the game when the "safe" loans they make go bad.”

 

 

“My friend David and the MBA have been on so many sides of the GSE issue that my head spins keeping up with them. His feigned crocodile tears over small community banks won't shake the belief that the MBA only cares about their larger commercial bank members. The MBA fear is that Congress--with other priorities--won't have time to work on Fannie/Freddie matters leaving it to a more thoughtful approach through some Treasury or Federal Housing Finance Agency (FHFA) regulatory directive.”

 

 

“So Lets get David Stevens/Corker 2.0 bill (not Warner bill because he has not supported it yet) 1. Govt. Provides explicit Guarantee to securties 2. Securities are created by GSE infrastructure called CSS. And who gets to benefit from all this for doing nothing? Ahhh!! the Wells Fargo and other big banks (as the David Stevens bill call for only 4-5 more guarantors)”

 

“Why Does David Steven not disclose the names of potential 4-5 guarantors that will be created by his bill? Bcoz that will give away his plan and make crystal clear that Gainers will be Wells Fargo and other big banks and losers will be american home buyers.”

 

 

“Whats David stevens problem with GSE as a utility model. They will keep there intellectual property (CSS) and they will be a low risk business with regulated return on capital?”

 

“Another spin by David "spin" Stevens is some how smaller banks and community banks are supposes to be benefited by his proposal that will create large banks as guarantors. Again, So small community banks will have to deal with Large Banks for there securitization needs, and he hopes that these Large TBTF bank will then play fair. and not to mention they compete in the same communities to get lending business.”

 

https://www.americanbanker.com/opinion/housing-market-needs-an-explicit-government-guarantee

Pressure re implicit/explicit guarantee is a good way to twist MBAs arm in favor of a recap. If anything, I imagine banks will drop their pants as long as they can secure an explicit guarantee. If they can come out of all this with just that it will be a victory for them. Even if they can't get their hands on Fannie and Freddie's business.

[rros]

Any preferred holder with an Ameritrade account?

 

This was posted yesterday at the ihub preferred board:

We are writing to inform you of a buy-out that's currently being offered to certain shareholders in a class of stock that you are invested in. Current holders of FNMAS, among other classes of Fannie Mae Preferred Stock, are being sought by a private investor that is seeking to make a large investment in Preferred Stock of Fannie Mae. The current price offered for FNMAS is $12 per share. If you are interested in this offer, please contact your local office to initiate the transfer process and the cash will be deposited into your account.

 

The highest weekly closing price was at $12.31 on March 2014.

[Midas79]

Any preferred holder with an Ameritrade account?

 

This was posted yesterday at the ihub preferred board:

We are writing to inform you of a buy-out that's currently being offered to certain shareholders in a class of stock that you are invested in. Current holders of FNMAS, among other classes of Fannie Mae Preferred Stock, are being sought by a private investor that is seeking to make a large investment in Preferred Stock of Fannie Mae. The current price offered for FNMAS is $12 per share. If you are interested in this offer, please contact your local office to initiate the transfer process and the cash will be deposited into your account.

 

The highest weekly closing price was at $12.31 on March 2014.

 

I don't have an Ameritrade account, but I would give this a 99.999% chance of being fake. The poster who posted this is mostly a troll in sheep's clothing, saying the opposite of other trolls like CatBirdSeat.

 

An announcement like this doesn't make any strategic sense either. An offer like this would be negotiated and only with large holders. I highly doubt that poster has a large enough position to matter.

[SnarkyPuppy]

Any preferred holder with an Ameritrade account?

 

This was posted yesterday at the ihub preferred board:

We are writing to inform you of a buy-out that's currently being offered to certain shareholders in a class of stock that you are invested in. Current holders of FNMAS, among other classes of Fannie Mae Preferred Stock, are being sought by a private investor that is seeking to make a large investment in Preferred Stock of Fannie Mae. The current price offered for FNMAS is $12 per share. If you are interested in this offer, please contact your local office to initiate the transfer process and the cash will be deposited into your account.

 

The highest weekly closing price was at $12.31 on March 2014.

 

Considering the source and the lack of any other news, I'm highly skeptical.

 

Edit:  Is this facilitating a block trade?  Is this really how block trades ever work?

[rros]

Mark Zandi, March 16th, 2018: The longer the GSEs remain in conservatorship, the harder it will be to get them out. That they will likely soon be scored by the CBO as providing a negative subsidy and thus providing revenues to the Treasury for other government needs will make it doubly hard politically to change the status quo. This is unfortunate, as the GSEs in conservatorship will not be able to keep up with the changing demographic and technological needs of the nation’s underserved mortgage borrower.

https://www.urban.org/debates/revisiting-housing-finance-why-federal-role

Where in the debate is Josh "utility" Rosner?

[locutusoftexas]

Mark Zandi, March 16th, 2018: The longer the GSEs remain in conservatorship, the harder it will be to get them out. That they will likely soon be scored by the CBO as providing a negative subsidy and thus providing revenues to the Treasury for other government needs will make it doubly hard politically to change the status quo. This is unfortunate, as the GSEs in conservatorship will not be able to keep up with the changing demographic and technological needs of the nation’s underserved mortgage borrower.

https://www.urban.org/debates/revisiting-housing-finance-why-federal-role

 

The government likes free money and the GSEs are like perpetual money machines. Unfortunately the Second Law of Thermodynamics tells us that, just like perpetual motion machines, this is impossible. Ultimately there will be a steep price to pay if the government maintains the status quo for the GSEs. A simpler example of "money for nothing" is that of AIG selling credit default swaps without the reserves to pay when the mortgage-backed securities defaulted. This was a major factor precipitating the financial crisis of 2008-9. AIG thought that the chance of default was infinitesimal, which was counter to both statistics and the Second Law. The main question is, "What are the potential negative consequences of the government continuing the NWS and robbing the GSEs and their shareholders?"

[investorG]

I'm fairly surprised there was no modest bounce from the kudlow news over the past two weeks given his past social media comments + being plugged into a position that theoretically has actionable power on the matter.

[Guest cherzeca]

I'm fairly surprised there was no modest bounce from the kudlow news over the past two weeks given his past social media comments + being plugged into a position that theoretically has actionable power on the matter.

 

i am watching congress dysfunction over the dodd frank amendment bill.  bipartisanship agt to mostly to help small banks is fragile and may not survive a reconciliation process.  if congress cant pass this modest bill then forget about housing finance

[investorG]

I'm fairly surprised there was no modest bounce from the kudlow news over the past two weeks given his past social media comments + being plugged into a position that theoretically has actionable power on the matter.

 

i am watching congress dysfunction over the dodd frank amendment bill.  bipartisanship agt to mostly to help small banks is fragile and may not survive a reconciliation process.  if congress cant pass this modest bill then forget about housing finance

 

regarding the dodd frank bill, imo it will get done.  there were 67 votes in the senate, not 60, creating a little wiggle room.  hensarling is likely posturing, he'll throw in a few large bank goodies and perhaps lose a few D senators and call it a day.

 

on the kudlow news, not even a little bounce? my best guess is that potential institutional buyers are aware that ackman / berk / perry are selling and they think they'll get better prices in the near future.

 

 

 

 

 

[investorG]

You mean to say you know that Berkowitz and Ackman are selling? How?

I know this was debated here. But it does sort of make sense that government may only settle with shareholders who owned before NWS and with those who still own them. In pre NWS holder case, it is easily proven of harm. Those who bought after, knew NWS existed. So I am not happy as I am after NWS buyer. But the point here is if Berkowitz and Ackman are selling their pre NWS shares and will buy later, I doubt they will be compensated for post NWS shares.

 

I'm fairly surprised there was no modest bounce from the kudlow news over the past two weeks given his past social media comments + being plugged into a position that theoretically has actionable power on the matter.

 

i am watching congress dysfunction over the dodd frank amendment bill.  bipartisanship agt to mostly to help small banks is fragile and may not survive a reconciliation process.  if congress cant pass this modest bill then forget about housing finance

 

regarding the dodd frank bill, imo it will get done.  there were 67 votes in the senate, not 60, creating a little wiggle room.  hensarling is likely posturing, he'll throw in a few large bank goodies and perhaps lose a few D senators and call it a day.

 

on the kudlow news, not even a little bounce? my best guess is that potential institutional buyers are aware that ackman / berk / perry are selling and they think they'll get better prices in the near future.

 

as stated in the post, it's a guess.  my main suspicion is ackman selling, dragging down the whole complex (as investors rotate between the two).  he has punted other legacy dead end positions recently and fired staff; he's likely under investor pressure to tighten his ship.  when corker's plan was either released (perceived as not good for common) or failed, and phillips made his downbeat comments several weeks ago - combined with our terrible court record - he perhaps lost any visible catalyst to justify near term success. 

 

i could be way off.  but if i'm right, things will stay stuck, at best, until a huge clean up block trade happens in the common shares.

 

[locutusoftexas]

Fairholme Fund holds only preferred shares -- not the common.

[DocSnowball]

Do we know which hedge fund or mutual fund owns pre NWS preferred shares? Would appreciate the reply and how I can verify that. Have been considering buying more pre NWS preferreds this quarter. TIA

[rros]

Going back to discussion on pre NWS buyers: it looks like a settlement is smart strategy with pre NWS buyers: it satisfies Berkowitz, Perry, Ackman, Paulson and Icahn. If so, they won't sell. What do you think?

 

You mean to say you know that Berkowitz and Ackman are selling? How?

I know this was debated here. But it does sort of make sense that government may only settle with shareholders who owned before NWS and with those who still own them. In pre NWS holder case, it is easily proven of harm. Those who bought after, knew NWS existed. So I am not happy as I am after NWS buyer. But the point here is if Berkowitz and Ackman are selling their pre NWS shares and will buy later, I doubt they will be compensated for post NWS shares.

 

I'm fairly surprised there was no modest bounce from the kudlow news over the past two weeks given his past social media comments + being plugged into a position that theoretically has actionable power on the matter.

 

i am watching congress dysfunction over the dodd frank amendment bill.  bipartisanship agt to mostly to help small banks is fragile and may not survive a reconciliation process.  if congress cant pass this modest bill then forget about housing finance

 

regarding the dodd frank bill, imo it will get done.  there were 67 votes in the senate, not 60, creating a little wiggle room.  hensarling is likely posturing, he'll throw in a few large bank goodies and perhaps lose a few D senators and call it a day.

 

on the kudlow news, not even a little bounce? my best guess is that potential institutional buyers are aware that ackman / berk / perry are selling and they think they'll get better prices in the near future.

 

as stated in the post, it's a guess.  my main suspicion is ackman selling, dragging down the whole complex (as investors rotate between the two).  he has punted other legacy dead end positions recently and fired staff; he's likely under investor pressure to tighten his ship.  when corker's plan was either released (perceived as not good for common) or failed, and phillips made his downbeat comments several weeks ago - combined with our terrible court record - he perhaps lost any visible catalyst to justify near term success. 

 

i could be way off.  but if i'm right, things will stay stuck, at best, until a huge clean up block trade happens in the common shares.

From all listed, only Perry owns pre nws. Paulson does not care. He is not litigating and he is relying on a restructuring. Ackman and Berkowitz bought after. From lawsuits, Washington federal (did I get the name right) owns pre or maybe even pre conservator ship and is part of Berko's lawsuit. And some of us here. But Berkowitz made clear his legal fight includes pre/post so how can post be discarded?

[DocSnowball]

Thank you rros.

[blackcoffee]

Buying now would not work if this scenario is real. You already know of NWS, so buying pre NWS shares ? How would you buy them? privately? I thought I saw Berkley Insurance name somewhere and they still owe a chunk and bought in 2005. There is some relationship between Berkeley and Fairlhome where Fairlhome may have bought from Berkley. I looked up on Google and it is all beyond my level to understanding.

 

"Berkley Insurance Company has continuously owned Fannie preferred shares since January 2005 and Freddie preferred shares since December 2009, and it had a reasonable expectation when it acquired its shares that a new class of securities in the Companies (or an amendment to an existing class of securities) would not wipe out its shares"

 

 

 

 

 

Do we know which hedge fund or mutual fund owns pre NWS preferred shares? Would appreciate the reply and how I can verify that. Have been considering buying more pre NWS preferreds this quarter. TIA

 

So I'm not a legal expert, and I know courts have made time based rulings in the past, but do they know they're not supposed to muck up the ownership structure like that? It's not supposed to matter when someone purchased the stock, all the rights transfer at all times. That's a pretty fundamental underpinning of the stock market, at least that's the general assumption in the broader market place. When they start down that path, it gets extremely complex very quickly. 

[Eye4Valu]

https://features.marketplace.org/bernanke-paulson-geithner/#transcript

 

[locutusoftexas]

So I'm not a legal expert, and I know courts have made time based rulings in the past, but do they know they're not supposed to muck up the ownership structure like that? It's not supposed to matter when someone purchased the stock, all the rights transfer at all times. That's a pretty fundamental underpinning of the stock market, at least that's the general assumption in the broader market place. When they start down that path, it gets extremely complex very quickly.

 

Your are correct, Blackcoffee. If and when a final plan is developed for ending the GSE conservatorship, the issue of pre- or post-NWS shares will be moot, i.e., of little or no practical value, for the reason that you gave above. For example, see the Moelis proposal, Safety-and-Soundness-Blueprint__1_.pdf at

 

https://seekingalpha.com/instablog/21984691-special-agent-utah/4995246-fannie-mae-freddie-mac-gse-blueprint-moelis-and-co

[investorG]

Tim Howard comments below.  Imo accurately calling out mnuchin's lack of strength on the matter to date.  some of you may not want to hear this, and are waiting for 2020 for the court of claims, but at least Emily might agree.

 

I haven’t seen anything in Mnuchin’s tenure as Treasury Secretary so far that would lead me to label him a “change agent.” To the contrary, since his pledge on Fox Business on November 30, 2016 to “get [Fannie and Freddie] out of government control…reasonably fast,” he’s repeatedly walked that pledge back. Some (including me at one point) thought he might act after it became clear mortgage reform wouldn’t be enacted in this Congress, but now that legislative reform is generally viewed as being as dead as Jimmy Hoffa, Mnuchin has pushed his timetable out again, saying to Bloomberg on March 8, “I’m not sure that’s something we’ll get done this summer before the election.”

[rros]

Just don't forget "exigent circumstances".

 

https://www.bloomberg.com/news/articles/2018-03-22/global-momentum-shows-cracks-as-trade-tensions-loom-over-economy

 

It's not really the trade wars. Narrow money (strictly household deposits, not m1, not m3) anticipated this 6 months ago. Worst is yet to come.