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

[Guest cherzeca]

Treasury's argument that a recovery for shareholders is possible (unknown and un-timed) is a straight arrow to the heart of the nationalization argument by plaintiff, so it is worrisome. Not to mention an acceptable delay strategy, as a recovery might be possible... within the next 1000 years.

 

except i didnt see the judge concerned with nationalization buying it

 

And wouldn't that argument be analogous to something like: "I didn't steal your property, I just took it but I could return it under some nebulous circumstances thus absolving me of theft".

 

as i recall this was from ms wright, treasury counsel, who was hardly inspiring confidence.  it was a very weak response, which only added to her lack of credibility imo

[rros]

Treasury's argument that a recovery for shareholders is possible (unknown and un-timed) is a straight arrow to the heart of the nationalization argument by plaintiff, so it is worrisome. Not to mention an acceptable delay strategy, as a recovery might be possible... within the next 1000 years.

 

except i didnt see the judge concerned with nationalization buying it

 

And wouldn't that argument be analogous to something like: "I didn't steal your property, I just took it but I could return it under some nebulous circumstances thus absolving me of theft".

 

as i recall this was from ms wright, treasury counsel, who was hardly inspiring confidence.  it was a very weak response, which only added to her lack of credibility imo

You are all correct. But we better be lucky.

[undervalued]

Treasury's argument that a recovery for shareholders is possible (unknown and un-timed) is a straight arrow to the heart of the nationalization argument by plaintiff, so it is worrisome. Not to mention an acceptable delay strategy, as a recovery might be possible... within the next 1000 years.

 

except i didnt see the judge concerned with nationalization buying it

 

And wouldn't that argument be analogous to something like: "I didn't steal your property, I just took it but I could return it under some nebulous circumstances thus absolving me of theft".

 

as i recall this was from ms wright, treasury counsel, who was hardly inspiring confidence.  it was a very weak response, which only added to her lack of credibility imo

You are all correct. But we better be lucky.

 

Does anyone know why the FHFA and Treasure are still fighting hard in these courts if they're friendly to shareholders in their future plans? Isn't a court win a good windfall for Mnuchin's shareholder friendly plan? Why aren't they weakening their stances?

[blackcoffee]

Treasury's argument that a recovery for shareholders is possible (unknown and un-timed) is a straight arrow to the heart of the nationalization argument by plaintiff, so it is worrisome. Not to mention an acceptable delay strategy, as a recovery might be possible... within the next 1000 years.

 

except i didnt see the judge concerned with nationalization buying it

 

And wouldn't that argument be analogous to something like: "I didn't steal your property, I just took it but I could return it under some nebulous circumstances thus absolving me of theft".

 

as i recall this was from ms wright, treasury counsel, who was hardly inspiring confidence.  it was a very weak response, which only added to her lack of credibility imo

You are all correct. But we better be lucky.

 

Does anyone know why the FHFA and Treasure are still fighting hard in these courts if they're friendly to shareholders in their future plans? Isn't a court win a good windfall for Mnuchin's shareholder friendly plan? Why aren't they weakening their stances?

 

yes because there is no real difference between the 2 major political parties when it comes to banks. They are captured by them thanks to hanky p and the bailouts.

that's the short answer. Trump isn't the savior here only the courts and they're all punting and delaying. Rampant corruption is the answer you're looking for and a lack of consequences for said corruption.

[orthopa]

Just had to throw my $.02 in which is broadly inline with others. Looks like all we have to do is just sit and wait huh?  So we need either a change to the 3rd amendment, receivership(unlikely due to mnuchins comments) or some other congress and a new path forward.

 

A lot of maybes but maybe this is Stevies' thought all along, wait till Hensarling, Corker out and work with new congress after all.

 

Does the fact that the stock still trade mean it will see value eventually? She mentions this as a reason?

 

[Guest cherzeca]

Just had to throw my $.02 in which is broadly inline with others. Looks like all we have to do is just sit and wait huh?  So we need either a change to the 3rd amendment, receivership(unlikely due to mnuchins comments) or some other congress and a new path forward.

 

A lot of maybes but maybe this is Stevies' thought all along, wait till Hensarling, Corker out and work with new congress after all.

 

Does the fact that the stock still trade mean it will see value eventually? She mentions this as a reason?

 

i do not have a high regard for treasury counsel, based solely on what i heard in the oral argument.  she was unprepared for the nationalization question, and countered it by saying the shareholders may eventually get value without offering a cogent explanation why...a big booboo for an appellate litigator.  if that judge is seriously perplexed that a conservatorship/receivership statute was converted into a nationalization statute without clear statutory language to that effect (and that is a big if, sometimes judges make comments in oral arguments and then apparently say never mind in conference), nothing that treasury counsel said will assuage him

[SnarkyPuppy]

Emily, with all due respect, many (not all) of your posts are simply a complaint about the current situation.  That doesn't add value to the board and just bogs it down.  With that said, I do appreciate it when you post something that adds value to the board.  Thank you.

 

1+

 

............................................................................................

[muscleman]

Treasury's argument that a recovery for shareholders is possible (unknown and un-timed) is a straight arrow to the heart of the nationalization argument by plaintiff, so it is worrisome. Not to mention an acceptable delay strategy, as a recovery might be possible... within the next 1000 years.

 

except i didnt see the judge concerned with nationalization buying it

 

And wouldn't that argument be analogous to something like: "I didn't steal your property, I just took it but I could return it under some nebulous circumstances thus absolving me of theft".

 

as i recall this was from ms wright, treasury counsel, who was hardly inspiring confidence.  it was a very weak response, which only added to her lack of credibility imo

You are all correct. But we better be lucky.

 

Does anyone know why the FHFA and Treasure are still fighting hard in these courts if they're friendly to shareholders in their future plans? Isn't a court win a good windfall for Mnuchin's shareholder friendly plan? Why aren't they weakening their stances?

 

Because DOJ is still controlled by Obama. Just look at how DOJ refuses to hand over documents Congress requested, and how Rod Rosenstein threatened to investigate every one of Congress Intelligence committee member. If DOJ has the ball to fight Congress, it definitely has no problem fighting against FnF shareholders.

[doughishere]

Treasury's argument that a recovery for shareholders is possible (unknown and un-timed) is a straight arrow to the heart of the nationalization argument by plaintiff, so it is worrisome. Not to mention an acceptable delay strategy, as a recovery might be possible... within the next 1000 years.

 

except i didnt see the judge concerned with nationalization buying it

 

And wouldn't that argument be analogous to something like: "I didn't steal your property, I just took it but I could return it under some nebulous circumstances thus absolving me of theft".

 

as i recall this was from ms wright, treasury counsel, who was hardly inspiring confidence.  it was a very weak response, which only added to her lack of credibility imo

You are all correct. But we better be lucky.

 

Does anyone know why the FHFA and Treasure are still fighting hard in these courts if they're friendly to shareholders in their future plans? Isn't a court win a good windfall for Mnuchin's shareholder friendly plan? Why aren't they weakening their stances?

 

Because DOJ is still controlled by Obama. Just look at how DOJ refuses to hand over documents Congress requested, and how Rod Rosenstein threatened to investigate every one of Congress Intelligence committee member. If DOJ has the ball to fight Congress, it definitely has no problem fighting against FnF shareholders.

 

CC: BagholderQuotes.

[Midas79]

Just had to throw my $.02 in which is broadly inline with others. Looks like all we have to do is just sit and wait huh?  So we need either a change to the 3rd amendment, receivership(unlikely due to mnuchins comments) or some other congress and a new path forward.

 

A lot of maybes but maybe this is Stevies' thought all along, wait till Hensarling, Corker out and work with new congress after all.

 

Does the fact that the stock still trade mean it will see value eventually? She mentions this as a reason?

 

i do not have a high regard for treasury counsel, based solely on what i heard in the oral argument.  she was unprepared for the nationalization question, and countered it by saying the shareholders may eventually get value without offering a cogent explanation why...a big booboo for an appellate litigator.  if that judge is seriously perplexed that a conservatorship/receivership statute was converted into a nationalization statute without clear statutory language to that effect (and that is a big if, sometimes judges make comments in oral arguments and then apparently say never mind in conference), nothing that treasury counsel said will assuage him

 

In your experience, how common is this? We have already seen it more than once in FnF shareholder cases.

[Guest cherzeca]

Just had to throw my $.02 in which is broadly inline with others. Looks like all we have to do is just sit and wait huh?  So we need either a change to the 3rd amendment, receivership(unlikely due to mnuchins comments) or some other congress and a new path forward.

 

A lot of maybes but maybe this is Stevies' thought all along, wait till Hensarling, Corker out and work with new congress after all.

 

Does the fact that the stock still trade mean it will see value eventually? She mentions this as a reason?

 

i do not have a high regard for treasury counsel, based solely on what i heard in the oral argument.  she was unprepared for the nationalization question, and countered it by saying the shareholders may eventually get value without offering a cogent explanation why...a big booboo for an appellate litigator.  if that judge is seriously perplexed that a conservatorship/receivership statute was converted into a nationalization statute without clear statutory language to that effect (and that is a big if, sometimes judges make comments in oral arguments and then apparently say never mind in conference), nothing that treasury counsel said will assuage him

 

In your experience, how common is this? We have already seen it more than once in FnF shareholder cases.

 

judges test counsel for both sides but usually do so with more verve when they actually are sympathetic with the line of questioning they are pursuing.  usually, one can sense how a judge will come out from the vigor/tenor of his/her questioning.  contra, as for ginsburg in perry, there is scuttlebutt that peter wallison (who was instrumental in getting ginsburg a judgeship when he was reagan WH counsel) "got to" ginsburg post-argument. 

 

as for cases still to be decided, in 5th circuit collins argument, willett seemed to be pro-P-ish (both in substance of questioning and tenor...recall the hotel california reference), but one can't be sure how he will vote and, perhaps more importantly, as the new guy on the block, whether he can bring another judge along with him if he favors Ps.

[allnatural]

Interesting bloomberg article: https://www.bloomberg.com/news/articles/2018-05-18/fannie-mae-advocacy-ban-doesn-t-stop-lawyer-from-pushing-views

 

Apparently this Brian Brooks fellow, who is on Fannies general counsel, is in Mnuchin's ear telling him the facts and that GSEs should be recapped / released administratively inline with FHFA's blueprint laid out earlier in the year. He also worked with Mnuchin at OneWest Bank.

 

At least someone over there isn't laying over.

[rros]

Interesting bloomberg article: https://www.bloomberg.com/news/articles/2018-05-18/fannie-mae-advocacy-ban-doesn-t-stop-lawyer-from-pushing-views

 

Apparently this Brian Brooks fellow, who is on Fannies general counsel, is in Mnuchin's ear telling him the facts and that GSEs should be recapped / released administratively inline with FHFA's blueprint laid out earlier in the year. He also worked with Mnuchin at OneWest Bank.

 

At least someone over there isn't laying over.

A surprise. Thanks. Interesting this comes at a time when the real estate market looks to be at the end of the line, judging by phm, dhi, bldr, nvr, len and other related stocks including wood and the price of lumber. I can't see the real estate market escaping the next recession whether later this year or next. C

 

Changing direction, is this Joe Light article a move to expose the behind the scene maneuvering right before next week's hearing? And will Brian Brooks be the administration's appointee to head FHFA next year?

[Luke 532]

 

Changing direction, is this Joe Light article a move to expose the behind the scene maneuvering right before next week's hearing? And will Brian Brooks be the administration's appointee to head FHFA next year?

 

That was my initial reaction as well.  Light is likely trying to undermine any future actions by the Administration by alerting adversaries to Mnuchin's possible end-goal.

[Guest cherzeca]

Interesting bloomberg article: https://www.bloomberg.com/news/articles/2018-05-18/fannie-mae-advocacy-ban-doesn-t-stop-lawyer-from-pushing-views

 

Apparently this Brian Brooks fellow, who is on Fannies general counsel, is in Mnuchin's ear telling him the facts and that GSEs should be recapped / released administratively inline with FHFA's blueprint laid out earlier in the year. He also worked with Mnuchin at OneWest Bank.

 

At least someone over there isn't laying over.

 

as i recall brooks was a senior partner at a DC law firm, so he understands the legal lay of the land...plus he was mnuchin's number 2 at onewest, not just another guy.  if true, brooks silent advocacy for what is likely a moelis blueprint pathway informs what mnuchin might be thinking...which is to go down this pathway but with a paid-for mbs guaranty (need congress) to deal with all of the incoming from FnF haters.

[Luke 532]

as i recall brooks was a senior partner at a DC law firm, so he understands the legal lay of the land...plus he was mnuchin's number 2 at onewest, not just another guy.  if true, brooks silent advocacy for what is likely a moelis blueprint pathway informs what mnuchin might be thinking...which is to go down this pathway but with a paid-for mbs guaranty (need congress) to deal with all of the incoming from FnF haters.

 

That's beautiful.

[Guest cherzeca]

as i recall brooks was a senior partner at a DC law firm, so he understands the legal lay of the land...plus he was mnuchin's number 2 at onewest, not just another guy.  if true, brooks silent advocacy for what is likely a moelis blueprint pathway informs what mnuchin might be thinking...which is to go down this pathway but with a paid-for mbs guaranty (need congress) to deal with all of the incoming from FnF haters.

 

That's beautiful.

 

if you think about it, the principal objection to FnF by its haters is that it could arbitrage the lower cost of financing due to the implicit fed guaranty for the benefit of its shareholders and execs (raines and howard were well paid).  forget that tbtf banks benefit from fed backing of deposits and the same implicit guaranty. there is no consistency where there is hate.

 

so if you want to do what's right (return FnF to a strong capital position) and be politic enough to understand what you have to do to do what is right (no more unpaid for implicit guaranty, and give mbs holders better regulatory capital treatment by holding fed backed mbs), then this would be a smart way of going about things.

[muscleman]

Except the intrinsic value has been stolen and continues to be stolen.

 

“Since Congress has been unable to put forth a viable plan since conservatorship began nearly a decade ago, we believe it is increasingly likely that the administration and FHFA will soon take the lead on housing finance reform. While the exact timing of a resolution is difficult to predict and continued stock price volatility is likely, the per-share intrinsic value of each entity continues to grow along with their core businesses.”

 

https://assets.pershingsquareholdings.com/media/2014/09/17123349/Pershing-Square-1Q18-Investor-Letter-PSH.pdf

 

Stop whining emily. You already sold so what’s the point?

[Luke 532]

if you think about it, the principal objection to FnF by its haters is that it could arbitrage the lower cost of financing due to the implicit fed guaranty for the benefit of its shareholders and execs (raines and howard were well paid).  forget that tbtf banks benefit from fed backing of deposits and the same implicit guaranty. there is no consistency where there is hate.

 

so if you want to do what's right (return FnF to a strong capital position) and be politic enough to understand what you have to do to do what is right (no more unpaid for implicit guaranty, and give mbs holders better regulatory capital treatment by holding fed backed mbs), then this would be a smart way of going about things.

 

I greatly appreciate your comments on this board... always helpful and insightful.  Thanks!

[SnarkyPuppy]

as i recall brooks was a senior partner at a DC law firm, so he understands the legal lay of the land...plus he was mnuchin's number 2 at onewest, not just another guy.  if true, brooks silent advocacy for what is likely a moelis blueprint pathway informs what mnuchin might be thinking...which is to go down this pathway but with a paid-for mbs guaranty (need congress) to deal with all of the incoming from FnF haters.

 

That's beautiful.

 

if you think about it, the principal objection to FnF by its haters is that it could arbitrage the lower cost of financing due to the implicit fed guaranty for the benefit of its shareholders and execs (raines and howard were well paid).  forget that tbtf banks benefit from fed backing of deposits and the same implicit guaranty. there is no consistency where there is hate.

 

so if you want to do what's right (return FnF to a strong capital position) and be politic enough to understand what you have to do to do what is right (no more unpaid for implicit guaranty, and give mbs holders better regulatory capital treatment by holding fed backed mbs), then this would be a smart way of going about things.

 

Seems odd to me that Mnuchin would explicitly call out Watt's term ending under this scenario?  The FHFA proposal contemplates both shareholder owned entities w/ capital requirements & an explicit mbs all determined via congress.  Why call Watt out as an impediment to reform?  Possible I'm just overthinking this - and it's helpful that Mnuchin has someone in FHFA who can help push Congress to do something practical "or else"

[Guest cherzeca]

as i recall brooks was a senior partner at a DC law firm, so he understands the legal lay of the land...plus he was mnuchin's number 2 at onewest, not just another guy.  if true, brooks silent advocacy for what is likely a moelis blueprint pathway informs what mnuchin might be thinking...which is to go down this pathway but with a paid-for mbs guaranty (need congress) to deal with all of the incoming from FnF haters.

 

That's beautiful.

 

if you think about it, the principal objection to FnF by its haters is that it could arbitrage the lower cost of financing due to the implicit fed guaranty for the benefit of its shareholders and execs (raines and howard were well paid).  forget that tbtf banks benefit from fed backing of deposits and the same implicit guaranty. there is no consistency where there is hate.

 

so if you want to do what's right (return FnF to a strong capital position) and be politic enough to understand what you have to do to do what is right (no more unpaid for implicit guaranty, and give mbs holders better regulatory capital treatment by holding fed backed mbs), then this would be a smart way of going about things.

 

Seems odd to me that Mnuchin would explicitly call out Watt's term ending under this scenario?  The FHFA proposal contemplates both shareholder owned entities w/ capital requirements & an explicit mbs all determined via congress.  Why call Watt out as an impediment to reform?  Possible I'm just overthinking this - and it's helpful that Mnuchin has someone in FHFA who can help push Congress to do something practical "or else"

 

i saw that interview with the money honey, and she pointed out watts term is up next year, and mnuchin confirmed that the administration could replace him.  it was all pretty matter of fact as i recall; i saw no particular animus expressed by mnuchin.  of course having the senate confirm watt's replacement next year may be easier said than done.  watt may be around as acting director for awhile

[rros]

We may be underestimating the role of Brian Brooks.

 

At some point, his name made the circles as one possible Under Secretary of Treasury. According to Joe Light, he has actually become an unofficial emissary spearheading a specific housing goal straight from the inside. And we already know he is a Mnuchin's man.

 

Even if JL/Bloomberg aim is to undermine administrative action by exposing illegal lobbying, how likely are they to succeed when the most important congress actors are hitting the exit door and the appetite for a new, more stringent Jumpstart is probably missing? If Brian Brooks has really been knocking doors for months now maybe there is some sense of urgency somewhere in the administration. As in "no need to wait for another Congress".

[Guest cherzeca]

We may be underestimating the role of Brian Brooks.

 

At some point, his name made the circles as one possible Under Secretary of Treasury. According to Joe Light, he has actually become an unofficial emissary spearheading a specific housing goal straight from the inside. And we already know he is a Mnuchin's man.

 

Even if JL/Bloomberg aim is to undermine administrative action by exposing illegal lobbying, how likely are they to succeed when the most important congress actors are hitting the exit door and the appetite for a new, more stringent Jumpstart is probably missing? If Brian Brooks has really been knocking doors for months now maybe there is some sense of urgency somewhere in the administration. As in "no need to wait for another Congress".

 

this is a vague anti-lobbying rule and likely an infringement on free speech rights, certainly of the individual if not also the institution. 

[allnatural]

@Snarkypuppy

 

Re: Watt holdings things up: I wrote this in a previous comment, but its possible Watt is anti-admin reform even though he is pro GSEs. Or as Cherzeca said, maybe Mnuchin was just stating facts.

 

"Watt's an interesting player in the drama. For any administrative action, you need FHFA to sign off. Although Watt has expressed pro GSEs / pro shareholder thinking (desire to rebuild capital + the FHFA blueprint on reform), he has also stated multiple times that its up to Congress to decide the future of the GSEs, not himself/FHFA. Maybe with Watt so close to the end of the term, he is the one that isn't willing to "dance" and that's why Mnuchin made his comments last week about potentially replacing him with someone else in January (who may be more willing to sign off on an administrative action). "

[SnarkyPuppy]

Right - I was responding to the theory that Mnuchin will go through congress to get an explicit guaranty