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

[Guest cherzeca]

I will try out my very best muscleman

 

technically speaking, GSE pref stocks are depressed for fear that i) scotus finds cfpb unconstitutionally structured, and ii) scotus finds cfpb constitutionally structured.  some cant figure out which is worse, given a possible Biden potus.

 

I say scotus finds cfpb unconstitutionally structured and prices rise.  but this is all TA, comes with a healthy dosing of salt

[orthopa]

So far there only appears to be a couple of legitimate comments to the capital rule. Chris Whalen has his comment up now.

 

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Comment-List.aspx?RuleID=674

 

FHFA said comment period was 60 days so that means comment period up by 7/20/2020?

[Guest cherzeca]

So far there only appears to be a couple of legitimate comments to the capital rule. Chris Whalen has his comment up now.

 

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Comment-List.aspx?RuleID=674

 

FHFA said comment period was 60 days so that means comment period up by 7/20/2020?

 

60 days from publication in federal register

[Midas79]

So far there only appears to be a couple of legitimate comments to the capital rule. Chris Whalen has his comment up now.

 

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Comment-List.aspx?RuleID=674

 

FHFA said comment period was 60 days so that means comment period up by 7/20/2020?

 

60 days from publication in federal register

 

When will that be? Whenever Calabria feels like it? Or does he have some restrictions to adhere to?

[orthopa]

So far there only appears to be a couple of legitimate comments to the capital rule. Chris Whalen has his comment up now.

 

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Comment-List.aspx?RuleID=674

 

FHFA said comment period was 60 days so that means comment period up by 7/20/2020?

 

60 days from publication in federal register

 

Thats what I was trying to figure out too. My naive assumption it was already. At the top of the page I linked it says  Home / Supervision & Regulation / Federal Register / Comment List

 

 

https://www.fhfa.gov/SupervisionRegulation/RegulationFederalRegister/Pages/Open-for-Comment.aspx

 

It also lists the Enterprise Regulatory Capital framework under the Rule Making/Federal Register link.

 

Not arguing. Just hoping this all means it was placed on 5/20 and the 7/20 date is realistic.

[Guest Covid-19_Survivor]

So far there only appears to be a couple of legitimate comments to the capital rule. Chris Whalen has his comment up now.

 

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Comment-List.aspx?RuleID=674

 

FHFA said comment period was 60 days so that means comment period up by 7/20/2020?

 

Those whalen arguments indicate that none of this is at it seems. There's no way each one has not been carefully considered by Calabria and Mnuchin, especially Mnuchin, and plans are in place to address them. That said, I'm backing off my opinion of no more govt backing because it doesn't seem possible after reading his comments about it. So, regarding that govt backing, to every comment made by anyone against 4%, I think one very simple question by Congress must be affirmed: "Would these capital requirements assured no bailouts 12 years ago?". That's mandatory, no support without it.

 

FnF have tanked since that pdf. I wonder if that's the issue, that this all can't be done without congress, and fear of Trump losing.

 

[Guest Covid-19_Survivor]

" Indeed, when we recall that the GSEs have historically been conduits for subsidized public financing of residential housing, the whole question of a transition to private capital seems absurd." - Chris Whalen

 

I so agree with that. So what's the big deal? treasury just added $2 trillion like it was nothing, another 5 is going to bring a ratings cut? nonsense. Just buy the firms. Stakeholders can be resolved with $50 bil (more chump change), and we all - including home buyers - go home happy.

[Guest cherzeca]

you can go to federal register side and search for publication of proposed rule and you wont see it yet, so it hasn't been published yet

[orthopa]

you can go to federal register side and search for publication of proposed rule and you wont see it yet, so it hasn't been published yet

 

ok thanks

[orthopa]

So far there only appears to be a couple of legitimate comments to the capital rule. Chris Whalen has his comment up now.

 

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Comment-List.aspx?RuleID=674

 

FHFA said comment period was 60 days so that means comment period up by 7/20/2020?

 

Those whalen arguments indicate that none of this is at it seems. There's no way each one has not been carefully considered by Calabria and Mnuchin, especially Mnuchin, and plans are in place to address them. That said, I'm backing off my opinion of no more govt backing because it doesn't seem possible after reading his comments about it. So, regarding that govt backing, to every comment made by anyone against 4%, I think one very simple question by Congress must be affirmed: "Would these capital requirements assured no bailouts 12 years ago?". That's mandatory, no support without it.

 

FnF have tanked since that pdf. I wonder if that's the issue, that this all can't be done without congress, and fear of Trump losing.

 

Of course. Whalen is a douche and has been self serving an a big bank propagandist the whole time. He just cares about what pertains to him. You think Calabria will spend 2 minutes on his concerns after how he and Dave Stevens acted regarding the forbearance issues?

 

There will be a fee paid for support to treasury which with the amount of capital they will have more then enough. There is nothing congress can do to stop recap now....and why would they? FnF need to come out of conservatorship.

[Guest Covid-19_Survivor]

So far there only appears to be a couple of legitimate comments to the capital rule. Chris Whalen has his comment up now.

 

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Comment-List.aspx?RuleID=674

 

FHFA said comment period was 60 days so that means comment period up by 7/20/2020?

 

Those whalen arguments indicate that none of this is at it seems. There's no way each one has not been carefully considered by Calabria and Mnuchin, especially Mnuchin, and plans are in place to address them. That said, I'm backing off my opinion of no more govt backing because it doesn't seem possible after reading his comments about it. So, regarding that govt backing, to every comment made by anyone against 4%, I think one very simple question by Congress must be affirmed: "Would these capital requirements assured no bailouts 12 years ago?". That's mandatory, no support without it.

 

FnF have tanked since that pdf. I wonder if that's the issue, that this all can't be done without congress, and fear of Trump losing.

 

Of course. Whalen is a douche and has been self serving an a big bank propagandist the whole time. He just cares about what pertains to him. You think Calabria will spend 2 minutes on his concerns after how he and Dave Stevens acted regarding the forbearance issues?

 

There will be a fee paid for support to treasury which with the amount of capital they will have more then enough. There is nothing congress can do to stop recap now....and why would they? FnF need to come out of conservatorship.

 

He may be a douche but his thoughts on FnF's credit rating being lowered and costs increased seems logical to me. So if FnF need, at the very least, another strong implicit guarantee, won't that require Congress' support?

[allnatural]

No because a a pspa amendment converting the current $250b credit line to a catastrophic paid for backstop will act as an explicit backstop. What else would you want to see if you are a credit agency. Doesnt require congress and this option is highlighted in the admin GSE plan from last year.

 

So far there only appears to be a couple of legitimate comments to the capital rule. Chris Whalen has his comment up now.

 

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Comment-List.aspx?RuleID=674

 

FHFA said comment period was 60 days so that means comment period up by 7/20/2020?

 

Those whalen arguments indicate that none of this is at it seems. There's no way each one has not been carefully considered by Calabria and Mnuchin, especially Mnuchin, and plans are in place to address them. That said, I'm backing off my opinion of no more govt backing because it doesn't seem possible after reading his comments about it. So, regarding that govt backing, to every comment made by anyone against 4%, I think one very simple question by Congress must be affirmed: "Would these capital requirements assured no bailouts 12 years ago?". That's mandatory, no support without it.

 

FnF have tanked since that pdf. I wonder if that's the issue, that this all can't be done without congress, and fear of Trump losing.

 

Of course. Whalen is a douche and has been self serving an a big bank propagandist the whole time. He just cares about what pertains to him. You think Calabria will spend 2 minutes on his concerns after how he and Dave Stevens acted regarding the forbearance issues?

 

There will be a fee paid for support to treasury which with the amount of capital they will have more then enough. There is nothing congress can do to stop recap now....and why would they? FnF need to come out of conservatorship.

 

He may be a douche but his thoughts on FnF's credit rating being lowered and costs increased seems logical to me. So if FnF need, at the very least, another strong implicit guarantee, won't that require Congress' support?

[Guest Covid-19_Survivor]

No because a a pspa amendment converting the current $250b credit line to a catastrophic paid for backstop will act as an explicit backstop. What else would you want to see if you are a credit agency. Doesnt require congress and this option is highlighted in the admin GSE plan from last year.

 

Well, I will say that makes far more sense than other claims of those seniors being simply canceled. But it still wouldn't address the issue, per Whalen. He said no amount of money is worth as much as govt backstop, and that too I agree with.

 

NM, I see what you did there. Although the seniors and CL are tied together, you're referring to an amendment that also separates the two so CL continues and seniors are resolved. I would think the house would be required for that though.

[Guest cherzeca]

So far there only appears to be a couple of legitimate comments to the capital rule. Chris Whalen has his comment up now.

 

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Comment-List.aspx?RuleID=674

 

FHFA said comment period was 60 days so that means comment period up by 7/20/2020?

 

Those whalen arguments indicate that none of this is at it seems. There's no way each one has not been carefully considered by Calabria and Mnuchin, especially Mnuchin, and plans are in place to address them. That said, I'm backing off my opinion of no more govt backing because it doesn't seem possible after reading his comments about it. So, regarding that govt backing, to every comment made by anyone against 4%, I think one very simple question by Congress must be affirmed: "Would these capital requirements assured no bailouts 12 years ago?". That's mandatory, no support without it.

 

FnF have tanked since that pdf. I wonder if that's the issue, that this all can't be done without congress, and fear of Trump losing.

 

Of course. Whalen is a douche and has been self serving an a big bank propagandist the whole time. He just cares about what pertains to him. You think Calabria will spend 2 minutes on his concerns after how he and Dave Stevens acted regarding the forbearance issues?

 

There will be a fee paid for support to treasury which with the amount of capital they will have more then enough. There is nothing congress can do to stop recap now....and why would they? FnF need to come out of conservatorship.

 

He may be a douche but his thoughts on FnF's credit rating being lowered and costs increased seems logical to me. So if FnF need, at the very least, another strong implicit guarantee, won't that require Congress' support?

 

Whalen is barking into the wind.  he will be ignored simply because his comments did not address the proposed capital rule, but rather his own precious views that he has held close to his heart for over a decade...all while Whalen global capital advisors retreats further into Whalen's bathroom closet server.

[Midas79]

Whalen is barking into the wind.  he will be ignored simply because his comments did not address the proposed capital rule, but rather his own precious views that he has held close to his heart for over a decade...all while Whalen global capital advisors retreats further into Whalen's bathroom closet server.

 

Exactly.

 

Also, Zandi's long-deserved putdown by Calabria shows that Calabria isn't going to listen to clowns. They will bluster and piss and moan, and Calabria will do exactly what he would have done if they had never said anything.

[Midas79]

Cross-posting from Tim Howard's blog, in response to ROLG and Mark's comments about the "Peak Cumulative Losses" figure of $167B in the proposed capital rule including losses from fraudulent MBS that were lated sued over:

 

 

Also, FnF paid a combined $36.3B in dividends to Treasury between the start of conservatorship and the end of 2011. These were all the result of circular draws, ones made against Treasury’s funding commitment that were immediately paid back to Treasury as 10% cash dividends on the seniors.

 

The final figure on settlement money received in PLS cases was $24.9B.

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Final-Update-on-Private-Label-Securities-Actions-9172018.aspx

 

As such, shouldn’t the $167B “Peak Cumulative Losses” number in Table 4 on page 28 of the proposed capital rule be $106B instead?

 

Calabria might be able to justify keeping the baseline capital requirements ($135B risk-based, $152B minimum/leverage as of the end of September 2019) in place, but correcting the “Peak Cumulative Losses” number should allow him to reduce the size of the buffers considerably. That, in turn, would both make it easier/possible for FnF to provide a market-based ROE with little or no increase to g-fees, as well as grease the skids for earlier dividend payments to facilitate the equity raise.

[Midas79]

...and the almost immediate correction because I messed up when reading Table 4:

 

 

Correction: the $167B Peak Cumulative Losses number was Fannie only; $98B was for Freddie, $265B combined. This $265B number is what should be reduced by $61B, to $204B.

 

The point stands, though: if Calabria’s justification of the huge buffers was to cover Peak Cumulative Losses, he should substantially reduce the size of those buffers in light of the circular draws and PLS settlements.

[Guest Covid-19_Survivor]

Whalen is barking into the wind.  he will be ignored simply because his comments did not address the proposed capital rule, but rather his own precious views that he has held close to his heart for over a decade...all while Whalen global capital advisors retreats further into Whalen's bathroom closet server.

 

Yes, I get all that, and maybe you're right that Calabria won't even read it. I wasn't referring to how it addresses the capital rule though but how it addresses reality. Whelan made some good points (AFAIK) about profitability. Points on the most part I have not read of before.

 

You think his points about FnF's CR are bogus? his points on sovereign support? Basle 3?

 

[Guest Covid-19_Survivor]

Cross-posting from Tim Howard's blog, in response to ROLG and Mark's comments about the "Peak Cumulative Losses" figure of $167B in the proposed capital rule including losses from fraudulent MBS that were lated sued over:

 

 

Also, FnF paid a combined $36.3B in dividends to Treasury between the start of conservatorship and the end of 2011. These were all the result of circular draws, ones made against Treasury’s funding commitment that were immediately paid back to Treasury as 10% cash dividends on the seniors.

 

The final figure on settlement money received in PLS cases was $24.9B.

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Final-Update-on-Private-Label-Securities-Actions-9172018.aspx

 

As such, shouldn’t the $167B “Peak Cumulative Losses” number in Table 4 on page 28 of the proposed capital rule be $106B instead?

 

Calabria might be able to justify keeping the baseline capital requirements ($135B risk-based, $152B minimum/leverage as of the end of September 2019) in place, but correcting the “Peak Cumulative Losses” number should allow him to reduce the size of the buffers considerably. That, in turn, would both make it easier/possible for FnF to provide a market-based ROE with little or no increase to g-fees, as well as grease the skids for earlier dividend payments to facilitate the equity raise.

 

exceptional point by ROLG

 

Actually, I see now how Midas and Mr. howard added to the original fraud recovery question. All very good points.

[muscleman]

Might be OT but it seems like the legal wheel of juggernaut is slow but grinding fine.

https://www.wsj.com/articles/appeals-court-orders-judge-to-dismiss-criminal-case-against-michael-flynn-as-justice-department-requested-11593008416?mod=hp_lead_pos1

 

[investorG]

I wonder if the rule of law guy would still predict retro relief with roberts or breyer the likely author of the Seila ruling.  I'm also surprised FNMAS didn't rally to around $10 after the quick and potentially impactful hiring of MS and JP.  Maybe someone knows something bearish that's not visible to us.

[Guest cherzeca]

I wonder if the rule of law guy would still predict retro relief with roberts or breyer the likely author of the Seila ruling.  I'm also surprised FNMAS didn't rally to around $10 after the quick and potentially impactful hiring of MS and JP.  Maybe someone knows something bearish that's not visible to us.

 

"likely" schmikely. this is Blackmun/soctusblog scuttlebutt predictioning.  why distinguish Seila from Lucia, assuming a ruling for unconstitutional structure?

 

"Maybe someone knows something bearish that's not visible to us."  maybe, maybe not.  the market has always been very undecided about GSEs...can you blame it?

[Guest Covid-19_Survivor]

I wonder if the rule of law guy would still predict retro relief with roberts or breyer the likely author of the Seila ruling.  I'm also surprised FNMAS didn't rally to around $10 after the quick and potentially impactful hiring of MS and JP.  Maybe someone knows something bearish that's not visible to us.

 

"likely" schmikely. this is Blackmun/soctusblog scuttlebutt predictioning.  why distinguish Seila from Lucia, assuming a ruling for unconstitutional structure?

 

"Maybe someone knows something bearish that's not visible to us."  maybe, maybe not.  the market has always been very undecided about GSEs...can you blame it?

 

Whelan's comments re: financial viability. The market is acting rationally. Personally, I think they're all been thought through and solutions exist, but without clarity from Calabria this shit should continue.

[Cox022]

Calabria on the Cato Institute Daily podcast.  https://www.cato.org/multimedia/cato-daily-podcast/mortgage-markets-covid-19?utm_source=dlvr.it&utm_medium=twitter

 

Nothing groundbreaking but a solid 6-7 minutes of Calabria talking about the GSE's, starting at 19:30.

 

some rough notes, part quote, part paraphrase:

 

-2021/2022 they may do some sort of public offering

-How GSE's raise capital is up to them, I just set the rules and mileposts

-They can either build earnings, sell off assets, or raise public or private capital

-they've hired advisors, it's early, everything is on the table

-we are talking hundreds of billions of dollars at the end of the day that need to be reaised by retained earnings, public or private offerings

-potentially largest public offerings in history and certainly not something done in a short amount of time

-I'm an independent regulator, my term runs to 2024, I have every intention of serving that term

-I hope my successor, because I think I am just carrying out the laws as congress decided it, I'd like to think my successor will take the same perspective

-in my 15 months here the dialogue around this has really changed [to follow the law instead of sticking to conservatorship limbo], and quickly, it's heartening, and I hope that sticks

-I'll add a caveat that it will be very, very difficult to raise capital if we see housing market have a big decline or the equity markets have a big decline

[beaufort]

This is the first interview where I have heard Calabria bring up a private capital raise as a possibility, along with retained earnings and a public capital raise.