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

[muscleman]

thanks Luke.  Stevens is annoying and cloying, but not dumb.  I think his point that housing/GSEs are currently not a problem and hence won't be a priority for a Biden admin at least initially is correct, and even if the house FSC thinks otherwise, I think Calabria gets probation time. just a question of inertia if nothing else.  he doesn't appreciate that collins may not be a live case after lame duck so that the Biden admin might need to go to court to remove Calabria at will, which I thought was somewhat naive.  but my biggest takeaway is that he thinks Toomey will be the new senate banking committee chair, and Toomey was an early proponent of GSE recap.  if he is right, and I rather think he spends a lot of time on the phone sussing out beltway moves, then that might be the best thing I heard today.

 

Toomey might well be in the "let it happen" column. Question is, who (person) or what (catalyst) would "make it happen" still? I think if nothing happens prior to transition of power, then looks like it may be a long drawn out wait once again, subject to the court ruling. The court hearing and if progressing then its result are the two sure events on the calendar, everything else seems to be subject to the kindness of strangers.

 

this is all true.  but look at the price action of the common v junior pref (6% outperformance of junior over past two days).  I will let muscleman inform us as to what the market is telling us, but it appears to be something that is more adverse to common than junior pref.

 

LOL..... The chart for common is in the middle of no where. Not in the comfort zone for me say anything about it.

The chart for Preferred looks a bit similar to August 2018. I think it may either go sideways or go down to 7.5 one more time before going up again. After selling out in May 2019, I am getting more interested in the preferred again. I haven't bought any though.

 

 

[Luke 532]

https://www.housingwire.com/articles/with-biden-win-likely-fhfa-doubles-down-on-ending-gse-conservatorship/

With Biden win likely, FHFA doubles down on ending GSE conservatorship

[Midas79]

https://www.housingwire.com/articles/with-biden-win-likely-fhfa-doubles-down-on-ending-gse-conservatorship/

With Biden win likely, FHFA doubles down on ending GSE conservatorship

 

All the more reason to settle Collins. If Calabria can entrench himself for at least another 12-18 months he should be able to get all the dominoes lined up and tip the first one over.

 

I do wonder if this is also a tell that Mnuchin is on board, because FHFA cannot release FnF while the seniors still exist: core capital is still hugely negative right now and would trigger an immediate "critically undercapitalized" designation under HERA.

[orthopa]

https://www.housingwire.com/articles/with-biden-win-likely-fhfa-doubles-down-on-ending-gse-conservatorship/

With Biden win likely, FHFA doubles down on ending GSE conservatorship

 

All the more reason to settle Collins. If Calabria can entrench himself for at least another 12-18 months he should be able to get all the dominoes lined up and tip the first one over.

 

I do wonder if this is also a tell that Mnuchin is on board, because FHFA cannot release FnF while the seniors still exist: core capital is still hugely negative right now and would trigger an immediate "critically undercapitalized" designation under HERA.

 

Agree, this statement points to 4th PSPA amendment, and consent decree at a minimum. Otherwise they cant continue to release them from conservatorship once Biden comes into office.

 

If they were smart (dumb statement) they would settle collins, give Calabria more time as you mention and set FnF up to raise capital once the Srs fate is decided. This could allow them to start to raise capital before summer. I don't have a target for when they would start to raise capital but if collins is argued and decision is waited for then late summer/fall 2021 maybe the soonest they could do something. With the lawsuits settled, capital structure known etc 1st capital raise could come much sooner while Calabria def in office which allows the recap to be farther along before he maybe removed.

 

As nasty and as bitter as this election and the period after is/maybe I could see the lame duck period being more of sticking it to the dems and carrying out the agenda then leaving it "for them". If Biden wins all political risk is gone and Mnuchin/Calabria can move at will.

 

[Guest cherzeca]

https://www.housingwire.com/articles/with-biden-win-likely-fhfa-doubles-down-on-ending-gse-conservatorship/

With Biden win likely, FHFA doubles down on ending GSE conservatorship

 

All the more reason to settle Collins. If Calabria can entrench himself for at least another 12-18 months he should be able to get all the dominoes lined up and tip the first one over.

 

I do wonder if this is also a tell that Mnuchin is on board, because FHFA cannot release FnF while the seniors still exist: core capital is still hugely negative right now and would trigger an immediate "critically undercapitalized" designation under HERA.

 

in private practice, I would try to "read" people. a necessary part of negotiation.  usually it is not too hard and you can get it sorta right.  in govt, reading people is a different game, since power is name of the game, and illusions of power lead to prevarication and subterfuge.  but at this stage, one would think a correct read would be that mncuhin wold want to execute (finally) on a to-do item before he goes back to movie investing

[typicalvalue]

My bigest worry right now is that Mnuchin is not on board which messes the process. Hope that all things were planned before the election, but the pace of the reform makes me doubt if its too late.

[orthopa]

https://www.housingwire.com/articles/with-biden-win-likely-fhfa-doubles-down-on-ending-gse-conservatorship/

With Biden win likely, FHFA doubles down on ending GSE conservatorship

 

All the more reason to settle Collins. If Calabria can entrench himself for at least another 12-18 months he should be able to get all the dominoes lined up and tip the first one over.

 

I do wonder if this is also a tell that Mnuchin is on board, because FHFA cannot release FnF while the seniors still exist: core capital is still hugely negative right now and would trigger an immediate "critically undercapitalized" designation under HERA.

 

Inverting this how could they continue to double down if they dont settle collins, do a 4th PSPA, and get a consent decree? Mnuchin is willing to give power and influence to a Biden Treasury Secretary to negotiate with Calabria?

[orthopa]

My bigest worry right now is that Mnuchin is not on board which messes the process. Hope that all things were planned before the election, but the pace of the reform makes me doubt if its too late.

 

In a lame duck period where Trump et al are angry and contesting results who/what becomes the enemy? FnF and ending the conservatorship or Stevens, Demarco, Parrot etc.

 

It would take some really special motivation for Mnuchin(I think there is no way in hell he would) to hand the power over to essentially the previous admin and their housing policy team. I open to anyone changing my mind on that.

 

 

[Midas79]

Agree, this statement points to 4th PSPA amendment, and consent decree at a minimum. Otherwise they cant continue to release them from conservatorship once Biden comes into office.

 

If they were smart (dumb statement) they would settle collins, give Calabria more time as you mention and set FnF up to raise capital once the Srs fate is decided. This could allow them to start to raise capital before summer. I don't have a target for when they would start to raise capital but if collins is argued and decision is waited for then late summer/fall 2021 maybe the soonest they could do something. With the lawsuits settled, capital structure known etc 1st capital raise could come much sooner while Calabria def in office which allows the recap to be farther along before he maybe removed.

 

As nasty and as bitter as this election and the period after is/maybe I could see the lame duck period being more of sticking it to the dems and carrying out the agenda then leaving it "for them". If Biden wins all political risk is gone and Mnuchin/Calabria can move at will.

 

This is from three years ago, but hopefully the Trump administration hasn't changed its mind on this:

 

To that end, Calabria said the Trump administration is committed to not handing Fannie Mae and Freddie Mac in conservatorship over to the next administration, but cautioned that the process will not be easy. "If it were easy to get GSEs out of conservatorship, it would have been done already," Calabria said.

 

The article is here, though you have to quickly Ctrl + A and copy/paste it.

https://www.housingwire.com/articles/41714-mark-calabria-trump-administration-committed-to-ending-conservatorship/

[Iriminage]

If Trump attempts to get elected via SCOTUS, how would that affect the court's calendar?  How much risk is there that a December 9th day in court becomes a January 9th?  Or, Feb 9th...

[Luke 532]

My bigest worry right now is that Mnuchin is not on board which messes the process. Hope that all things were planned before the election, but the pace of the reform makes me doubt if its too late.

 

ACG: "Calabria, Mnuchin and Powell have a very good relationship, one team, no distance, no friction."

 

They, ACG, reiterated this point on a call today.

[Midas79]

@cherzeca

 

A question from the Twitter chat: if the Collins plaintiffs either settle or drop their case (due to getting what they want from a PSPA amendment), is the Fifth Circuit en banc panel's ruling in force or vacated?

 

My understanding was that it was vacated the moment SCOTUS granted cert, so Calabria would still enjoy for-cause removal protection if Collins is settled or dropped. Is that correct?

[typicalvalue]

https://www.housingwire.com/articles/with-biden-win-likely-fhfa-doubles-down-on-ending-gse-conservatorship/

With Biden win likely, FHFA doubles down on ending GSE conservatorship

 

All the more reason to settle Collins. If Calabria can entrench himself for at least another 12-18 months he should be able to get all the dominoes lined up and tip the first one over.

 

I do wonder if this is also a tell that Mnuchin is on board, because FHFA cannot release FnF while the seniors still exist: core capital is still hugely negative right now and would trigger an immediate "critically undercapitalized" designation under HERA.

 

Inverting this how could they continue to double down if they don't settle collins, do a 4th PSPA, and get a consent decree? Mnuchin is willing to give power and influence to a Biden Treasury Secretary to negotiate with Calabria?

 

It all points out that leads to a settlement before December 9th.

 

-Raising capital ASAP

-Let Calabria finish the reform and buy him more time.

-Consistency with the administrative action initiated

-Advisors may have pushed on this and made clear that no one is going to put a dime with lawsuits outstanding.

 

The main problem is that we think as private individuals, and they are bureaucrats. And bureaucrats tend to mess things. On the positive side now urgency has build and there is a deadline both on the admin and justice side, so this may push them.

[Guest cherzeca]

@cherzeca

 

A question from the Twitter chat: if the Collins plaintiffs either settle or drop their case (due to getting what they want from a PSPA amendment), is the Fifth Circuit en banc panel's ruling in force or vacated?

 

My understanding was that it was vacated the moment SCOTUS granted cert, so Calabria would still enjoy for-cause removal protection if Collins is settled or dropped. Is that correct?

 

no the 5th C en banc remains after any settlement that terminates the cert grant.  not the same situation as when a C grants en banc review of and thereby vacates a merits panel decision.  the law on APA claim would remain split among circuits

[investorG]

@cherzeca

 

A question from the Twitter chat: if the Collins plaintiffs either settle or drop their case (due to getting what they want from a PSPA amendment), is the Fifth Circuit en banc panel's ruling in force or vacated?

 

My understanding was that it was vacated the moment SCOTUS granted cert, so Calabria would still enjoy for-cause removal protection if Collins is settled or dropped. Is that correct?

 

no the 5th C en banc remains after any settlement that terminates the cert grant.  not the same situation as when a C grants en banc review of and thereby vacates a merits panel decision.  the law on APA claim would remain split among circuits

 

If this is true there likely won't be a Collins settlement, at least on the constitutional angle. 

 

Biden could fire Calabria on Jan21 rather than 5 months later or possibly not at all if the SC finds FHFA director to be different than CFPB. 

[Guest cherzeca]

@cherzeca

 

A question from the Twitter chat: if the Collins plaintiffs either settle or drop their case (due to getting what they want from a PSPA amendment), is the Fifth Circuit en banc panel's ruling in force or vacated?

 

My understanding was that it was vacated the moment SCOTUS granted cert, so Calabria would still enjoy for-cause removal protection if Collins is settled or dropped. Is that correct?

 

no the 5th C en banc remains after any settlement that terminates the cert grant.  not the same situation as when a C grants en banc review of and thereby vacates a merits panel decision.  the law on APA claim would remain split among circuits

 

If this is true there likely won't be a Collins settlement, at least on the constitutional angle. 

 

Biden could fire Calabria on Jan21 rather than 5 months later or possibly not at all if the SC finds FHFA director to be different than CFPB.

 

a settlement on both collins claims suits both C&M.  while I dont see Biden admin focusing on GSEs right out off box given that housing is doing well and Biden needs to show action on pandemic, settling collins will give C ability to resist any Biden at will firing for the year it would take to end litigation process.  but again I do not see Biden trying to terminate C at will especially since Biden would need senate confirmation of replacement which Rs will still control and the replacement would have to go through SBC which will be headed by Toomey, who is pro recap/release

[investorG]

@cherzeca

 

A question from the Twitter chat: if the Collins plaintiffs either settle or drop their case (due to getting what they want from a PSPA amendment), is the Fifth Circuit en banc panel's ruling in force or vacated?

 

My understanding was that it was vacated the moment SCOTUS granted cert, so Calabria would still enjoy for-cause removal protection if Collins is settled or dropped. Is that correct?

 

no the 5th C en banc remains after any settlement that terminates the cert grant.  not the same situation as when a C grants en banc review of and thereby vacates a merits panel decision.  the law on APA claim would remain split among circuits

 

If this is true there likely won't be a Collins settlement, at least on the constitutional angle. 

 

Biden could fire Calabria on Jan21 rather than 5 months later or possibly not at all if the SC finds FHFA director to be different than CFPB.

 

a settlement on both collins claims suits both C&M.  while I dont see Biden admin focusing on GSEs right out off box given that housing is doing well and Biden needs to show action on pandemic, settling collins will give C ability to resist any Biden at will firing for the year it would take to settle.  but again I do not see Biden trying to terminate C at will especially since Biden would need senate confirmation of replacement which Rs will still control and the replacement would have to go through SBC which will be headed by Toomey, who is pro recap/release

 

2 major assumptions in this:  R's win one or 2 of GA senate runoffs and Biden's intentions on housing - both could easily be wrong. 

 

Also what does this mean: "settling collins will give C ability to resist any biden at will firing for the year it would take to settle".

 

IMO if your original statement is true that a settlement on Constitutional simply reinforces the en banc -- which may or may not be true -- then the best we can likely hope for over the near term is a settlement on APA or simply a 4th amendment outside the legal realm.

[Guest cherzeca]

@cherzeca

 

A question from the Twitter chat: if the Collins plaintiffs either settle or drop their case (due to getting what they want from a PSPA amendment), is the Fifth Circuit en banc panel's ruling in force or vacated?

 

My understanding was that it was vacated the moment SCOTUS granted cert, so Calabria would still enjoy for-cause removal protection if Collins is settled or dropped. Is that correct?

 

no the 5th C en banc remains after any settlement that terminates the cert grant.  not the same situation as when a C grants en banc review of and thereby vacates a merits panel decision.  the law on APA claim would remain split among circuits

 

If this is true there likely won't be a Collins settlement, at least on the constitutional angle. 

 

Biden could fire Calabria on Jan21 rather than 5 months later or possibly not at all if the SC finds FHFA director to be different than CFPB.

 

a settlement on both collins claims suits both C&M.  while I dont see Biden admin focusing on GSEs right out off box given that housing is doing well and Biden needs to show action on pandemic, settling collins will give C ability to resist any Biden at will firing for the year it would take to settle.  but again I do not see Biden trying to terminate C at will especially since Biden would need senate confirmation of replacement which Rs will still control and the replacement would have to go through SBC which will be headed by Toomey, who is pro recap/release

 

2 major assumptions in this:  R's win one or 2 of GA senate runoffs and Biden's intentions on housing - both could easily be wrong. 

 

Also what does this mean: "settling collins will give C ability to resist any biden at will firing for the year it would take to settle".

 

IMO if your original statement is true that a settlement on Constitutional simply reinforces the en banc -- which may or may not be true -- then the best we can likely hope for over the near term is a settlement on APA or simply a 4th amendment outside the legal realm.

 

yes I expect Rs to control senate.

 

I have clarified my post to say " settling collins will give C ability to resist any Biden at will firing for the year it would take to end litigation process."

 

apart from that, I can explain it to you but I can't understand it for you

 

 

[investorG]

@cherzeca

 

A question from the Twitter chat: if the Collins plaintiffs either settle or drop their case (due to getting what they want from a PSPA amendment), is the Fifth Circuit en banc panel's ruling in force or vacated?

 

My understanding was that it was vacated the moment SCOTUS granted cert, so Calabria would still enjoy for-cause removal protection if Collins is settled or dropped. Is that correct?

 

no the 5th C en banc remains after any settlement that terminates the cert grant.  not the same situation as when a C grants en banc review of and thereby vacates a merits panel decision.  the law on APA claim would remain split among circuits

 

If this is true there likely won't be a Collins settlement, at least on the constitutional angle. 

 

Biden could fire Calabria on Jan21 rather than 5 months later or possibly not at all if the SC finds FHFA director to be different than CFPB.

 

a settlement on both collins claims suits both C&M.  while I dont see Biden admin focusing on GSEs right out off box given that housing is doing well and Biden needs to show action on pandemic, settling collins will give C ability to resist any Biden at will firing for the year it would take to settle.  but again I do not see Biden trying to terminate C at will especially since Biden would need senate confirmation of replacement which Rs will still control and the replacement would have to go through SBC which will be headed by Toomey, who is pro recap/release

 

2 major assumptions in this:  R's win one or 2 of GA senate runoffs and Biden's intentions on housing - both could easily be wrong. 

 

Also what does this mean: "settling collins will give C ability to resist any biden at will firing for the year it would take to settle".

 

IMO if your original statement is true that a settlement on Constitutional simply reinforces the en banc -- which may or may not be true -- then the best we can likely hope for over the near term is a settlement on APA or simply a 4th amendment outside the legal realm.

 

yes I expect Rs to control senate.

 

I have clarified my post to say " settling collins will give C ability to resist any Biden at will firing for the year it would take to end litigation process."

 

apart from that, I can explain it to you but I can't understand it for you

 

ok but it still doesn't make sense to me.  if 5th circuit en banc ruling on constitutionality is entrenched and activated with a collins settlement at SC then Biden could fire Calabria in 10 weeks - which is likely not Calabria and Mnuchin's goal.

[Guest cherzeca]

@cherzeca

 

A question from the Twitter chat: if the Collins plaintiffs either settle or drop their case (due to getting what they want from a PSPA amendment), is the Fifth Circuit en banc panel's ruling in force or vacated?

 

My understanding was that it was vacated the moment SCOTUS granted cert, so Calabria would still enjoy for-cause removal protection if Collins is settled or dropped. Is that correct?

 

no the 5th C en banc remains after any settlement that terminates the cert grant.  not the same situation as when a C grants en banc review of and thereby vacates a merits panel decision.  the law on APA claim would remain split among circuits

 

If this is true there likely won't be a Collins settlement, at least on the constitutional angle. 

 

Biden could fire Calabria on Jan21 rather than 5 months later or possibly not at all if the SC finds FHFA director to be different than CFPB.

 

a settlement on both collins claims suits both C&M.  while I dont see Biden admin focusing on GSEs right out off box given that housing is doing well and Biden needs to show action on pandemic, settling collins will give C ability to resist any Biden at will firing for the year it would take to settle.  but again I do not see Biden trying to terminate C at will especially since Biden would need senate confirmation of replacement which Rs will still control and the replacement would have to go through SBC which will be headed by Toomey, who is pro recap/release

 

2 major assumptions in this:  R's win one or 2 of GA senate runoffs and Biden's intentions on housing - both could easily be wrong. 

 

Also what does this mean: "settling collins will give C ability to resist any biden at will firing for the year it would take to settle".

 

IMO if your original statement is true that a settlement on Constitutional simply reinforces the en banc -- which may or may not be true -- then the best we can likely hope for over the near term is a settlement on APA or simply a 4th amendment outside the legal realm.

 

yes I expect Rs to control senate.

 

I have clarified my post to say " settling collins will give C ability to resist any Biden at will firing for the year it would take to end litigation process."

 

apart from that, I can explain it to you but I can't understand it for you

 

ok but it still doesn't make sense to me.  if 5th circuit en banc ruling on constitutionality is entrenched and activated with a collins settlement at SC then Biden could fire Calabria in 10 weeks - which is likely not Calabria and Mnuchin's goal.

 

look there are many real world reasons why C might say "yes boss" if Biden tries to remove him at will.  but as a legal matter, C could resist and let Biden proceed to litigation. Biden would be smart to bring an action in 5th C, but that would need to be a new action that would have to start in federal district court, which presumably would follow collins, which would then be appealed to 5th c, which would presumably follow collins, which could then be appealed by C to scotus, which would either take the case or not....and if C really wanted to bust balls, if he gets an at will removal notice, he could file in federal district court of DC an action for a declaratory judgment, which need not (and most likely would not) follow collins.

 

in the real world, someone in Biden admin would sit down with C sometime in spring of 21 and talk about what C sees going forward...and most likely there would be an agreement letting C stay and pursue a path he has been working on for almost 2 years, maybe with a little leeway in favor of low income housing that might be the result of that conversation.

 

edit:  the main takeaway is that if Biden wants to replace CFPB head, that can happen immediately, as per Seila.  if he wants to replace C that is something C could resist...which gives C leverage for a sit down chat at a minimum.

[orthopa]

Not sure how much water the Gary Hindes connection holds but some have mentioned that as an angle where Biden wouldnt hammer the GSES. Personally if we have PSPA, consent decree settlement, etc, etc Im not worried much about Biden. If he gets pesky Calabria can appeal all day long. We all have gotten a good taste of how slow and fine the justice system grinds.

[Guest cherzeca]

for all of you armchair lawyers who still dont get it and just to hammer the nail one more time on C's options if Collins settles, remember that there is an argument being made before SCOTUS that Seila doesn't apply to fhfa...I dont think it is a winning argument but it certainly isn't frivolous....this same argument can be made by C in federal district and circuit courts in case Biden tries to remove C without cause and C doesn't want to go.

[investorG]

for all of you armchair lawyers who still dont get it and just to hammer the nail one more time on C's options if Collins settles, remember that there is an argument being made before SCOTUS that Seila doesn't apply to fhfa...I dont think it is a winning argument but it certainly isn't frivolous....this same argument can be made by C in federal district and circuit courts in case Biden tries to remove C without cause and C doesn't want to go.

 

how does this square with your earlier comment that if Collins settles at SC then the Collins 5th circuit en banc -- which ruled Calabria can be fired by Biden -- goes into effect?

[Guest cherzeca]

for all of you armchair lawyers who still dont get it and just to hammer the nail one more time on C's options if Collins settles, remember that there is an argument being made before SCOTUS that Seila doesn't apply to fhfa...I dont think it is a winning argument but it certainly isn't frivolous....this same argument can be made by C in federal district and circuit courts in case Biden tries to remove C without cause and C doesn't want to go.

 

how does this square with your earlier comment that if Collins settles at SC then the Collins 5th circuit en banc -- which ruled Calabria can be fired by Biden -- goes into effect?

 

squares perfectly.  ask yourself some questions. 

 

is Collins 5thC decision in effect now? YES.

 

was that decided before Seila? YES.

 

does SCOTUS trump 5thC? YES.

 

is there an open question whether Seila applies to fhfa? YES.

 

if collins settles before SCOTUS decides collins, does the open question whether Seila applies to fhfa persist? YES.

 

if C receives a removal without cause and he wants to fight it, can fhfa make the same arguments in federal district and circuit courts that are being made now before SCOTUS, that Seila doesn't apply to fhfa? YES.

 

will this all take time if C decides to pursue this path?  YES.

 

should you be in this investment if you dont understand above?  NO

 

not saying C will take this path, but he can take this path.

[investorG]

for all of you armchair lawyers who still dont get it and just to hammer the nail one more time on C's options if Collins settles, remember that there is an argument being made before SCOTUS that Seila doesn't apply to fhfa...I dont think it is a winning argument but it certainly isn't frivolous....this same argument can be made by C in federal district and circuit courts in case Biden tries to remove C without cause and C doesn't want to go.

 

how does this square with your earlier comment that if Collins settles at SC then the Collins 5th circuit en banc -- which ruled Calabria can be fired by Biden -- goes into effect?

 

squares perfectly.  ask yourself some questions. 

 

is Collins 5thC decision in effect now? YES.

 

was that decided before Seila? YES.

 

does SCOTUS trump 5thC? YES.

 

is there an open question whether Seila applies to fhfa? YES.

 

if collins settles before SCOTUS decides collins, does the open question whether Seila applies to fhfa persist? YES.

 

if C receives a removal without cause and he wants to fight it, can fhfa make the same arguments in federal district and circuit courts that are being made now before SCOTUS, that Seila doesn't apply to fhfa? YES.

 

will this all take time if C decides to pursue this path?  YES.

 

should you be in this investment if you dont understand above?  NO

 

not saying C will take this path, but he can take this path.

 

ok.  i went off track in your first question - I thought the Collins 5th Circuit en banc decision goes on 'hold' when the SC decides to review the case.  no?