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

[Guest cherzeca]

thanks orthopa.  broadly is a weasel word that lawyers like, and this does look like a lawyer drafted it.  the big point of this language that you quote imo is that T has obligated itself to fhfa to negotiate and execute an agreement that implements the administration plan, which contains references to private capital reducing taxpayer risk....execute such an agreement not by any particular date, mind you, but it is highly unusual for an entity like T to obligate itself to execute a further agreement.  T certainly thought it was seeing eye to eye with fhfa when it obligated itself in this fashion.

[Spekulatius]

I have posted this before but helpful again to just reacquaint ourselves with the previous amendment since we maybe close to the end here.

 

https://home.treasury.gov/system/files/136/9-27-19%20_FNMA%20Capital%20Agreement_0.pdf

 

The Enterprise and Treasury agree to negotiate and execute an additional amendment to the

Agreement that further enhances taxpayer protections by adopting covenants broadly consistent

with recommendations for administrative reform contained in Treasury's September 2019

Housing Reform Plan, in further consideration for the amendment contained in Part I of this

agreement.

 

I post this because I believe what we will see in a 4th amendment was decided long ago. If we remember correctly SM and MC were actively negotiating an amendment not long after the Sept 2019 letter agreement. They have been negotiating for 14 months if you can believe its truly will come down to the wire and things are not decided already.

 

What i ponder now looking at the language is what does "broadly consistent" mean? Why not "consistent"?

 

The language to me suggest the liquidation preference will stay in a 4th amendment due to the last sentence correct?

 

Any thoughts on this.

 

Where do you think the preferred trade when there is no amendment by January 20th?, because I think that’s the way more likely outcome. I would say around $4, give or take. That’s based on where they traded before Trump Geotagging eclectic and when Trump is gone, they could just get back to the same price point, absent any

Executive action. It’s a simple point of view, but do you have a better one?

 

I think there is quite some lack of crucial think here. Every bullish aspect here is celebrated but where is the post mortem when the predicted events don’t occur.

 

Fair example, just a short while ago, the story came up that three  Fannie Mae staff should be ready to work over the holidays to work on financials etc presumable to get ready for privatization.

 

Well did they work over the weekend! If email that they may require to wrote leaked out what would you expect the fact that dozens if not more staff worked over the holidays would have leaked out as well. And if it didn’t leak out and you invert your logic what does it mean?

 

Anyways, we will see who is right, I think most of the time value of the executive action option value has deflated but not all. $4 is probably the downside here for the $25 nominal value preferred, give or take.

[COBFInfinity]

I think there is quite some lack of crucial think here. Every bullish aspect here is celebrated but where is the post mortem when the predicted events don’t occur.

 

Fair example, just a short while ago, the story came up that three  Fannie Mae staff should be ready to work over the holidays to work on financials etc presumable to get ready for privatization.

 

Well did they work over the weekend! If email that they may require to wrote leaked out what would you expect the fact that dozens if not more staff worked over the holidays would have leaked out as well. And if it didn’t leak out and you invert your logic what does it mean?

 

 

I know you're just here to troll and if the preferreds are up 150% next week, you won't be back to talk about it, but I'll humor you because you are trying to give the impression that you're doing some real second level thinking, but can't actually see the obvious.

 

The email to Fannie Mae staff said that it was "possible" that the conservatorship would be ended imminently, and if so, they would need some people to work over the holidays. So did they work over the holidays? Probably not, because, duh, the conservatorship was not ended in late December. We all know this. You logic is about as good as this: Mnuchin only believes in ending conservatorships during Hannukah, and now that it's January, he can't do it for religious reasons.

 

What you fail to recognize is the importance of Fannie Mae senior management having reason to believe the conservatorship would end imminently. Is it fair to assume they know more about what is happening than you? Do you think maybe they've had many discussions with Mark Calabria about what they might expect? Do you really think they would notify staff if absolutely nothing was expected to change?

 

So it's blatantly obvious that Mnuchin intended to sign a PSPA agreement. Exactly what changes, none of us here know. Is it possible he has had a last minute change of heart? Sure, it's possible, but HE has definitely not said that. The last public comments said he was likely to sign. But if your whole argument is, "It didn't happen two weeks ago, therefore it will never happen," then perhaps you shouldn't be casting stones at how anyone else evaluates this investment.

[locutusoftexas]

1. What evidence do you have that he wont act vs that he will. The he will pile is way higher then he wont pile. We are not down to minutes here with still a week and a half to go.

 

2. There is no way to invest in the Sr Preferred now so no way arbitrage with them. And your correct MM buys high and sells low. After the outcome occurs, he will come and tell us what happened. Has  happened 3 or 4 times now.

 

3. FnF do not have to exit conservatorship in any way palatable to Maxine Waters or the Democrats. FnF exit conservatorship is an agreement between Treasury and FHFA and if CD between FHFA and the GSEs. Congress is not involved at all now or in the future with that. Who cares what Maxine Waters thinks. The only input she will have will be in a bill that can pass through congress that hasnt happened in 12 years. I hope you dont hold your breath on that. Maxine Waters has no imput on compensating equity investors. After out of conservatorship its the GSEs that will deal with investors vis CRPs.

 

4. The SCOTUS cannot release the companies from conservatorship. Only deal with the NWS. If you havent already, please re read HERA.

 

5. If you looked at the OMB projections they do not include dividends from FnF. Not really sure this makes much sense objectively.

 

1. You assess the odds as perhaps much greater than 50-50 that Mnuchin will execute the 4th amendment before leaving office. That would be great. However, as I said, this is not about investing, it is about politics and people, both of which are at best amoral and unpredictable. So far the optimistic predictions have not panned out. We have 12 days left. I was hopeful four years ago. I have learned. I hope that I am wrong and you are right.

 

2. I knew that the Sr Preferred are not investible now. However, I thought that someone who wanted to work harder than I would might be able to estimate a value based on the various options for disposing of them as part of the release from conservatorship. If no release occurs and the dividend is paid per the 3rd Amendment, the value to the Treasury is effectively infinite and the value of the common and juniors is zero.

 

3. I brought up Maxine Waters because she and other Democrats had contacted Calabria to ask him to hold off on this process. It is precisely the possibility of a bill that one cannot ignore. Despite the faith of many that the government would eventually do the right thing by private shareholders, no one in the government has accomplished anything, including the beloved Trump administration. Meanwhile, Maxine Waters is Chairwoman of the House Committee on Financial Services, and sorry to say, yes she can do something, and she will probably have something to do with this. Your comments about her are erroneous and therefore unhelpful.

 

4. Are you arguing that the court decisions will not affect the timeline and decisions on the release from conservatorship? If so, than again, you are ignoring the practical aspects of negotiation and decision making. Of course the court cannot release them, but certainly court decisions are a significant factor in this.

 

5. What OMB does is irrelevant.  Before the capital raise was instituted by Calabria, Treasury had received the proceeds from the NWS since the 3rd Amendment went into effect. That money went somewhere If they don't want the $Billions or so per quarter received over 8 years, I will be happy to take it.

[SnarkyPuppy]

1. What evidence do you have that he wont act vs that he will. The he will pile is way higher then he wont pile. We are not down to minutes here with still a week and a half to go.

 

2. There is no way to invest in the Sr Preferred now so no way arbitrage with them. And your correct MM buys high and sells low. After the outcome occurs, he will come and tell us what happened. Has  happened 3 or 4 times now.

 

3. FnF do not have to exit conservatorship in any way palatable to Maxine Waters or the Democrats. FnF exit conservatorship is an agreement between Treasury and FHFA and if CD between FHFA and the GSEs. Congress is not involved at all now or in the future with that. Who cares what Maxine Waters thinks. The only input she will have will be in a bill that can pass through congress that hasnt happened in 12 years. I hope you dont hold your breath on that. Maxine Waters has no imput on compensating equity investors. After out of conservatorship its the GSEs that will deal with investors vis CRPs.

 

4. The SCOTUS cannot release the companies from conservatorship. Only deal with the NWS. If you havent already, please re read HERA.

 

5. If you looked at the OMB projections they do not include dividends from FnF. Not really sure this makes much sense objectively.

 

1. You assess the odds as perhaps much greater than 50-50 that Mnuchin will execute the 4th amendment before leaving office. That would be great. However, as I said, this is not about investing, it is about politics and people, both of which are at best amoral and unpredictable. So far the optimistic predictions have not panned out. We have 12 days left. I was hopeful four years ago. I have learned. I hope that I am wrong and you are right.

 

2. I knew that the Sr Preferred are not investible now. However, I thought that someone who wanted to work harder than I would might be able to estimate a value based on the various options for disposing of them as part of the release from conservatorship. If no release occurs and the dividend is paid per the 3rd Amendment, the value to the Treasury is effectively infinite and the value of the common and juniors is zero.

 

3. I brought up Maxine Waters because she and other Democrats had contacted Calabria to ask him to hold off on this process. It is precisely the possibility of a bill that one cannot ignore. Despite the faith of many that the government would eventually do the right thing by private shareholders, no one in the government has accomplished anything, including the beloved Trump administration. Meanwhile, Maxine Waters is Chairwoman of the House Committee on Financial Services, and sorry to say, yes she can do something, and she will probably have something to do with this. Your comments about her are erroneous and therefore unhelpful.

 

4. Are you arguing that the court decisions will not affect the timeline and decisions on the release from conservatorship? If so, than again, you are ignoring the practical aspects of negotiation and decision making. Of course the court cannot release them, but certainly court decisions are a significant factor in this.

 

5. What OMB does is irrelevant.  Before the capital raise was instituted by Calabria, Treasury had received the proceeds from the NWS since the 3rd Amendment went into effect. That money went somewhere If they don't want the $Billions or so per quarter received over 8 years, I will be happy to take it.

 

"Meanwhile, Maxine Waters is Chairwoman of the House Committee on Financial Services, and sorry to say, yes she can do something, and she will probably have something to do with this. Your comments about her are erroneous and therefore unhelpful."

 

Can you please provide some hypothetical examples of precisely what she can do under an optimistic PSPA amendment unwinding the senior preferred & releasing the GSEs subject to pre-defined capital levels dictated by a consent decree? 

[cameronfen]

To be clear, his opinion literally started with "I don't know what I'm talking about".  Specifically:

 

"I don’t really follow FNMA and FMCC" and "I don’t know the intricacies of this case"

 

Has everyone lost their minds?  We are obviously aware of the risk that SM doesn't do anything.  Was the comment supposed to be breaking news?  Struggling w/ the value-add

 

And yet people that commented after you are still saying a high likelihood that SM does something. 

[beaufort]

Following up on locust and orthopa's posts

 

1.  I assess the odds at much higher than 50/50 that SM will act.  This assessment is based on the fact that SM said he will likely act.  I also have a view that SM is cautious with language.  He knows what likely means.  I place emphasis on that. 

 

Edit:

 

Of course, I am not only making my decision based on SM's recent comments.  I am basing my view on the last 4 years of activity, all driving towards the PSPA amendment.  See Orthopa's posts on all of the activity of the last 4 years, with which I agree.

 

FnF are an investment because after a careful review, FnF offer safety of principal and an acceptable return.  This is a special situation with two related catalysts, judicial and administrative.  The MOS is the lawsuits.  The simplest distillation of the MOS is the the following rule:  the US government cannot expropriate without compensation. 

 

There are many other claims advanced, but the expropriation rule is the backstop. 

 

Edit:

In other words, this is not a 50/50 bet.  It is an asymmetrical bet on excellent upside to par value in acceptable time, with limited downside, mainly in the time value of money and lost opportunity. 

 

3.  The cynic in me thinks that the reason the imminent 4th amendment has been so well telegraphed is that SM wants politicians of all stripes to profit from this investment if they want to; this avoids a backlash by people who are thinking about their own pocketbook.  Given how long this plan has been in the works, anybody who wanted to buy could have.  Everybody gets to wet their beaks.  This is also why I think SM was calling both democrats and republicans in the last couple of months, putting the word out that this is happening.

 

Things don't always happen for the reasons they are purported to happen.  I went to Morocco about 15 years ago.  My GF and I were looking at a map for a restaurant.  A helpful guide befriended us to assist as he was walking by.  When we got to the restaurant, the guide spent a bit of time talking in Arabic with the restauranteur.  I only read about and realized later that it was during that conversation that he was negotiating his commission for bringing us in.

 

4.  The lawsuits are what gives many investors in these companies their required margin of safety.  They are necessary for me to have made the decision to invest, despite expecting an administrative solution the whole time.  The lawsuits mean that I won't lose my principal, given the prices I have paid.  If the lawsuits take another 5 years to work out, including appeals, I will still do well when taking the time value of money into account.  But it will not be the homerun that my purchases last week will be if it works out in the next week or so, that's for sure.

 

Final purchases

 

I bought my last allocation last week, finishing yesterday, representing between 20-25% of the final investment.  My calendar has cleared up for the next couple of weeks.  I'm going to do a lot of skiing and wait.

 

Speculation re JPS prices following 4th amendment next week

 

I think the market has prices right, given how efficient it is.  If the 4th amendment is a writedown of the SPS, end of NWS and a very significant commitment fee, as I expect it to be, I see a double right away for JPS to approx 50% of par value.  From there to par value, we will need clarity on an exchange and a timeline for a capital raise.  I will not be surprised at all if there is a one and done capital raise. Especially if the incentives are there by virtue of an onerous commitment fee pending full capitalization, in addition to management being incentivized to quickly raise capital to get bonuses.  Investors will also want their dividends right away.

 

How I interpret the press

 

I don't think Gasparino et al have much understanding of what they are saying, but I do accept as an assumption that he is being fed tidbits of information that are accurate.  For example, he says bankers and lawyers have recently met with Treasury.  It's possible they are meeting for simply another letter agreement, which I have previously argued is not a PSPA amendment because it uses different language, but I don't think it is most likely.  There have been two letter agreements, one with Watt, another with Calabria.  Both have been agreements that modify the cash flows, but don't change the ownership structure.  I don't have a memory of this much reported professional activity in the past letter agreement episodes.  Bankers were not yet even engaged previously. 

 

Edit:

 

To further clarify, I accept the basic facts that Gasparino et al are reporting; ie Mnuchin met with Calabria in November twice.  I don't accept any of the opinions that he reports unrelated to the facts, or opinions related to the facts.  His opinions are worth nothing.   

 

@cherzeca

 

The paragraph you cite in the Calabria letter agreement looks like an agreement to later agree, which isn't contractually binding in Canada.  The rule may be different in the US.  It is interesting that the Treasury would go so far as to purportedly bind itself to a future agreement.  I make the point to illustrate that Treasury was at that time willing to insert a soft paragraph that pushes the bull thesis buttons as well.  It doesn't make sense to insert the further agreement language unless you want a further agreement.  Why open up Treasury to more litigation for failing to agree to a further amendment?  Even if I am right about the binding nature, why bother creating problems where they don't exist and get involved in that argument at all?  The simplest answer is that Treasury and FHFA intend to do exactly what they have said they are going to do which is to modify the agreements.

 

Edit:

 

One more note.  Whatever political cover SM needed, from SCOTUS or otherwise, is no longer needed.  It's time to act.   

 

 

 

 

 

 

 

 

 

[typicalvalue]

Mnuchin returning early from its trip. Show time begins.

 

[Gregmal]

I actually see this as one of the best short term, event driven trade setups out there right now. You have maybe 20-30% potential short term downside and 150%+ upside potential. If your risk tolerance is 100 bps(IE nothing), you can T up a rather meaningful position.

[cameronfen]

I actually see this as one of the best short term, event driven trade setups out there right now. You have maybe 20-30% potential short term downside and 150%+ upside potential. If your risk tolerance is 100 bps(IE nothing), you can T up a rather meaningful position.

 

Just so everyone doesn’t think I’m a hater, this seems like a reasonable counter argument at first glance although again I haven’t done any work on the stock.  I just think people saying that the chance is still greater than 50/50 because SM said he would do it before the coup happened aren’t updating their beliefs correctly. 

[Jcmeg35]

Other than the fact that there has not yet been a PSPA and the value of the securities has sold off, what has transpired over the last few weeks to indicate that Mnuchin won’t sign a PSPA or some other agreement that alters the current state?

[COBFInfinity]

I actually see this as one of the best short term, event driven trade setups out there right now. You have maybe 20-30% potential short term downside and 150%+ upside potential. If your risk tolerance is 100 bps(IE nothing), you can T up a rather meaningful position.

 

Just so everyone doesn’t think I’m a hater, this seems like a reasonable counter argument at first glance although again I haven’t done any work on the stock.  I just think people saying that the chance is still greater than 50/50 because SM said he would do it before the coup happened aren’t updating their beliefs correctly.

 

Lots of people are saying/implying this, but can someone clarify WHY they think Mnuchin would choose not to sign a PSPA agreement based on what Trump did this week?

 

I accept that there might be a reason, but I'm not sure what it would be. Mnuchin's job ends in 11 days, he's fabulously wealthy, and it's unclear if he has any interest in running for any office in the future, so I honestly see ZERO concern that he would have if a few Democrats don't like what he does - they were never going to like it anyway.

[COBFInfinity]

P.S. If anyone was going to back out of a PSPA amendment, I would think it is Calabria, not Mnuchin. He's the one who could plausibly hurt his career by doing it. But as with Mnuchin, none of us here know whether Calabria has had any reason to change his mind.

[cameronfen]

I actually see this as one of the best short term, event driven trade setups out there right now. You have maybe 20-30% potential short term downside and 150%+ upside potential. If your risk tolerance is 100 bps(IE nothing), you can T up a rather meaningful position.

 

Just so everyone doesn’t think I’m a hater, this seems like a reasonable counter argument at first glance although again I haven’t done any work on the stock.  I just think people saying that the chance is still greater than 50/50 because SM said he would do it before the coup happened aren’t updating their beliefs correctly.

 

Lots of people are saying/implying this, but can someone clarify WHY they think Mnuchin would choose not to sign a PSPA agreement based on what Trump did this week?

 

I accept that there might be a reason, but I'm not sure what it would be. Mnuchin's job ends in 11 days, he's fabulously wealthy, and it's unclear if he has any interest in running for any office in the future, so I honestly see ZERO concern that he would have if a few Democrats don't like what he does - they were never going to like it anyway.

 

A large number of Americans including many republicans consider that coup just occurred incited by president Trump.  Trump has lost legitimacy as president even by many in his own party as evidenced by the many resignations.  While I agree it doesn’t really effect SM monetarily, passing controversial legislation at this point in time persona non grata for the foreseeable future.  If you don’t buy that, consider what the repercussions for Trump and the GOP.  Trump incites the coup.  When it’s contained instead of doing nothing, which is the best he can do, he passes this controversial legislation which is counter to Biden’s agenda.  You know how many people on both the left and the right would pummel the republicans and Trump for having no shame and continuing to undermine the Biden administration even after trying to stage a coup?  Is it possible, yeah.  Is it likely after what happened this week, probably not.

 

Edits (additional thoughts):

Also priority number 1 (as well as 2,3,4...) is to ensure a smooth transition to Biden’s presidency.  I would imagine this falls down on the list of priorities, considering how far behind they are in transitioning, given the new additional spotlight on making sure this is smooth. 

[COBFInfinity]

I actually see this as one of the best short term, event driven trade setups out there right now. You have maybe 20-30% potential short term downside and 150%+ upside potential. If your risk tolerance is 100 bps(IE nothing), you can T up a rather meaningful position.

 

Just so everyone doesn’t think I’m a hater, this seems like a reasonable counter argument at first glance although again I haven’t done any work on the stock.  I just think people saying that the chance is still greater than 50/50 because SM said he would do it before the coup happened aren’t updating their beliefs correctly.

 

Lots of people are saying/implying this, but can someone clarify WHY they think Mnuchin would choose not to sign a PSPA agreement based on what Trump did this week?

 

I accept that there might be a reason, but I'm not sure what it would be. Mnuchin's job ends in 11 days, he's fabulously wealthy, and it's unclear if he has any interest in running for any office in the future, so I honestly see ZERO concern that he would have if a few Democrats don't like what he does - they were never going to like it anyway.

 

A large number of Americans including many republicans consider that coup just occurred incited by president Trump.  Trump has lost legitimacy as president even by many in his own party as evidenced by the many resignations.  While I agree it doesn’t really effect SM monetarily, passing controversial legislation at this point in time persona non grata for the foreseeable future.  If you don’t buy that, consider what the repercussions for Trump and the GOP.  Trump incites the coup.  When it’s contained instead of doing nothing, which is the best he can do, he passes this controversial legislation which is counter to Biden’s agenda.  You know how many people on both the left and the right would pummel the republicans and Trump for having no shame and continuing to undermine the Biden administration even after trying to stage a coup?  Is it possible, yeah.  Is it likely after what happened this week, probably not.

 

Edits (additional thoughts):

Also priority number 1 (as well as 2,3,4...) is to ensure a smooth transition to Biden’s presidency.  I would imagine this falls down on the list of priorities, considering how far behind they are in transitioning, given the new additional spotlight on making sure this is smooth.

 

Thanks for the thoughts, although I disagree. Here's why.

 

Most Republicans are sticking with Trump (even though they shouldn't), particularly those in Congress who, with very few exceptions, are not asking for Trump to be removed. This may change the day he leaves, but for now it has changed less than you imply. His approval rating among Republicans outside of D.C. has fallen, but is still pretty high (see https://morningconsult.com/2021/01/08/trump-approval-rating-capitol-riot-poll/).

 

Next up is the fact that the Republicans in housing oversight already approved of ending the conservatorships. I can't imagine they will be outraged if it happens. And as I said, the Democrats already opposed it, so what else is new?

 

Next up, you are calling this legislation. It is not legislation. Trump will not be directly involved. The 3rd Amendment in 2012 was not a hot topic in D.C. at all. I don't think another amendment will be either, particularly with impeachment dominating the news for weeks to come. As others have implied, if Mnuchin was waiting until the last minute because of potential blowback, this is actually the best possible scenario because it will get 2 minutes of coverage and then be gone from the news.

 

Now, if Mnuchin has to actually ask Trump one last time whether he should sign off, I have only 2 possible thoughts. 1) Trump absolutely doesn't care or 2) ending the conservatorships has been the plan all along to thank John Paulson and possibly other donors for their support. If it's the latter, then Trump says "yes" because he will want to keep his rich friends on his side, if possible. The one real concern I have is that it has been reported that Mnuchin discussed the 25th Amendment and I have to assume Trump has seen that reporting. I would imagine Mnuchin would just say "fake news" or "yeah, someone brought it up, but I disagreed with it" and he's been loyal to Trump for many years now. If Trump believes that Mnuchin is trying to undermine him, though, he would fire Mnuchin. But as of now, Mnuchin is still on the job and has said he will stay to the end. And he will reportedly meet with MBS before returning the U.S., which most likely includes some discussion that will personally benefit Trump, so it looks like Mnuchin is safe for the moment. Then again, Trump can no longer fire people on Twitter, so who knows?!

 

I don't think an amendment impacts the transition to Biden's team materially. Treasury is just an investor here. FHFA provides oversight to the GSE's and there should not be any continuity issues as Calabria isn't going anywhere.

 

As for last minute executive actions - guess what? Trump has already been pushing through a bunch in the past 2 months that Biden won't like. You know who else did that before his term ended? Yup, Obama. Of course the other side doesn't like it, but that's just how the game is played.

 

So my take on your views is that you think certain things should matter, but I'm not sure any of them actually do matter.

[COBFInfinity]

Side note: performance attribution analysis of FAIRX implies that Berkowitz still had a substantial position in GSE preferreds last week. He has a large position, so even if he did change his mind based on last week's events we wouldn't be able to tell how he was reacting. But it's pretty clear that he did not throw in the towel late in 2020 when many others said it was already too late.

[cameronfen]

 

Thanks for the thoughts, although I disagree. Here's why.

 

Most Republicans are sticking with Trump (even though they shouldn't), particularly those in Congress who, with very few exceptions, are not asking for Trump to be removed. This may change the day he leaves, but for now it has changed less than you imply. His approval rating among Republicans outside of D.C. has fallen, but is still pretty high (see https://morningconsult.com/2021/01/08/trump-approval-rating-capitol-riot-poll/).

 

Next up is the fact that the Republicans in housing oversight already approved of ending the conservatorships. I can't imagine they will be outraged if it happens. And as I said, the Democrats already opposed it, so what else is new?

 

Next up, you are calling this legislation. It is not legislation. Trump will not be directly involved. The 3rd Amendment in 2012 was not a hot topic in D.C. at all. I don't think another amendment will be either, particularly with impeachment dominating the news for weeks to come. As others have implied, if Mnuchin was waiting until the last minute because of potential blowback, this is actually the best possible scenario because it will get 2 minutes of coverage and then be gone from the news.

 

Now, if Mnuchin has to actually ask Trump one last time whether he should sign off, I have only 2 possible thoughts. 1) Trump absolutely doesn't care or 2) ending the conservatorships has been the plan all along to thank John Paulson and possibly other donors for their support. If it's the latter, then Trump says "yes" because he will want to keep his rich friends on his side, if possible. The one real concern I have is that it has been reported that Mnuchin discussed the 25th Amendment and I have to assume Trump has seen that reporting. I would imagine Mnuchin would just say "fake news" or "yeah, someone brought it up, but I disagreed with it" and he's been loyal to Trump for many years now. If Trump believes that Mnuchin is trying to undermine him, though, he would fire Mnuchin. But as of now, Mnuchin is still on the job and has said he will stay to the end. And he will reportedly meet with MBS before returning the U.S., which most likely includes some discussion that will personally benefit Trump, so it looks like Mnuchin is safe for the moment. Then again, Trump can no longer fire people on Twitter, so who knows?!

 

I don't think an amendment impacts the transition to Biden's team materially. Treasury is just an investor here. FHFA provides oversight to the GSE's and there should not be any continuity issues as Calabria isn't going anywhere.

 

As for last minute executive actions - guess what? Trump has already been pushing through a bunch in the past 2 months that Biden won't like. You know who else did that before his term ended? Yup, Obama. Of course the other side doesn't like it, but that's just how the game is played.

 

So my take on your views is that you think certain things should matter, but I'm not sure any of them actually do matter.

 

Seems fair.  I think reasonable people can disagree.  I just get pissed when people start attacking me or the other bears personally etc. I don’t have anything short.  I actually want you all to make money, doesn’t matter to me. But I want to share my thoughts in an area where I thought I was as qualified as the others on the thread to handicap considering how many people had views that I didn’t think take into consideration what happened on Wednesday.  I won’t go point by point as there are lots of things I don’t have anything to add: 

 

1) re legislation.  Yeah I should have used another word.  I didn’t actually mean something that comes from Congress.  Rather I meant that the executive branch likely won’t make any policy moves especially ones that are likely to be controversial.  Why?  Trump just incited a crowd to storm Congress, take and kill politicians, unless the election was overturned. If the press catches even a whiff of undermining the Biden administration, you can bet there will be stories that eviscerate his administration.  Note you can test my hypothesis.  If trump admin starts putting out executive actions or pardons or bureaucratic changes now (after the storming of the capitol), maybe I’m wrong. Otherwise put more weight on me being right. 

 

2.) re executive actions.  It’s true that Trump has been putting out EAs these past two months, but my point is after the capitol riots, they cannot behave in the same way as previous administrations have.  Correct me if I’m wrong, but I’m guessing no big policy changes have happened since the capitol from the T admin. 

 

3.) I didn’t mention this so much earlier, but do you think anyone is paying to FNMA right now in the administration (other than people who aren’t paid to worry about anything but that)?  Trump is facing impeachment, 25 amendment etc etc. any shot the political appointees had at reasonable next jobs probably went down the drain.  Trump is in a rage and might just burn down the country.  Benghazi took years of investigation.  This is way more serious than Benghazi and it was not just due to administration incompetence, but actually invited by the executive.  WH counsel is telling staff to not communicate with trump to shield them from future legal liability due to this event.  Do you think anyone cares about the stockholders of FNMA right now?  Maybe SM has some friends and owes them something.  You better hope they are really close friends who has saved his life or something.  Bc SM didn’t cancel his Africa trip for FNMA, he canceled his trip because a coup occurred in Washington incited by his boss. 

[james22]

Trump just incited a crowd to storm Congress, take and kill politicians, unless the election was overturned.

 

Imagine Mnuchin believes Trump the victim of a stolen election, tech censorship, a biased press, etc.

 

You think if he knows people like you already believe Trump incited a coup he's worried about the press writing "eviscerating" stories about Fannie Mae/Freddie Mac? LOL

 

I think it's more likely he can now disregard political considerations. If he does side with Trump, he'll no longer give a fuck about any potential blowback.

[COBFInfinity]

Seems fair.  I think reasonable people can disagree.  I just get pissed when people start attacking me or the other bears personally etc. I don’t have anything short.  I actually want you all to make money, doesn’t matter to me. But I want to share my thoughts in an area where I thought I was as qualified as the others on the thread to handicap considering how many people had views that I didn’t think take into consideration what happened on Wednesday.  I won’t go point by point as there are lots of things I don’t have anything to add: 

 

1) re legislation.  Yeah I should have used another word.  I didn’t actually mean something that comes from Congress.  Rather I meant that the executive branch likely won’t make any policy moves especially ones that are likely to be controversial.  Why?  Trump just incited a crowd to storm Congress, take and kill politicians, unless the election was overturned. If the press catches even a whiff of undermining the Biden administration, you can bet there will be stories that eviscerate his administration.  Note you can test my hypothesis.  If trump admin starts putting out executive actions or pardons or bureaucratic changes now (after the storming of the capitol), maybe I’m wrong. Otherwise put more weight on me being right. 

 

2.) re executive actions.  It’s true that Trump has been putting out EAs these past two months, but my point is after the capitol riots, they cannot behave in the same way as previous administrations have.  Correct me if I’m wrong, but I’m guessing no big policy changes have happened since the capitol from the T admin. 

 

3.) I didn’t mention this so much earlier, but do you think anyone is paying to FNMA right now in the administration (other than people who aren’t paid to worry about anything but that)?  Trump is facing impeachment, 25 amendment etc etc. any shot the political appointees had at reasonable next jobs probably went down the drain.  Trump is in a rage and might just burn down the country.  Benghazi took years of investigation.  This is way more serious than Benghazi and it was not just due to administration incompetence, but actually invited by the executive.  WH counsel is telling staff to not communicate with trump to shield them from future legal liability due to this event.  Do you think anyone cares about the stockholders of FNMA right now?  Maybe SM has some friends and owes them something.  You better hope they are really close friends who has saved his life or something.  Bc SM didn’t cancel his Africa trip for FNMA, he canceled his trip because a coup occurred in Washington incited by his boss.

 

You keep implying that Trump is all of a sudden going to be a respectful, honorable guy in the last 10 days. Not going to happen. When has he ever cared about what his detractors think? You really think he's not going to pardon anyone now because some people won't like it? Lol, I expect a pardon Pez dispenser in the coming days. If anything, Trump's history implies he is willing to be even more aggressive in offending his opponents right now. I don't think the GSE's is going to rile up anyone, though.

 

And, believe it or not, the WH has continued to put out executive actions since the 6th (see https://www.whitehouse.gov/presidential-actions/).  I don't know if there's any controversy with these, but your assumption that everyone has just stopped working appears to be false.

[COBFInfinity]

Lol, I just opened the Bloomberg.com page. The bold headline is "Trump is Planning to Stage a Defiant Last Week". Seems consistent to what I just wrote above. His entire existence revolves around amplifying his base, not appeasing to his detractors.

[cameronfen]

Seems fair.  I think reasonable people can disagree.  I just get pissed when people start attacking me or the other bears personally etc. I don’t have anything short.  I actually want you all to make money, doesn’t matter to me. But I want to share my thoughts in an area where I thought I was as qualified as the others on the thread to handicap considering how many people had views that I didn’t think take into consideration what happened on Wednesday.  I won’t go point by point as there are lots of things I don’t have anything to add: 

 

1) re legislation.  Yeah I should have used another word.  I didn’t actually mean something that comes from Congress.  Rather I meant that the executive branch likely won’t make any policy moves especially ones that are likely to be controversial.  Why?  Trump just incited a crowd to storm Congress, take and kill politicians, unless the election was overturned. If the press catches even a whiff of undermining the Biden administration, you can bet there will be stories that eviscerate his administration.  Note you can test my hypothesis.  If trump admin starts putting out executive actions or pardons or bureaucratic changes now (after the storming of the capitol), maybe I’m wrong. Otherwise put more weight on me being right. 

 

2.) re executive actions.  It’s true that Trump has been putting out EAs these past two months, but my point is after the capitol riots, they cannot behave in the same way as previous administrations have.  Correct me if I’m wrong, but I’m guessing no big policy changes have happened since the capitol from the T admin. 

 

3.) I didn’t mention this so much earlier, but do you think anyone is paying to FNMA right now in the administration (other than people who aren’t paid to worry about anything but that)?  Trump is facing impeachment, 25 amendment etc etc. any shot the political appointees had at reasonable next jobs probably went down the drain.  Trump is in a rage and might just burn down the country.  Benghazi took years of investigation.  This is way more serious than Benghazi and it was not just due to administration incompetence, but actually invited by the executive.  WH counsel is telling staff to not communicate with trump to shield them from future legal liability due to this event.  Do you think anyone cares about the stockholders of FNMA right now?  Maybe SM has some friends and owes them something.  You better hope they are really close friends who has saved his life or something.  Bc SM didn’t cancel his Africa trip for FNMA, he canceled his trip because a coup occurred in Washington incited by his boss.

 

You keep implying that Trump is all of a sudden going to be a respectful, honorable guy in the last 10 days. Not going to happen. When has he ever cared about what his detractors think? You really think he's not going to pardon anyone now because some people won't like it? Lol, I expect a pardon Pez dispenser in the coming days. If anything, Trump's history implies he is willing to be even more aggressive in offending his opponents right now. I don't think the GSE's is going to rile up anyone, though.

 

And, believe it or not, the WH has continued to put out executive actions since the 6th (see https://www.whitehouse.gov/presidential-actions/).  I don't know if there's any controversy with these, but your assumption that everyone has just stopped working appears to be false.

 

It has nothing to do with whether trump is a better person, but literally everything to do with the fact that this time he has gone to far for anyone to listen to now.  When I say trump admin and republicans, I really mean the bureaucrats and his administration that are probably doing what is best for republicans and Trump.  No one cares what he thinks now and he is effectively President in name only. 

 

If you look at the executive actions that you mentioned none of them have any substance, like pardoning controversial people, changing policy.  It seems like they just have to deal with who reports to who, likely because 25+ high ranking officials resigned and people can’t be nominated.  If he does decide to pardon controversial people yea I agree that would be somewhat a negative for my thesis, but he hasn’t yet, because he’s not in control anymore. 

 

Edits: added admin after Trump. 

[COBFInfinity]

It has nothing to do with whether trump is a better person, but literally everything to do with the fact that this time he has gone to far for anyone to listen to now.  When I say trump admin and republicans, I really mean the bureaucrats and his administration that are probably doing what is best for republicans and Trump.  No one cares what he thinks now and he is effectively President in name only. 

 

If you look at the executive actions that you mentioned none of them have any substance, like pardoning controversial people, changing policy.  It seems like they just have to deal with who reports to who, likely because 25+ high ranking officials resigned and people can’t be nominated.  If he does decide to pardon controversial people yea I agree that would be somewhat a negative for my thesis, but he hasn’t yet, because he’s not in control anymore. 

 

Edits: added admin after Trump.

 

You're just making stuff up here. Trump is still POTUS. If he wants to pardon people, you think the WH lawyers are going to refuse? Highly unlikely.

 

But again, what does that have to do with Mnuchin, who can sign off on PSPA amendment on his own?

 

Anyway, I'm done with the back and forth. Time to just wait and see what Mnuchin does, or doesn't do.

[typicalvalue]

The main conclusion is that everyone reasoning is valid until mnuchin acts/20th of jan. Market is the smartest one and has priced as if Mnuchin dosent acts. Wait and see

[cameronfen]

Sure the back an forth is definitely getting old.  But I feel like I should defend myself after you claiming I am making something up.  As far as preventing trump from executing his duties by his admin, plenty of articles say this. 

 

Here is one: https://www.cbs58.com/news/isolate-the-president-local-expert-discusses-impact-of-cabinet-trump-administration-resignations

 

Here is another:

 

And a reference to the counsel advising no contact with Trump: https://www.google.com/amp/s/abovethelaw.com/2021/01/white-house-counsels-legal-advice-stay-away-from-trump/amp/

 

Edit: removed a slightly incendiary comment.     

[locutusoftexas]

"Meanwhile, Maxine Waters is Chairwoman of the House Committee on Financial Services, and sorry to say, yes she can do something, and she will probably have something to do with this. Your comments about her are erroneous and therefore unhelpful."

 

Can you please provide some hypothetical examples of precisely what she can do under an optimistic PSPA amendment unwinding the senior preferred & releasing the GSEs subject to pre-defined capital levels dictated by a consent decree?

 

We have ten days left. I do not accept your hypothetical that an "optimistic PSPA amendment unwinding the senior preferred... consent decree" will appear before January 20. The key is that both Treasury and FHFA must officially reach an agreement, which has not occurred yet. On the 20th a new Secretary will be installed. So, in that case, no agreement at least for a while. Then the alternatives are (1) They remain in conservatorship, etc., forever; (2) A new agreement between FHFA and Treasury will be reached; or (3) Congress settles this with a new law. Waters will have a lot to do with (3) and perhaps (2).

 

If your hypothesis is correct (fat chance on reaching an official agreement after the 20th), then they will probably exit conservatorship, and Waters would ideally only be able to hold hearings. Even in that increasingly unlikely instance, however, remember what the greatest philosopher of the 20th century said: "It's not over 'til it's all over."

 

I predict that you and Orthopa will be feasting on crow after the Inauguration. However, I remain never in doubt and often wrong. I am rooting for you both to be enjoying a better meal at that time. It's about money, and not about winning an argument.