orthopa Posted October 17, 2015 Share Posted October 17, 2015 Thanks, reason I ask I hold both and at this point more common. Im not smart enough to know which will do better long term. I should mention that I'm in the preferred until they reach (or get near) par. I'm not interested in the 8.25% rate unless it is reinstated and FNMAS continues to trade significantly below par. I will reevaluate the situation when FNMAS reaches par and may very well consider a position in the common at that time. But for the here and now, I'm in FNMAS. In other words, long-term isn't really what I'm focused on here at this time (if long-term is 10+ years from now). I'm focused on getting the NWS and conservatorship mess fixed, profit from it, and then take a fresh look at the prospects of Fannie. That being said its unlikley this will go anywhere near 10 years correct? Doesnt the majority of FNF capital get wound down in 2018? Link to comment Share on other sites More sharing options...
merkhet Posted October 17, 2015 Share Posted October 17, 2015 orthopa, the GSEs don't have enough capital. A prerequisite to any release would be that they'd have to rebuild that capital -- either through (1) capital injection or (2) buildup over time. If it's (1), I could see a situation where the preferreds are paid off or converted into equity at par to inject $35 billion into the companies w/ an additional injection of $X billion from adjusting the strike price of the warrants. That would mean that the common gets diluted substantially. I wouldn't be surprised if the common went to zero and the preferred gets completely paid off. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 17, 2015 Share Posted October 17, 2015 That being said its unlikley this will go anywhere near 10 years correct? Doesnt the majority of FNF capital get wound down in 2018? Correct, 10 years was an arbitrary number. orthopa, the GSEs don't have enough capital. A prerequisite to any release would be that they'd have to rebuild that capital -- either through (1) capital injection or (2) buildup over time. If it's (1), I could see a situation where the preferreds are paid off or converted into equity at par to inject $35 billion into the companies w/ an additional injection of $X billion from adjusting the strike price of the warrants. That would mean that the common gets diluted substantially. I wouldn't be surprised if the common went to zero and the preferred gets completely paid off. +1 Link to comment Share on other sites More sharing options...
orthopa Posted October 17, 2015 Share Posted October 17, 2015 orthopa, the GSEs don't have enough capital. A prerequisite to any release would be that they'd have to rebuild that capital -- either through (1) capital injection or (2) buildup over time. If it's (1), I could see a situation where the preferreds are paid off or converted into equity at par to inject $35 billion into the companies w/ an additional injection of $X billion from adjusting the strike price of the warrants. That would mean that the common gets diluted substantially. I wouldn't be surprised if the common went to zero and the preferred gets completely paid off. OK thanks. I need to go re read Bill Ackmans "plan" or thesis again to see if foolishly exposed to a large amount of common relative to preferred. Thanks. Link to comment Share on other sites More sharing options...
doughishere Posted October 18, 2015 Share Posted October 18, 2015 Bethany on CSpan2. Right now. With Joe Light. Link to comment Share on other sites More sharing options...
merkhet Posted October 18, 2015 Share Posted October 18, 2015 Bethany on CSpan2. Right now. With Joe Light. Anything particularly interesting? Link to comment Share on other sites More sharing options...
doughishere Posted October 18, 2015 Share Posted October 18, 2015 Naw. I had nothing to do so I watched it. Nothing we don't already know. No new insights. Bethany did make a comment at the end saying something that I've posted about a bit; she commented on the secrecy an how she wants to read these redacted statements and document. Other than that, She caried on her same mo; not entirely happy the hedge funds( and she made distinction about fairlome and what not) coming in after but non the less she thinks it's the lesser of two evils. The rest of it was just the disfunctionality of the govt and the two gses. Link to comment Share on other sites More sharing options...
tede02 Posted October 19, 2015 Share Posted October 19, 2015 It seems like the pressure just continues to build. Now Joe Biden's buddy is an investor in Fannie/Freddie and is suing the government (apologies if this was already posted but I hadn't seen it). http://www.bloomberg.com/politics/articles/2015-10-09/a-biden-buddy-picks-a-fight-over-mortgages Link to comment Share on other sites More sharing options...
muscleman Posted October 19, 2015 Share Posted October 19, 2015 It seems like the pressure just continues to build. Now Joe Biden's buddy is an investor in Fannie/Freddie and is suing the government (apologies if this was already posted but I hadn't seen it). http://www.bloomberg.com/politics/articles/2015-10-09/a-biden-buddy-picks-a-fight-over-mortgages http://timhoward717.com/2015/10/19/obama-abandons-the-truth-and-throws-black-america-under-bus-egbert-perry-to-even-the-score/ When pressure continues to build, the default reaction for the government and the white house is to remain the inertia, just as I expected before. The government and regulators are better at reacting to past blow outs than anticipating and reacting forward. Therefore I think the HYPE should really stop and we should just count on the courts to move this forward. Link to comment Share on other sites More sharing options...
doughishere Posted October 19, 2015 Share Posted October 19, 2015 Man I wish I had a big army so I could change the deals I made. Very King like..... Anyone have the link to Jacob Lews interview today? Link to comment Share on other sites More sharing options...
fareastwarriors Posted October 20, 2015 Share Posted October 20, 2015 White House Punts on Fannie-Freddie Fate Administration’s rejection deals blow to investors, housing advocates http://www.wsj.com/articles/white-house-punts-on-fannie-freddie-fate-1445281685 Link to comment Share on other sites More sharing options...
doughishere Posted October 20, 2015 Share Posted October 20, 2015 This is also making the rounds today. http://www.politico.com/f/?id=00000150-8337-d8e3-addc-b77feac70000 How Not to have a Real Discussion about Fixing Fannie and Freddie: October 19, 2015 Joshua Rosner Link to comment Share on other sites More sharing options...
Luke 532 Posted October 26, 2015 Share Posted October 26, 2015 Anybody else have thoughts on my question below? Thanks in advance for your input! Legally, if it comes to that, I think the Steele case filed in the District Court of Delaware is pretty hard to argue with on a legal basis. Assuming merkhet's assessment is correct (and I know he'd likely insert his disclaimer here) and it comes to a legal decision (no settlement), I have a question. If Steele wins the case, what actions can the government take that would prevent FNMAS from returning to par? They would obviously appeal the decision which would extend the process, but can the Delaware courts demand that dividends be reinstated for FNMAS while the case is going through the appeals process? Other than appealing, can the government just ignore the Delaware court decision? I'm trying to guesstimate how shareholders of FNMAS could get hurt even if Steele wins the Delaware case. It is becoming increasingly difficult to resist the urge to have an out-sized position in FNMAS. Many thanks for input! I think there's a lot they can do to keep the preferreds functionally worthless if they want to; the GSEs will still have no capital, so if they set out to target building up capital through earnings alone, the government would have plenty of justification to continue omitting the dividend for years. Furthermore, the government would still have plenty of capacity to drain earnings away - e.g. they provide a mammoth credit facility to the GSEs which the private sector would probably find impossible to replicate (current availability: $258bn combined!); in any case this commitment is what affirms the government's support of the entities, without which they likely cannot do business. If the third amendment were voided, especially retroactively, I don't see why the commitment fee would not be re-imposed, perhaps also retroactively. This could easily consume the entirety of available profits for the GSEs - the fee is effectively at the discretion of the Treasury (again, unless you believe the GSEs could and would replicate it in the marketplace). Big picture, these companies require the government's continued support to function. So the answer to what can the government do to impair their equity securities will likely always be "a great deal". The real question is how much does the government care about continuing to grind away here rather than potentially working out a deal with partners who, although relatively small, might be able to help get private money back into the mortgage market place. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 26, 2015 Share Posted October 26, 2015 New lawsuit: http://investorsunite.org/wp-content/uploads/2015/10/KY-Complaint.pdf Link to comment Share on other sites More sharing options...
merkhet Posted October 26, 2015 Share Posted October 26, 2015 It's possible that Steele wins his suit, so the money is returned and the senior preferreds go to 10% again -- but then nothing happens after that. But I think it's unlikely to keep the GSEs in conservatorship after that happens -- they'd have adequate capitalization, etc. The argument for keeping them in conservatorship becomes much harder. Link to comment Share on other sites More sharing options...
doughishere Posted October 27, 2015 Share Posted October 27, 2015 malonigse Was pretty good today one part of this paranoid Admin calls for “mortgage reform which Congress must pass,” while another office fines the heck out of the banks, who would be the ultimate untrustworthy beneficiaries of the Obama/congressional mortgage market reforms. Another day another lawsuit huh? Soon the court systems are gonna be bogged down with shareholder lawsuits Link to comment Share on other sites More sharing options...
Luke 532 Posted October 27, 2015 Share Posted October 27, 2015 It's possible that Steele wins his suit, so the money is returned and the senior preferreds go to 10% again -- but then nothing happens after that. But I think it's unlikely to keep the GSEs in conservatorship after that happens -- they'd have adequate capitalization, etc. The argument for keeping them in conservatorship becomes much harder. Let's say Steele wins and the gov't is ordered to return some money. What if they simply refuse to do so? I wouldn't put it past our gov't to do something like that (heck, not turning over 11,000 documents is one example). Link to comment Share on other sites More sharing options...
merkhet Posted October 27, 2015 Share Posted October 27, 2015 It's possible that Steele wins his suit, so the money is returned and the senior preferreds go to 10% again -- but then nothing happens after that. But I think it's unlikely to keep the GSEs in conservatorship after that happens -- they'd have adequate capitalization, etc. The argument for keeping them in conservatorship becomes much harder. Let's say Steele wins and the gov't is ordered to return some money. What if they simply refuse to do so? I wouldn't put it past our gov't to do something like that (heck, not turning over 11,000 documents is one example). There's no executive privilege on money. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 27, 2015 Share Posted October 27, 2015 Thanks, merkhet. Assuming we win Delaware, I'm trying to come up with ways that FNMAS holders still get hurt. Legally speaking, Delaware seems like a pretty strong bet. Link to comment Share on other sites More sharing options...
doughishere Posted October 27, 2015 Share Posted October 27, 2015 Obama can decide to expand his authority. I feel like just because he doesn't have it doesn't mean he doesn't think he can have it. I kinda lump theses things into the "tragedy of the commons" argument. Really the only bearish argument that i think exists out there. That congress and "those in power" could decide to deny property rights to individuals acting independently and rationally according to each's self-interest behave in a way thats contrary to the best interests of the whole group. I'd have more respect for some of the proponents against F&F if they at least admitted to this is why they want to see an end to F&F. The sad thing is that theres plans out there to make everyone mutually better and all the propents aginst F&F really want is their pound of flesh. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 29, 2015 Share Posted October 29, 2015 Major civil rights groups join push to recapitalize Fannie Mae, Freddie Mac http://www.housingwire.com/articles/35487-major-civil-rights-groups-join-push-to-recapitalize-fannie-mae-freddie-mac?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire Excerpt: "In a letter sent Thursday to President Barack Obama, as well as many other senior members of the federal government with housing ties, the National Community Reinvestment Coalition, the National Association for the Advancement of Colored People, and the League of United Latin American Citizens say they urge the Obama administration to reconsider its position on recapitalizing the government-sponsored enterprises." Link to comment Share on other sites More sharing options...
Luke 532 Posted October 30, 2015 Share Posted October 30, 2015 Interesting video on Fannie and minorities: Link to comment Share on other sites More sharing options...
doughishere Posted October 30, 2015 Share Posted October 30, 2015 Here's a wild thought. Someone should dial up Al Sharpton, NAACP and other minority groups. Start up a civil rights case. Ship that on over to the FHFA. Wouldn't that be rich? Why not? We have a Constitutional case, a Securities law case and whatever else. Why not add a civil rights case of by keeping F&F in conservatorship you are disenfranchising minorities their rights? I want to be clear, I'm not saying that Obama(I cast my first ever presidential ballot for him) and crew are racist but when you have the disenfranchisement of minorities being caused by poor governmental policies then those policies should be looked at and corrected. I think anyone who is a human being can empathize with that. http://www.housingwire.com/articles/35487-major-civil-rights-groups-join-push-to-recapitalize-fannie-mae-freddie-mac “While at this moment in time, we may disagree strategically with those in the administration who want to foreclose the possibility of recapitalizing Fannie Mae and Freddie Mac even as reforms continue, we fundamentally believe that you, Mr. President, are in the very best position to safeguard and protect homeownership for the working families and minority communities across the country who rely most on the Enterprises for access to mortgage credit,” the groups write. "Fannie and Freddie, through their charters, their affordable housing goals and the products they offer, have played a critical role in creating homeownership opportunities and building the middle class in America, Taylor continued. “We simply cannot stand by and face losing their affirmative obligations to serve, especially when Congress does not have a viable, coherent plan that would better serve working families." Link to comment Share on other sites More sharing options...
Luke 532 Posted October 30, 2015 Share Posted October 30, 2015 Summons for Mel Watt attached.Summons_for_Watt_Filed_10-30-15.pdf Link to comment Share on other sites More sharing options...
doughishere Posted October 30, 2015 Share Posted October 30, 2015 Summons for Mel Watt attached. Heh. Link to comment Share on other sites More sharing options...
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