Nice of you to drop in NN. I would like to comment on some of that google board material.
1. Economic damages of 23 cents-absurd! Let's start with the fasb hearing where we read that the warrants were issued in 2008 to depress the stock price.. Then we have that de listing from the nyse in June of 2010 of both the preferred and the common. Who makes that decision and what happens to the stock price right after? It's almost as bad saying after the thief stole your car and crashed- See it's not worth much now so you don't have that much economic loss. What kind of precedent does that set on future takings cases?
2. Even you realize that with the kind of precedents from the Lambreth decision, it's going hard to attract private capital in partnership with the government in the mortgage market. Who would trust the government? Therefore the solution is add to the fha for an explicit government backing. That is a path to nowhere. It won't pass the house and Shelby was against CW's Fmic. There is a reason why the implied guarantee existed so long, it was the only way to please left , right and center. How do you keep that debt off the government books also?
3. I have a win -win solution. As Ackman says" I stand with the taxpayers". Just go back to the old agreement and credit the gse's with paying back the "loan". Put the over payment towards recapitalization and add 15 billion excess loss reserves from fre and 25 billion in excess loss reserves from fnma. Taxpayers get 80 % of the companies from the warrants for taking the risk on perhaps a combined 40-50 billion that was actually needed. 200 billion in value for those taxpayers.
Heads or tails everybody's a winner! I know others will not agree, but I will drop those fraud charges and just credit the accountants and government with honest mistakes in estimates that had 10% charges added to them.
4. I suggest you take your advice to have an open mind and read the 27 page report. Ask yourself why many private mortgage insurance companies did not need government help despite much worse loan quality than the gse's ? Answer-put back accounting. Or perhaps read John Hempton's blog from November 2009 on the difference between Bank of America's loss provisions and Fannie mae's. Fnma admitted that they may have over provisioned not more than a year later.
5. It's all about trust! As late as December of 2011, Edd Demarco (testimony to congress)said the old shareholders had a residual claim after the tax payers had been paid back. Of course he also said given the tax payers claim was over 187 billion , it was unlikely they would ever be paid back. Well , some of us had more faith in the economy than he had or knew of the accounting fraud ?? Now all I ask is that the government restore that trust by going back to the terms of that old deal. As outlined in #3 , it's a win -win for everybody!
AI
