Fannie Mae-No Politics (FNMA)

[jcromeenes]

After so many years in this I'm jaded. I only believe an event after it has happened. Words are cheap.

[Mr Michael]

Hi REAL…
Thank you for continuing to share with this community.
Great insights…

Michael

[DaJester]

In general, the government cannot be sued unless they let you. So yes, FHFA and Treasury have operated with impunity and the GSEs as private entities are the ones that have been targeted. This shines the light on the behavior of the FHFA acting on behalf of the GSEs. It's not complicated.

"I will put it bluntly: do you think a senior-to-common exchange negotiated by FHFA and Treasury would be challenged in court? What court, and what would the requested remedy be?"

Only if it's challenged proactively, which I think is very remote. Requested remedy would be preliminary injunction so that the ownership of the equity could be challenged prior to new shares being created and possibly sold to other owners.

Now a blunt question for you: What difference does it make to Treasury to take 92%, 22% or 2% of the GSE equity? What motivation do they have to engage in profiteering on the GSE draws that the taxpayer has already received a +10% return on?

[stockprofitter]

Rick, where is your FNMA horn?

Leave Gabby alone for a while and get to work lol
Market maker has to eat too!!

[DaJester]

"From the government's point of view, if FnF have enough capital, where "enough" is defined by law and regulation, what purpose would there be for the companies to have more?"

This one is simple to answer. Because it's not their companies or property to limit.

[DaJester]

"On the other hand you get posters here that throw out common share price targets based on either fallacies ("it traded at $60 before the conservatorships started!") or nothing at all, but you don't call them out on it. Why?"

Why? I've already answered that. Because YOU ARE THE ONE calling people hypocrites while using the EXACT same logical fallacies you are calling them out on.
Others: The stock traded at $60 prior to conservatorship. FACT.
Others: Trump is the best hope to release the twins. OPINION
You: Treasury took a 92% stake in AIG. FACT
You: Treasury does not fear any lawsuits. OPINION

What you can't seem to realize, is that the facts and opinions stated are on equal ground. They are useful to see someone's thought process and stir discussion but they have nothing to do whatsoever with the actual release plan, unless someone is an insider and part of the planning. We are all in the dark. You seem to think you are the light of truth. I assure you, you are not.

Apparently you are just incapable of understanding my point so I'm going to give up trying to explain it to you. I'll just call you a hypocrite like you do to others.

[Fannie Heyyyyy]

Friday, April 19th marks 30 days since Lamberth signed the verdict. Is Friday the deadline for the government appeal? TIA

[stockprofitter]

Kdomp - are you long, short,common,preferred, pita? Lol

Not expecting an ounce of honesty

[kthomp19]

Nearly every one of your messages since this one arrive once in a while have a time delta of about 5-30 seconds.

A while back I decided to just check the board every few days, craft all the responses that I wanted, and then post them all at once. You trying to read something into that is strange, but you're heading down a blind alley.

The only pattern of behavior that coincides with that is prepared remarks and minimizing billable hours.

This is rather amusing: it is a tacit admission on your part that you don't think I'm a paid basher.

Still, you seem utterly incapable of refuting or even addressing my arguments, instead resorting almost exclusively to passive-aggressive ad hominems. Climb the pyramid. We will all be better for it.

Back before you decided to start responding to my posts purely with such ad hominems, you had set a price target of "anywhere from 5 to 250 depending on your probability model" but you never did answer my question as to how you came up with those numbers. Pray tell, what makes you think that anything under $5 isn't possible, and that anything even approaching $250 is?

[kthomp19]

FHFA passes a rule and must require an act of congress to reverse which implies that the rule is equivalent to legislation.

No, this is bad logic. According to the Supreme Court, FHFA possesses only executive power, not legislative power.

The FHFA was established as an independent agency. SCOTUS ruled that the director could be removed at will. Shouldn't that imply that the director serves at the will of the president?

That's right.

because the agency is run by a single director and not a panel, the agency is no longer an independent federal agency.

That's wrong. The Supreme Court specifically shot down this argument on page 24:

That interpretation reads far too much into the term “in-
dependent.” The term does not necessarily mean that the
Agency is “independent” of the President. It may mean in-
stead that the Agency is not part of and is therefore inde-
pendent of any other unit of the Federal Government. And
describing an agency as independent would be an odd way
to signify that its head is removable only for cause because
even an agency head who is shielded in that way would
hardly be fully “independent” of Presidential control.

This "panel" idea leads me to believe that you have been reading ano's nonsense. The best advice I can give you with regards to ano is to not assume that anything he says is correct. I proved him wrong on so many things that he left this board and blocked me on Twitter.

So, I don't think the agency has the same status after the SCOTUS ruling as before. How do you define it? Is it an executive agency that is independently funded? Whatever it is, no one has bothered to question it or update any rules, laws...etc.

FHFA and all of HERA exist exactly as they did before the ruling except that now the President can remove the FHFA director at will.

[kthomp19]

From what I understand they are involved with like 60% of bank mergers so they aren't exactly huffing gasoline.

In that case, what they have to say about their common price target is worth paying attention to:

"Without the Treasury making a concession (either a write-down or a conversion to common) of its senior preferred position, the current shareholders will have no value," KBW said. "And even with a conversion to common, which we think is the most likely scenario, the common shares are likely to be diluted down to close to zero."

The preferred shares might have some value, but that is dependent on how the government restructures Fannie and Freddie, the report continued.

[kthomp19]

Here’s something to ponder: I just read a clip from Paul Mampilly in January. Where he thought that the Government was getting close to turning back on the preferred dividends in a form of re normalizing the Twins. Would that basically solve the preferred’s problem?

Yes. Turning the junior pref dividends back on would bring the trading prices of most of the series pretty close to stated value, usually called par.

If that happened what then would the common’s price be? $100- $200- $300 or as Stock analyze thinks $1,500?

Come again? Where on earth are these numbers coming from?

The two major signals from turning on the junior pref dividends would be that FHFA/Treasury are serious about getting FnF out of conservatorship and that the juniors wouldn't be exchanged for commons. The seniors could still be converted to commons and the warrants would still exist, so I don't see why the commons would run higher than maybe $6-7 on such news.

[kthomp19]

Paulson is a preferred holder not commons.

Correct. The Seeking Alpha article says "Recall too that John Paulson, whose fund holds Fannie common is a part of Trump's transition team" but that is not anything even approaching proof. Instead it is a misconception, likely based on the idea that Seeking Alpha sometimes auto-inserts the ticker FNMA when it detects the first instance of "Fannie Mae" in an article, similarly with FMCC and "Freddie Mac".

In the past some posters here have made erroneous claims that big investors owned commons when in fact it wasn't true. Even Seeking Alpha gets this wrong sometimes so it can't be used as proof.

For example, this Seeking Alpha article from 2018 claims that Berkowitz's Fairholme Fund owned FNMA and FMCC. But checking Fairholme's 2018 semi-annual report and Fairholme's 2018 annual report shows no ownership in FNMA or FMCC at all. They had FNMAS and FMCKJ instead.

[kthomp19]

Trader I know at Freddie has indicated to me 2028 is the year he's been told to expect to have the capital to exit conservatorship.

That's only for Freddie. Fannie can hit the base leverage capital requirement in 2026 if the seniors are cancelled or converted to common.

Compliance with the regulatory capital requirements can be ignored until 2028 at this point in time.

It can be ignored until either company exits conservatorship. FHFA has decided not to classify FnF using any of HERA's required capital classifications while conservatorship lasts.

[kthomp19]

Stop conflating a regulation with the law.

Regulations and law go hand in hand. Stop trying to act as if they are two entirely separate things.

The FHFA director, by regulation, can set a minimum capital requirement higher than what is mandated by 12 USC 4612(a). This is exactly what Calabria did when his ERCF made the base minimum capital requirement 2.5% of adjusted total assets rather than balance sheet assets. Thompson has kept this part of the ERCF in place.

The law, namely 12 USC 4614(a)(3)(A)(ii), requires that FHFA classify FnF as "significantly undercapitalized" if they do not meet the minimum capital requirement.

The current capital rule is a regulation. It is purely at the discretion of the Directorto set the risk based level once the APA requirements are satisfied.

This is why I only talked about the minimum capital requirement. The FHFA director has more leeway by HERA to set the risk-based requirement, but the minimum requirement is more restrictive when it comes to FnF's capital classifications outside of conservatorship.

There is nothing stopping the Director from proposing to set a revised risk based level at say 2.6%, have a public hearing and comment period and publish the new rule in the federal register.

A risk-based capital requirement of 2.6% would be based on risk-adjusted assets, which is a far lesser number than balance sheet assets or adjusted total assets. The only thing setting the risk-based capital requirement this low would accomplish would be to make the minimum capital requirement always control because it would always be higher. In order for FnF to be classified as "adequately capitalized" outside of conservatorship, they must meet both the risk-based and minimum requirements.

Obviously it is entirely possible to do what dajester wished for.

Only with respect to the risk-based capital requirement, and since both the risk-based and minimum capital requirements need to be met, it wouldn't help.

[kthomp19]

If I were to file a lawsuit, there would be a TON of prep work prior to filing. I don't need to do all that prepwork just to respond to IH posts however.

The utter lack of any details as to what you would be suing over (you have said in the past that you think the LP ratchet itself is a cause for action), or where, or in what court, or what remedy you would seek, leads me to believe that you aren't serious about filing your own lawsuit.

You seem to be far more concerned with winning an argument on a technicality ("see, future lawsuits are possible!") than taking any action to back up your words, let alone go into detail on your estimates for the future common share price.

[kthomp19]

It is very difficult to successfully sue a government agency. However, this does not mean it is impossible as we have now seen.

FHFA was not successfully sued. The companies were the defendants; FHFA was only brought it because it is the one who made the decision to sign the NWS. FHFA was not held financially liable for anything; it's the companies that will pay the damages.

Thus far, even including the implied covenant trial, nobody has successfully sued FHFA or Treasury with respect to the conservatorships or NWS.

If the FHFA makes another egregiously bad agreement while in bed with Treasury, I expect FHFA will be sued... again.

You mean the companies will be sued again? Because that's the precedent.

Whether it's successful or not, or how long it takes is another story

But this is the most important part. Handicapping the probability of success and the timeline is a critical part of estimating the future price of the common shares, which is the primary purpose of this message board.

Because FHFA doesn't pay a cent does NOT mean they have carte blanche to making additional agreements that violate the GSE covenant with shareholders.

Quite the opposite: if FHFA can sign the NWS, a horrendously bad agreement that mocks attempts to think of something worse, and have the only outcome be that the companies pay less than $1B to shareholders, why would they ever fear the courts again?

They have been put on notice, so if FHFA does it again - the courts may grant a contract remedy instead of or in addition to monetary?

Bad logic. The only "notice" that FHFA has been put on is that the companies will be slapped on the wrist. I can't rule out contract damages in the future, but I can certainly place a very low probability on them given what has already happened.



Here, I will put it bluntly: do you think a senior-to-common exchange negotiated by FHFA and Treasury would be challenged in court? What court, and what would the requested remedy be?

[kthomp19]

Right, why would they possibly want any of the capital taken from the GSEs over the past 15 years to do anything useful. Like say, ummm. Pay off the SPS - Shares that can't be legally paid down.

What I meant by "what need do they have for capital beyond the regulatory requirements" was to look at that from the perspective of the government as financial regulator, not from the perspective of the companies.

The very purpose of FnF having sufficient capital, as defined by law and regulation, is to prevent them from being a danger to the financial system. This is true of other financial institutions as well. From the government's point of view, if FnF have enough capital, where "enough" is defined by law and regulation, what purpose would there be for the companies to have more?

I think that's the justification for the past-full-capitalization cash sweep.

[kthomp19]

There is no need for a fact check of every detail, or hyperlink, or for me to go to the court house to file some paperwork in order to express an opinion.

That doesn't mean that you can't provide any details at all regarding your hypothetical scenarios. It's that vagueness that hurts their credibility.

You're acting like the fact that you cannot give all the details means that you cannot give any of them. Pure logical fallacy.

I will again ask you directly: what are your answers to these five questions specifically regarding a claim over the LP ratchet, which you have repeatedly claimed could be a cause for action?

1) In what court would the suit be filed, and why? - Could be anywhere, pick one. One or more may get to SCOTUS again.
2) Which law was/would be allegedly violated? - Depends on future FHFA actions. Another breach of implied covenant seems likely. Could also be a takings. Could be a injunction or prospective relief request to prevent share increase.
3) What would the plaintiffs seek as remedy? - Depends on the suit obviously. Damages from profit sweep to LP. Damages from cash sweep after capital threshold is reached. Could be a monetary remedy or a contractual remedy.
4) Given what has happened in all the other court cases, what reason is there to believe this new suit would succeed? Because one has succeeded.
5) How long would it take, in light of the government having fought every other case tooth and nail, for the suit to ultimately succeed? Don't know, but likely less time than the first win.

For the record, I am expecting you to dodge these questions like you have every other time I asked.

So for you to call out others for their predictions, you should also come to realize you are doing the exact same thing.

Wrong. You still seem to be operating under the idiotic idea that all predictions are equally useless.

Predictions made using facts and sound reasoning are good, even if they're not always right.
Predictions made using fallacies and wishful thinking are bad, even if they're not always wrong.
Gamblers and casinos provide a clear example. There is a reason the house always wins in the long run, even if they don't win every single bet.

My predictions are made based on the law, facts, mathematics, and logical reasoning. On the other hand you get posters here that throw out common share price targets based on either fallacies ("it traded at $60 before the conservatorships started!") or nothing at all, but you don't call them out on it. Why?

[stockprofitter]

Not officially released

[FOFreddie]

It would be a great estate planning move for John Paulson?

[FOFreddie]

real777mellon is the Real Deal! Lots of interesting insights and knowledge!

[jcromeenes]

Have we been officially released? If so, why isn't the stock flying?

[stockprofitter]

8-0..proves otherwise

[jcromeenes]

Yes, but the US Gov't owns FNMA! lol.

[trunkmonk]

thanks for that Augie doggie🐶

[stockprofitter]

Once $1.59 breaks through then it’s off to mid $2s’

Taken a while but she’ll get there

[Patswil]

For those on the 20
Delay we hit $1.50. Down at 1.47 now

[stockprofitter]

It was Trump FNMA bonds that I knew of not commons

[Donotunderstand]

if x and social media could get a story out on how the gse's would help more houses being built, better loan rates, and a housing market free from government control,

I could see this turning into a AMC reddit movement and force the gov't's hand to release the gse's.

YES YES
I have argues such for months and years - to each President
IMO Reality is F and F (free) do not have the biggest stick in reducing cost of mortgages-period
But as noted before a SPLASH - GOV will not charge its usual FEE - no fee - suspended for one year - to LOWER cost to almost every buyer would IMO stimulate activity and be a super PR win

I will say ---- I 100% disagree that F and F being in conservatorship has LED TO THIS HOUSING Crisis --- that is the FED and a free market where - without some GOV hand out - builders will never build lower cost-price houses when they can maker more money in a free market by building higher cost - price homes - for which there is still a huge market. This is not GREED this is Fair Market Capitalism. Those of us who lean left - inside democracy and free markets - would LOVE to see GOV hand outs - help to those builders (but that action will be called Socialism or Communism and those not getting help will bitch "THEY THEY" (immigrants - minorities - lazy - patronage) get it all - even when designed say on a lottery !!!

[Sammy boy]

Gosh damn you, you just had to say something!

[EternalPatience]

But but but

Bradford told us this is a Biden trade and happening soon..

[stockprofitter]

Oh wow great find! Paulson owns FNF common I had no idea.

BRAVO.

[Wise Man]

The FHFA will have its motion for JMOL to override the verdict, forfeited.
It was submitted on Friday.
(*) Pending to know what the judge has to say in a reply.

#FANNIEGATE ATTYS DRAMA TV SERIES
7th amnt:"No fact tried by a jury shall be otherwise re-examined in any Court",blasts an attempt to appeal a jury issue already decided.
Only a JMOL Rule 50(b),which needs 50(a):same sufficiency-of-the-evidence arguments w/ oral motion?
Forfeited https://t.co/AcdRN7ctRQ

— Conservatives against Trump (@CarlosVignote) April 17, 2024

[real777mellon]

It's inevitable. It's a necessary step to the next 30+ years of housing/financing housing in the USA. The Banks want it more than we all do.

[real777mellon]

Paulson's funds hold common Fannie Mae shares: https://seekingalpha.com/article/4030454-fannie-mae-why-i-sold-preferred-and-own-common

[JOoa0ky]

Paulson is a preferred holder not commons.

[real777mellon]

Not sure if anyone reported so just sharing a 15 April 2024 Yahoo Finance article which names Paulson the front runner for Treasury Secretary. #TrumpTradeGSEs this is great news. Previously Trump mentioned Paulson in his NH Primary victory speech where Paulson was in attendance saying (Paulson) "would make a great Treasury Secretary" - we know Paulson holds a lot of $FNMA $FMCC shares. I see this as great news for us all. Get out and vote.

From What Trump is signaling with his possible Treasury and Fed picks- Yahoo Finance - 15 April 2024:

Billionaire hedge fund manager John Paulson appears to hold, for now at least, a prime position in the effort to become Treasury Secretary among a variety of finance figures.

More mentions of Paulson in the article src here: https://finance.yahoo.com/news/what-trump-is-signaling-with-his-possible-treasury-and-fed-picks-140008359.html

February 2024 New Hampshire primary story src: https://www.futureofcapitalism.com/2024/01/john-paulson-at-trump-ii-treasury

load up cheap while you can bulls!

EDIT: Source proof (one of many places) that cites Paulson & Co. holding $FNMA (common fannie mae stock): https://seekingalpha.com/article/4030454-fannie-mae-why-i-sold-preferred-and-own-common

[Airbus320]

Thanks.

[stockprofitter]

3yr chart test $2.38

I answered my own question

[stockprofitter]

Are we ready to fly?

[Augie Boukalis]

Should be above 1.50 🌵🛹🇺🇸

[Viking61]

Selling pressure looks to be running out. Looking for Green tomorrow!!

[Lite]

Can you break this down to better explain what this is?

[EternalPatience]

The number of cases that we have seen, no body on earth would have seen. Even if we hypothetically get money, they will put it into the kitty and act as if nothing happened. We have seen this before

[Golfbum22]

Someone please ask TP why the govt deserves the warrants?
They were collateral

He is giving away just to get his preferred paid is why

It’s ridiculous bs to keep saying this

Duh

[Augie Boukalis]

@Sammy Boy I need a good reason to buy a stock don't just throw a few out there that are on the top of your mind after they hit 🎯 a 52 wk hi🎯🌵🛹🇺🇸

[Golfbum22]

Because the dems told him to wait for the election so they can use this as rah rah bs

[Augie Boukalis]

Has anyone checked pacer for any court fileings 🌵🛹🇺🇸

[Augie Boukalis]

https://www.housingwire.com/articles/demand-stalled-in-march-for-new-home-purchases-mba/?utm_source=dlvr.it&utm_medium=twitter