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The
owners of the housing GSEs would have to believe that their returns would be higher
post-privatization – an outcome Sallie Mae has appeared to achieve.
Interesting article.....
The political clout of the housing GSEs and the complexities of winding down the GSE
activities suggest that any privatization initiatives can realistically take place with the
acceptance and active participation by the companies. As in the case of Sallie Mae, the
Board and management must decide that privatization is in the shareholders’ best interest
and actively pursue it. As long as the GSE charter is more valuable than that of a purely
private company, the housing GSEs are likely to keep it. However, the Sallie Mae
experience suggests that a reduction in benefits and increase in regulation can reduce the
value of the federal backing to the point that privatization becomes the most attractive
option.
• Greater political support for the status quo: The entire housing industry (Realtors,
homebuilders, mortgage bankers, affordable housing activists etc.) rallies around the
GSEs to defend their privileges as a way to lower mortgage rates. Fannie Mae and
Freddie Mac aggressively lobby Congress to protect and expand their charter {WSJ
reference}.
The primary lesson is that GSE privatization can be done. The process and structure was
a win – win for the government and the shareholders of Sallie Mae. The government
reduced its contingent liability inherent in the GSE charter. It ensured stability in the
student loan market and revenue through a transition period. The legislation facilitated an
orderly transition from the GSE to non-GSE business over a nine year time period. The increase
in financing costs for Sallie Mae was small and did not materially reduce the profitability of the
student loan business. Bondholders were unaffected and the execution costs to change the charter
were small. Privatization reduced the political risk and external treats to the viability of the
company.
The second lesson is that it takes motivated parties. Sallie Mae shareholders and management
were motivated by the threat of government competition in its core business along with the
reduction in its funding advantage through imposition of the offset fee. The Congress had an
ideological interest in reducing the role of government in the economy and found an ideal
candidate in Sallie Mae. The Administration wanted an example for its Reinventing Government
initiative.
The third lesson is that the sky does not fall when the government involvement is removed. The
student loan market remained competitive and liquid. Lenders continued to have access to ample
funds and student lending (and the FFELP) continued to grow.
There are some major differences between the privatization of Sallie Mae and the housing GSEs,
however.
• Size and complexity: At the time of privatization, Sallie Mae was a $50 billion company
with a simple business model purchasing government guaranteed, variable-rate assets
match funded with variable-rate debt. By way of contrast, Fannie Mae and Freddie Mac
are huge – with over $1.8 trillion in assets and an additional $2 trillion in securities
guarantees [2003, OHFEO]. They are highly complex financial institutions managing
mortgage credit, interest rate and prepayment risk with huge counterparty risk exposure
from their portfolio hedging activities.
• Mortgage end-user rates that are market determined as opposed to administratively set14.
The federal government effectively sets the rates on student loans – thus the value of
agency status is not reflected in costs to the end user. By contrast, a portion of the GSE
benefits accruing to Fannie Mae and Freddie Mac result in lower mortgage rates – an
outcome heavily publicized by the GSEs and housing related interest groups.15
• Looser regulation: The Departments of Treasury (safety and soundness) and Education
were more assertive in their oversight of Sallie Mae than HUD and OFHEO have been
for Housing GSEs (until recently).
You are very wise! How long have you been investing? As much as i would like to make money, i really want this wisdom. The more i read about different things about the market the more and more complex it seems. Buy low sell high right? Ha ha... Anyway So many people with so many different views. I believe making wise choices in our investment decisions will lead to profits. It just seems like there are so many "factors" to take into consideration. I guess if it was easy everyone would do it. Many people especially older ones are so filled with fear because they think they could loose all their money. As i have gained much knowledge in my research, I try to put it all together. I was hoping to find some "golden secret" of how it all operates. But there is none. There i no one thing that i could tell someone. Im glad to hear from you.
Good video! Thank you!
I agree. Seems to me like once they can accumulate enough buy orders then they can start the profit release. But they would want it above a certain price quickly to work in there favor in order to move the masses quickly into believing that the price is going to go up even higher? Perhaps this is the "run" that everyone has been referring to. The MM's have accumulated so much of this stock under a certain level that they can take it up rather high? And then they eventually run out? And things reverse in a massive sell rapidly?
Your welcome. It's a hard reality to accept for many traders, but the market makers control the stock. They need us and we need them . They " make a market" for us. LOL.
Yeah,your welcome! i am new also. January of 2012 i opened a scottrade account with a CD from the bank that wasn't paying hardly anything. First year i only income invested. Just starting to trade a few months ago.
The MARKET MAKERS AND WHAT THEY DO VIDEO.
The MARKET MAKERS -
Market makers maintain a bid and ask price of any particular stock or security ext. THEY ARE THEREFORE MAKING THE MARKET.
The BID PRICE is what the market makers will BUY from YOU at. The ASK PRICE is what they will SELL TO YOU AT.
This is really good, but they need to add that it is another "Record Profit" isn't it?
What do you mean " sell their shares at the top"?
I think the volume has to be up a lot for about three days with .15 to .20 c gains. This will trigger many day traders to jump in also. This is how it happened to me...
1) I knew housing was coming back strong. I had a good position in Radian. RDN.
2) One day i saw a flash on the screen FANNIE MAE REPORTS RECOD PROFIT OF 8 BILLION!
3) I immediately looked into fnma and saw it was a penny stock. I was shocked.
4) sold all my other positions and put in order for fnma at $1.00
5) I did not look at the ask which was 1.05 - i could not stay on the computer cause i was at work.
6) went home to see i did not get the stock and it closed at 1.20 DAARRRRRNNNN!
7) finally got in at 1.36 the next morning
8) baught a lot more the next day, friday, at 2.41
Let me warn you this thing will move quick when it catches fire. Im talking .10 in like 6 minuets !
Good POST!!
Since 2009 Fannie Mea has provided approximately $3.7 TRILLION IN LIQUIDITY TO THE HOUSING MARKET. Wow!
PATIENCE DANEILSON!!! These reports are just coming out!
Freddie Mac (FMCC) reported a $5 billion profit during the second quarter, the second-largest quarterly profit in the company’s history and the latest reminder of how surging profits at Freddie and its larger sibling, Fannie Mae (FNMA) could reshape the debate over the firms’ futures.
i really like the part about "RESHAPE THE DEBATE" MMMMMMMM.....
I will remain confident .
I stay away from bears.
This was a very well written article. Must have been someone with half a brain. Im glad to hear the media not bashing FNF, but admitting it is essential to a strong housing recovery and economy!
I was just about to post this. THE TIDE IS TURNING!!!
No, I have normal cash account. Just spoke with scottrade. They said i can sell a stock and buy another in the same day, however if i sell that new stock before the three day settling period i will get i "free ride violation" The first violation is a warning and the second they will suspend and unsettled funds trading for 90 days.
YESSSSSS!!!!!
This is not the correct chart! Silly!
Thanks! Kudlow says he dont see GSE's going anywhere!
Only a warning if stock tanks? What happens if it goes up?
Scottrade lets me sell and buy the same day. I don't think i am supposed to do it but they have not told me anything yet. IF i sell stock A and then put in the order for stock B it will have a screen that says "you are using unsettled funds". So i guess I'm supposed to wait the three day time for funds to settle before i buy again.
Somebody here actually predicted this. I forgot who it was maybe Zargis? He said he saw them bring it down in one last ditch effort before earnings came out.
Just pure manipulation IMO. I have waited to long to see these earnings! Since last run when i didn't sell. I have held through some turbulent waters (selling) in the last two months. Even when FNMA went down to $1.08 . So i am prepared for whatever. We all know this stock is a powder keg just waiting to explode!
$1.50 will hold. Take it to the bank!
I agree. What a strange coincidence he makes a speech two days before earnings are released. Maybe big money want's to get in cheap, cause they know whats coming.... Seems like this stock was starting a run until he squandered it. It will happen. Patience!
Thank you Fannie Mae! This is a real treat!
I agree. Let's see what happens tomorrow, but i am getting a feeling that we are in for a real "treat" ! I believe this is going to go higher this time than what anyone is expecting.
Amen! There were some other things i remember also. The news was saying that the stock exploded also due to their coal production. I believe this symbolizes all of the lawsuits that FNMA received money from. I know they don't deal with coal. LOL. In the dream this stock was moving up so fast and my computer was going slow to sell it and i was getting angry. Like trying to run in a dream and not being able to. I was so mad cause i was like $14.08 wow! I want to take profits!
I think $14.08 would still be an incredible bargain. FNMA traded at $57 before 2008. And higher at times.
Powerful dream last night, It was @ $14.08!!! I saw it in green! So i'm calling it $14.08!!!
I had an awesome dream last night! The number was $14.08 !!!!! This thing topped out at $14.08 !!!! I am not making this up! Take it for what it's worth!
Give me a RRRRRRR, Give me an UUUUUU, Give me a NNNNNNN what's that spell?
RRRRRRRRRUUUUUUUUUUUUUNNNNNNNNNNNNNNNNNNNN!!!!!
That would be killer to have $10 billion!
Fannie Mae past dividend payments. These are some good dividends! They were quarterly.
Ex/Eff Date Type Cash Amount Declaration Date Record Date Payment Date
8/14/2008 Cash 0.05 8/7/2008 8/18/2008 8/29/2008
4/28/2008 Cash 0.35 4/18/2008 4/30/2008 5/27/2008
1/29/2008 Cash 0.35 1/18/2008 1/31/2008 2/25/2008
10/29/2007 Cash 0.5 10/16/2007 10/31/2007 11/26/2007
7/27/2007 Cash 0.5 7/17/2007 7/31/2007 8/27/2007
5/16/2007 Cash 0.1 5/1/2007 5/18/2007 5/25/2007
4/26/2007 Cash 0.4 4/20/2007 4/30/2007 5/25/2007
1/29/2007 Cash 0.4 1/19/2007 1/31/2007 2/26/2007
10/27/2006 Cash 0.26 10/17/2006 10/31/2006 11/27/2006
7/27/2006 Cash 0.26 7/18/2006 7/31/2006 8/25/2006
1/27/2006 Cash 0.26 1/24/2006 1/31/2006 2/27/2006
10/27/2005 Cash 0.26 10/18/2005 10/31/2005 11/25/2005
7/27/2005 Cash 0.26 7/19/2005 7/29/2005 8/25/2005
4/27/2005 Cash 0.26 4/19/2005 4/30/2005 5/25/2005
1/27/2005 Cash 0.26 1/18/2005 1/31/2005 2/25/2005
10/27/2004 Cash 0.52 10/19/2004 10/31/2004 11/25/2004
7/28/2004 Cash 0.52 7/20/2004 7/30/2004 8/25/2004
4/28/2004 Cash 0.52 -- 4/30/2004 5/25/2004
2/19/2004 Cash 0.065 -- -- --
10/29/2003 Cash 0.45 -- 10/31/2003 11/25/2003
7/29/2003 Cash 0.45 -- 7/31/2003 8/25/2003
4/28/2003 Cash 0.39 -- 4/30/2003 5/25/2003
1/29/2003 Cash 0.39 -- 1/31/2003 2/25/2003
10/29/2002 Cash 0.33 -- 10/31/2002 11/25/2002
7/29/2002 Cash 0.33 -- 7/31/2002 --
4/26/2002 Cash 0.33 -- 4/26/2002 --
1/29/2002 Cash 0.33 -- 1/31/2002 --
10/29/2001 Cash 0.3 -- 10/29/2001 --
7/27/2001 Cash 0.3 -- 7/27/2001 --
1/29/2001 Cash 0.3 -- 1/31/2001 --
10/27/2000 Cash 0.28 10/17/2000 10/31/2000 11/25/2000
Read more: http://www.nasdaq.com/symbol/fnma/dividend-history#ixzz2alQ4UyZh