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DoNot - JPS could wallow in the quagmire for a long long time.
Commons are PE sensitive - period/full stop. CBO thinks 15 pe and probably could be 30 given today’s prices.
The JPS are booked as equity but are 100% dividend dependent. So if no dividends for a long time and commons are p/e sensitive, it’s pretty straightforward.
I know you JPS folks think I repeat the Tim Howard quote for no other reason than ... but I think the above is a main reason it’s called a quagmire - I don’t know how many times i have to explain it ... why did jps lose 50% value relative to commons? Look forward to ur answer ...
Shadow - honest questio , on the for cause, how is Collins diff from Seila? If you say acting vs confirmed, what about when a confirmed director is in place? The confirmed fhfa director still needs to sign off on the quarterly sweep of profits ...
Golf, if Scotus asked for the Treasury response, then Scotus got their answer that ending the NWS alone in line with the 5th circuit does NOT moot the case. Ending the NWS alone does NOT provide technically any remedy. Scotus must do more ...
This letter doesn’t delay anything, it infact provides insight into the deliberations of at least some of the Justices.
I see this as a good sign.
If FnF were to raise capital via retained earnings for 6 years and then do an SPO to raise the delta to meet the 3 to 4% capital levels to exit conservatorship, how much more money would be added to the liquidation preference?
Say at least 20 billion per year times 6 = $120 billion. Could be 25 billion per yr by 6 = $150 billion. What if it is $30 billion per yr? Now $180 billion added to the liquidation preference.
The Liquidation Pref today stands at ~$220 billion. Add another $150 billion = $370 billion.
FnF have already paid $308 billion. So now the 10% dividend will be reinstated on $370 billion LP I believe per quarter, which is $37 billion per quarter, or ~$147 billion per yr. If the lesser is the net asset change qtr to qtr, then put a number in there, which is a bit nebulous given the future net asset changes qtr to qtr are hard to determine. Imagine a world where FnF’s book continues to grow qtr to qtr and then the delta is paid to the gov. That could be, during good times, any where from a billion a quarter up to the $37 billion in one quarter being the lesser compared to the 10% on the LP.
On top of all this there is a commitment fee to be paid also.
Someone tell me how this ends without the LP being written down to 0 and the gov deemed paid back. Anyone? Buehler? FnF could, over 10 to 15 years, pay the USA gov a Trillion dollars. Someone please tell me I’m wrong and when and how this mafia deal ends ... Even if the cap rule limits are attained, is there anything contractually preventing the gov from continuing to charge the 10% dividend on the LP? Or the qtr to qtr net asset delta being paid to Treasury? When does it end?
This LA “4th amendment” is a continuation of the NWS with a different name, continuing the concrete vat tied to the ankles of the twins, forget about a concrete life preserver. I still believe Mnuchin crafted this LA with a large portion of the intent to be highlighting the 5th circuit’s prospective relief of the NWS as ineffective and insufficient.
I think any holdouts at SCOTUS just got confirmation that the latest 4th amendment LA represents a legal yet bastardized way to get around the 5th circuits NWS prospective remedy cancellation, demonstrating the remedy as ineffectual.
If the above is true ... Well done, Mr Mnuchin, well played ...
Last but not least
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Rick - 180 loaned and 300+ paid back = 124$ billion profit to gov. If the liquidation pref never goes down then the companies can never leave conservatorship and can never paydown the 180 billion loan.
The gov still has $220+ billion in liquidation preference that will drive the 10% dividend once the companies reach milestones in raising capital per the cap rule which is $100+ billion.
Stopping the NWS does nothing to account for $300 billion paid back to the gov. It is as if the $300 billion was just a gift and nothing more as there is no way to pay back the gov.
The easiest way to understand the latest amendment and current situation is if Scotus doesn’t write down the liquidation pref to 0 (the loan balance that was originally $180 billion to 0 from the $300 billion already paid), the the government could be repaid on a $180 billion loan something close to $750 billion - could be even closer to a 1 Trillion dollars from 2 private companies.
That’s incredible and would be bigger than most countries in the world will ever see over 100 years.
That’s why this latest move by Mnuchin, et al, is hilariously so ridiculous a significant portion of the reasoning behind this deal is to show Scotus how ridiculous and ineffectual the NWS remedy (cancellation) that Collins just received is. The 5th circuit said prospective (going forward) relief was sufficient = NWS cancellation only. Given the current amendment by Mnuchin, which ended the NWS, it is now plain for all to see that the NWS amendment alone is not sufficient. In fact it does nothing.
Retrospective relief is needed, which is applying past payments of $300+ billion to the liquidation preference per section 3(a) of the PSPA agreement.
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https://investorshub.advfn.com/boards/read_msg.aspx?message_id=160997140
What? Another Jan oldie?
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Happy, technically the NWS is done. It is the liquidation preference you need to focus on.
There is a big difference between the NWS and sweeping all quarterly profits to Treasury vs increasing dollar for dollar the liquidation preference of the sr preferred shares.
There is no quarterly sweep, and it is important to remember that what just happened is exactly what the 5th circuit en banc said was enough remedy.
The remedy Collins asked for in the 5th circuit was to zero out the sr preferred shares (liquidation preference) and cancel the NWS going forward. The 5th circuit only granted remedy on the NWS only. Both items are being asked at Scotus and what Mnuchin did was force Scotus to see the remedy granted by the 5th circuit does nothing to allow the companies to get any closer to release.
It’s clear as day that part of the intent of the most recent “amendment” was to draw the vast, huge contrast of what just a cancellation going forward of the NWS does (which is absolutely nothing) vs writing down the liquidation pref and cancelling the NWS. It can’t be any more clear.
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https://investorshub.advfn.com/boards/read_msg.aspx?message_id=160989248
Another oldie but goodie from Jan
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The liquidation pref going to 0 makes the outcome unchangeable. Politicians can regulate and curb excess but government interference is all but over until congress acts, which is doubtful.
The key point related to the “amendment” is it, at its core, is contradictory to itself in that it is impossible to raise capital without exiting conservatorship. There can only be one reason for that, and it is to demonstrate to Scotus, even with the NWS de facto cancelled per the prospective remedy endorsed by the fifth circuit, that the PSPA will keep the GSEs in conservatorship indefinitely, at least for decades as the FHFA stated.
Scotus IMO is almost forced to rule that not allowing the NWS to have paid down the liquidation preference is not “good faith” dealings, and will need to grant Collins’ request on remedy = liquidation pref down to 0.
IMO, there is no other logical conclusion. The contract is so onerous that it is laughable and shows the huge contrast in how the PSPA would’ve been paid down and what happens if it basically never can be.
The government before Scotus is not challenging the fact, as they did in lower courts, that the gov loaned $180 billion to the GSEs and received over $300 billion in return to net a profit of $124 billion = %70 profit for the government. The gov is only challenging the right to even challenge the NWS by Collins.
All Collins is asking for is the liquidation preference be deemed paid. Collins isn’t even asking for the $124 billion be repaid, but as stated in oral arguments, Collins isn’t opposed to having a significant portion, or all, of the $124 billion repaid. As stated during oral arguments, the real request by Collins is as simple as an accounting adjustment and comes at no expense from the gov given the gov made $124 billion.
I’ll post later on why I think the gov can’t write off the liquidation pref given the DOJ could sue on behalf of taxpayers ...
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https://investorshub.advfn.com/boards/read_msg.aspx?message_id=160983452
Meanwhile, back in Jan, or the hall of justice ...
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They can send the amendment to scotus to notify them of the update. It basically shows Scotus there is no end in sight even if the NWS is technically ended. IMO it takes a potential remedy out of play showing how just the end of the NWS per the 5th circuit does nothing to provide remedy to Collins.
It shows how prospective relief means nothing as the liquidation pref can (and has been) increased dollar for dollar of retained earnings and the 10% dividend payment can be reinstated Even with the NWS being canceled. It shows the neverending conservatorship due to the gov terms basically preventing any repayment of a loan.
Scotus will be forced to act, or swallow the bitter pill of allowing a de facto nationalization in the United States of America.
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https://investorshub.advfn.com/boards/read_msg.aspx?message_id=160975166
After FnF build “sufficient capital” to meet the 3 or 4% of net assets, while during the same period the Liquidation Pref goes up quarterly commensurate with the FnF retained earnings, the Treasury will get the lesser of 10% of the Liquidation Pref, which could be $500+ Billion or more by the time the 3% threshold is attained.
So now the Treasury could get $50 billion quarterly dividends on the Liquidation Preference? Or 10% on the net value quarterly increase of FnF? Whichever is lesser ... plus a commitment fee ... ha! Can someone say Nationalization?
Scotus, if you asked that question, you should see FnF have paid their debt in the $308 billion dollars paid.
Deem the gov paid back and net the LP to 0 and cancel the NWS in perpetuity. Then give the excess billions ($30 billion) back to FnF. Then, let the CFC handle damages on the takings ...
Interesting times ...
The question is: What prompted this letter? Did some Scotus Justices want to better understand the intent of the LA executed in Jan?
The DOJ basically said if you don’t 0 out the Liquidation Preference, we will keep taking money on top of the $308 billion already paid in perpetuity per the 10% dividend/Liquidation Pref increase.
I wrote about this when the LA came out. Essentially saying Mnuchin made it clear that technically stopping the NWS does not change anything per the new LA and the Collins case in front of Scotus.
I think the court just asked that very question.
Skeptic - JPS FNMAS agreed, not buying 1 single FNMAS share of the quagmire trade that Tim Howard - CFO of Fannie Mae who issues the JPS shares - called a "Quagmire" trade since the hope for dividends is 0.
FNMA Commons outperform JPS FNMAS quagmire dramatically ...
Well said
Skeptic - your're right - JPS is dead money
DoNot - Agreed FNMAS tanks after favorable SCOTUS ...
Skpetic - Totally agree JPS FNMAS to $3.50 - Good Luck JPS
Guido, thot i read if “Collins loses the way Hindes thinks Hindes doesn’t get his case reinstated.” Paraphrased
If APA=> direct claims are allowed as Hindes thinks, then I thot Hindes’s claims do get reinstated...
Sorry if I misunderstood
Guido, if Collins loses the NWS/LP to 0 and allows for APA/Direct Claims, then Hindes’s case is back. CFC becomes front and center for Commons.
If the NWS/LP to 0 wins and APA dies, then direct damages are dead and Hindes’s case is buried. Commons blast off and there is still the potential for CFC Faireholme, et al, to get massive damages from gov.
If both are wins (nws/lp) and apa, then the potential for takings and damages becomes massive for the gov across Fairholmes, which has a lot of cases combined into it, including Commons plaintiffs, and many direct claims get reinstated.
SCOTUS is the lead domino. Will it fall ...?
MRJ - desperate times call for desperate measures. Hindes has JPS ... JPS knows a favorable Scotus on NWS and LP makes JPS dead money for a long time. The story about the Big Bang “being a done deal” should have your “hogwash” antennae at elevated levels.
I definitely wouldn’t read anything into it. If you want to read into things, read into Toomey’s statement about how shareholders got shafted by the NWS. That is unprecedented and a first coming from the gov.
Skeptic - JPS (FNMAS) you are spot on 100% correct - JPS (FNMAS) is going significantly down after SCOTUS
Watch out for the FNMAS headfake - spiked on no volume - beware of the illiquid headfake ... don't need anymore JPS bagholders stuck in the Tim Howard former CFO "Quagmire"
Shadow - Hindes believes Direct claims will be available but no NWS/Liquiation Pref to 0 ...
All of the articles, etc., and posters, it's just a comedy of errors and noise ...
It will be here soon enough ... then the noise will increase!
Mnemonic - what happens if the CAP Rule is changed? Favorable SCOTUS Ruling? Takings claim in CFC with Faireholme?
These articles conveniently leave those unanticipated variables out of the equation.
Any of the above alone could shave off many years off of the 15 year timeline. Any combination could shave off 10+ years off the timeline ...
I definitely anticipate after SCOTUS the Cap Rule will be re-proposed. Calabria is persona non-grata! Ciao, Bella!
Skeptic, I agree JPS FNMAS is $3.50 after SCOTUS ...
JPS is a “Quagmire”. Tim Howard, Fannie CFO who issued the JPS the JPS crowd is invested in, called the JPS shares, e.g., FNMAS, FNMAT, etc, a “quagmire” trade.
Good luck!
Skeptic - agreed - JPS FNMAS will be sub $3.50 for a long time ...
Surrogates are attacking SCOTUS - JPS knows a favorable SCOTUS ruling they are forever bagholders ...
Hindes, Pagliara, etc., nice work ...
FOF - more indications once Calabria is gone, probably a new cap rule to be proposed ... we’ve been telling JPS ...
So now JPS is rooting against the very same company they are invested in in front of SCOTUS?
Too funny - you can’t make this stuff up! JPS must really be in a quagmire...
FOF - I think the conversations may have happened, but if the press (Joe Light & Hackerman) are getting wind of UST inaction back in Dec 2020 and Jan 2021, before the capitol riots, then I think the misrepresentation (intentional or not) of the POTUS conversations represented by Hindes during this time period - Dec 2020 to Jan 2021 - "changing Mnuchin's minds" is over extended.
If Joe Light and Hackerman for Bloomberg (I think it was them), knew of the lack of interest to act on the "Big Bang" by Treasury, then how does a subsequent conversation with a Hindes insider and Trump instruct on the press having a full understanding of the Treasury's position?
It doesn't make sense. If anything, if everything is to be believed, it's that Trump had no idea what Mnuchin was going to do and really didn't care about the GSEs.
If Trump did care, but realized there was all sorts of legal issues, etc., that could be an annoyance in his post-presidency, then the Hindes insider conversation with Trump was overinflated in Hindes's article.
Or Or Or ...
I think the "deal was done" but for the capitol riots insinuation by Hindes is on shaky ground ... Seems a little vanity run amok ... "my insider knew this and that and I have insider connections" type of thing ...
Thoughts?
Skeptic - genius - JPS goes no where ...
Haha - still holds true!
Toomey vs Hindes ...
Where are all the JPS surrogates to promote SCOTUS saying the NWS and LP are staying as is? Endorsing Hindes view? Toomey thinks differently ...
Cmon, JPS Quagmire - come out and play ... I’ll wait for FNMAS to hit $3.50 before I’ll jump in ...
Carney is a joke ... His credibility is as bad as Bradford ...
JPS are a quagmire - no dividends for a while unless Scotus cleans the slate. They better hope for that ...
Good Luck, JPS!
Skeptic, once again agree - JPS won’t get relisted ...
Skeptic, I agree JPS has no reason to go higher ...
Trunk - I think with an adverse ruling on the NWS and LP - meaning there is direct language from Scotus closing that door, I’ll shift probably almost all GSE holdings to JPS.
If APA is allowed and NWS and LP are denied, all classes will fall. It should be a relative current ratio trade. I will probably load the JPS boat then.
If SCOTUS slams the door on NWS and Liquidation Pref going to 0, I’ll shift 50% to JPS ...
Skeptic, agreed FNMAS will be settled down at $3.50.
Skeptic - I once again agree JPS are done for ...
ImTheShadow - Given the grey area you just posted, is there the risk of more litigation on the warrants?
Absolutely, so how do all parties save face/settle?
Over and over and over again the JPS crowd says Collins isn't asking for this or that and this and/or that.
SCOTUS asked Collins, "what if we go after the 2nd and 1st amendments?"
SCOTUS asked Collins, "are you asking for a check for 100s of billions?"
SCOTUS asked Collins, "how do we unscramble the egg?"
The above indicates all options are on the table. Who knows if any will be used, but the options are absolutely, positively on the table.