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Obit, I think what was said in the past -something key- is that any profit from the securitization platform will flow straight to the GSEs. Just like with any subs. Not sure if this is in the white paper. Have to research it.
But there is still a risk here. If retained portfolios get wind down to zero, the government absorbs the guarantee business and the securitization scheme is divested, then FF have no reason to exist and can certainly be dismantled in a receivership. So the ongoing legal processes are key to determine shareholders' rights before any of this happens or set the basis for new lawsuits should FHFA and Treasury continue to make decisions in conflict with c-ship. Court decisions will be key independently of any outcome.
Well.. that is a lot of new positions. The whole institutional count is almost the entire issuance of preferred ADRs. If anything, not much supply anymore. Unless I am reading something the wrong way.
sorry, wrong message.
Can you please direct me to a link or page where that information is being detailed? Can't find anything on it. Thanks.
Thank you for starting this fora.
What makes this a good speculative investment? Dividends are not cumulative. Lack of long term history abiding rule of law in Russia. In addition, these quasi preferred shares are subject to a lot of arbitrary regulations by the company itself. Not to mention that Putin hates them. Where do these shares go from here in a 9 bill debt-laden company? I can't see them receiving dividends in a long, long time. It may take years and a lot of restructuring before they ever get any money given potential covenants tied to the debt... Without divies, where's the value? Last but not least, Justice family appear to be net sellers here. And they own a chunk!
These preferred shares have nothing "preferential".
I agree with your point of view. Yes, Treasury has been acting unilaterally. Let's not forget Treasury sells its bonds to the same market Fannie and Freddie sell theirs. Politicians though probably feel they are between a rock and a hard place: populace may want them to hurt shareholders yet they understand this will have negative, lasting consequences with the same hand that feeds them. In spite of the Corkers of the world claiming 'no more private gains while socializing losses'.
Ultimately, they will have to find a way to kill 2 birds with the same stone and realize that by respecting property rights and the rule of law they are actually making a service to the Nation. The masses can also understand this. But I still don't think commons are the place to be.
The companies are afloat because of Treasury's funding commitment. Without it, they become technically insolvent. And so far they haven't been allowed to recapitalize.
I think those who believe that "profits" equal to "everything is fine" are deluding themselves. Right now, profits do not stay at the companies and there is a legal battle going on to determine what part of the profits belong to which entity. Then, there is the issue that in the future profits stemming from g-fees may not flow to the GSEs. Not to mention profits from their retained portfolio which will dwindle.
With a removal of the Treasury's commitment FHFA can always claim insolvency and therefore receivership. The chances of this are slim as it will create yet another set of issues. And I don't think Treasury wants to become embroiled in more conflict. They may not act nice but they are not stupid.
I'd say nothing has changed with both commons and Jrs. That the Jrs. have had a few minor successes in the legal battle. And that the CSS is a continuation of DeMarco's vision.
The reason we hear more about commons here and in GG forum it's because some are pumping them ferociously. Always remember commons have the sword of Damocles hanging over them.
No, I am not sure. I will have to go back and hear the 1.30hr presentation again. Even though his ideas are crystal clear he is not the easiest one to understand when speaking.
Maybe I'll do that this weekend and write a tiny transcript of what he said in this respect. But I think he mentioned it twice and of these 2 instances one was a response to someone from the audience. He was saying what will make sense is that the government does this and that... I will try to get his exact wording.
20c, do you think that at some point the judge may order the parties to sit down at the table and look for remedies? Sorry if this is a silly question.
The reason I say this it's because of Professor Einstein's insistence on what ought to happen is that the government should make all excess funds above 10% payable to principal and reduce both the debt and interests.
This may not be the best of outcomes for us as none of the past divies will offset the debt and FF will still be left with 90 to 100 bill in Srs.
Very nice. Must watch. Thank you!
Is this regarding the latest JPMorgan sin? I heard on NPR the majority of the money will go to the government and the rest to homeowners, possibly. FF wasn't mentioned.
If things revert to the 2nd amendment we are back in the 10% dividend. Who knows what declaring it null may represent? Getting back all the DTAs? Will this mean some sort of recap.? Treasury being left with a bigger deficit that has already been discounted? Then, the companies will be further away from net zero!
Because of the implications it looks like a very complex issue.
Maybe a remedy somewhere in the middle will look acceptable to all parties. Like Treasury accepting all payments done as part of a pay off that will eliminate the Srs. once we are net zero. This could also quickly improve Fannie and Freddie's net worth position as all future earnings -after net zero- will be kept. If in addition Treasury amends the agreements again allowing recapitalization this could be the best outcome. I am dreaming lol.
Hamilton's argument is dated 1791. So for all we know it may simply be outdated.
However, it is a known fact that courts have granted government actions some discretion. Discretion meaning "flexibility in the interpretation" of the actions taken by government. This is in line with Hamilton's view of the inherent implied power of the government.
But as you say and has been ruled already, when it comes to Fannie and Freddie, the Treasury, the PSPA agreements and the FHFA, the government acted as a private entity realting to other private entities. Therefore, implied powers -whether they do exist or existed only in 1791- are irrevelant. The "discretion" only comes into the picture if the government acts as "government". Treasury acted as a shareholder.
Then, what really matters to us and the current lawsuits is corporate law, private property rights and the rights of shareholders. That was the point I was trying to make.
Excerpt from "Financial Founding Fathers"...
For those who are interested in how Hamilton dealt with the scripts and national debt.
Hamilton and the recent rulings regarding the Treasury acting as another shareholder and the GSEs not being government agencies will all come together soon. Hamilton -to our detriment- used the concept of "implied powers" by the government in order to push and move forward with the creation of his financial system.
Yet, the recent rulings will make it difficult for the government to raise a defense based on Hamilton's view of implied powers as the government acted as a private entity and not as a federal entity with a national concern. This is -in my humble view- why the recent rulings could be critical. So Hamilton for us could be both good and bad. Except that the bad part seems to have been defused.
Let's not forget the inner contradiction: Hamilton was not "private". He *was* the government and he only tried to raise government's credibility only to make it larger and more powerful. Which was needed to create order in the system. His main goal was to help the government, not private entities. This was simply the consequence of trying to raise trust in the government. His merit is that he used that additional discretionary power (the casino edge) in a responsible manner. Not everyone in the government -these days- acts that way.
This article appears "smart" at first but obfuscates some truths.
Interest rates rising is the big bear for bonds. The period from 1946 to 1981 was a long 35 year bear for bonds. Do you think the elite you've talked to may have had some "bond" biased? Some elite have a natural disdain for stocks.
All those who think rising interest rates will kill anything (FF, the market, RE, etc.) please explain this chart.
The period 1946-1981 was one of the most prosperous ever! An environment of rising interest rates..
Rising interest rates may simply mean that there is ample, vast economic development, expansion of GDP, much more opportunities, etc. A boom. Interest rates rise as a way of tempering such progress. Economic progress happens first, interest rates rise in the aftermath.
Progress can also happen in an environment of declining interest rates. What changes in the picture is which industry benefits.
Bottom line are earnings!
From 1946 to 1981 a few selected industries ran the show, from 1982-2008 a different group of industries benefited. The key will be to assess who will benefit for the next 35 years.
Working fine here. Could be your browser. Not recognizing cookies. Change browser, restart your computer, stop your firewall, if using firefox stop all add-ons, etc.
According to Bill Maloni rumors are there are 2 new bills in the works. One from Senator Jack Reed, presumably favoring reform, and another one from duo Johnson-Crapo.
"They must have realized that their clients would prefer to continue with the status quo."
Do you think that someone whispered the same thing to Senator Reid?
force them?
Simply write them a letter asking for your cost basis on your portfolio and then you can see things in writing. If anything, it may help you discuss this issue with them. It will be unusual that they report cost basis by actually setting a date on which there were no trades. Did you receive any gifts on 11/5/12, any inheritance, any transference from another portfolio?
The real issue is not finding the executed orders by order number for the "problem" shares. How are you going to prove to them dates and prices paid?
As for the IRS, why worry now? You have time till next reporting season when etrade is obliged to report cost basis.
Taint is correct. I contacted the attorneys for this case and they said "no hearing set in Perry Capital v. Lew for September 7, 2013. There are a number of cases against the Treasury Department, and it may be that there is a hearing in one of those other cases. As a general matter, hearings in federal courts are open to the public although there may be exceptions..."
5 stars. Thank you.
The best part is that Reid's recent comments are inline with this analysis. Analysts thoughts are of no consequence unless there is at least one politico out there that supports the same ideas.
I agree with camaro. More time for the courts to decide on the injuction relief issue. Or those 28 bill would have gone to Treasury's black hole.
If it is the MM it is to replenish inventory or simply "make markets". I hear they like it when cheap. However, your "why" is not the same as the MM's. They are the buyer of last resort and will have to buy what anyone sells, at any price whether they like or not, if noone else shows up.
For every seller there's a MM or a specialist :):):):)
Those appear to be a sale considering the buying prices. What can you do?
Dam it, Obit. Eres un poliglota!
Anybody else thinks this -today and coming days- is a great buying opportunity for both commons and preferreds? I am thinking the media is again misinterpreting recent news.
There are several interpretations on what was said so far. According to today's WSJ article, there is a shift going on from "wind down" the companies to "transition" them. Specifically, the business model to die but parts of the companies to survive. It is still too early to say if this has positive consequences to equity, but it could.
Sorry. Should have read all messages to prevent repeating what SA and 20c already said.
Freddie's new risk-sharing securities
This looks to me like a tacit acceptance/approval by market participants for the new bonds. If so, this alone can avert any remaining risk of "wind down" favoring "reform".
http://www.housingwire.com/articles/kroll-digs-freddie-data-prep-potential-risk-sharing-securitizations
Thank you, Joseph. They deleted your post but I had a chance to read it prior to that.
Is cititrade related to citibank? I am having a hard time finding a link that works. Would like to check them out.