Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
6/28/2021
FHFA Announces Three Staffing Updates
?Washington, D.C. – Today, the Federal Housing Finance Agency (FHFA) announced new appointments to the leadership team? for longtime FHFA staff ?Naa Awaa Tagoe, Daniel E. Coates, and Danielle Walton. Tagoe will now serve as Acting Deputy Director for the Division of Housing Mission and Goals (DHMG), and Coates and Walton will serve in Acting Director Sandra L. Thompson’s Office of the Director with Coates as Senior Advisor to the Director, and Walton as Acting Chief of Staff.
“I am pleased that Naa Awaa, Dan, and Danielle have agreed to take on these new positions. It is my goal to provide as many opportunities as possible to leverage the expertise of FHFA’s world-class staff as we execute on our important mission” said Acting Director Sandra L. Thompson. “All three are experts in mortgage finance and share my dedication to ensuring that all Americans have equal access to safe, decent, and affordable housing.”
Previously, Tagoe served as the Principal Associate Director in the Office of Capital Policy at FHFA. Her team was responsible for regulatory capital policy for the Enterprises. This work included oversight of the Enterprises’ credit risk transfer programs, non-performing loan sales programs, Dodd-Frank Act stress tests, and financial eligibility requirements for approved mortgage insurers, mortgage sellers and mortgage servicers. Prior to joining the predecessor agency of FHFA in 2003, Tagoe held positions with Bear Stearns and Houlihan Lokey. Tagoe earned her bachelor’s degree in Electrical Engineering and her MBA from Stanford University.
Before becoming a Senior Advisor in the Office of the Director, Coates served as a Senior Associate Director at FHFA, where he led a team of economists and financial analysts. His team was responsible for targeted credit and market risk examinations to support the FHFA’s examinations of the Federal Home Loan Banks (FHLBanks). Additionally, Coates led a team of financial analysts who evaluated the financial condition and performance of the FHLBanks. He serves as the Chairman of the FHFA’s Reference Rate Transition Steering Committee, which oversees the FHFA’s regulated entities’ transitions away from LIBOR and other reference rates. Coates is also the FHFA’s representative to the Alternative Reference Rates Committee (ARRC). Before joining FHFA, Coates worked as an economist at the U.S. General Accounting Office and the Federal Housing Finance Board. He earned his Ph.D. (with distinction) in economics from Columbia University, and his MA and BS in economics from the University of Delaware.
Prior to being named Acting Chief of Staff, Walton served as the Director of Stakeholder Relations in FHFA’s Office of Congressional Affairs and Communications. She was responsible for establishing and maintaining consistent and productive relationships with the housing finance industry, consumer and public interest groups, and internal staff. This work included serving as the liaison between stakeholders and the Agency Director, as well as supervising the development strategies to help deliver the Agency’s organizational objectives, stimulate participation in Agency activities and identify concerns. Before joining FHFA, Walton worked for secondary mortgage market participants including Ginnie Mae and Freddie Mac. She holds a Bachelor of Arts from the University of Maryland, College Park.?
Wonder what if anything is going on behind the scenes?
Look at you, smooth move! I think in TH's piece this morning, he mentioned that the SCOTUS, by ruling that the FHFA is a Government Conservator that they can self deal UNLIKE TRADITIONAL CONSERVATORS!
Since HERA was apparently a cut and paste of the 1980's S&L crisis rescue legislation, does that mean going forward that any banks going into conservatorship are subject to the Government Conservator self dealing and selling assets for the "public good"?
Thanks KT! The Collins case of course was just devastating but what do you think their prospects are on remand? The 5th is traditionally a good Circuit to be in...
Although I am running out of optimism for the remand, IF it goes to trial and the court expands the scope of discovery to include all intra governmental communications regarding the nws implementation in any situations involving a confirmed director (because POTUS WAS POWERLESS TO EXECUTE HERA AS HE SAW FIT AND IN THEORY AT LEAST THE POTUS COULD HAVE WANTED TO GO ONE WAY BUT THE CONFIRMED DIRECTOR DISAGREED) then the Collins Plaintiffs may discover more documentation that could result in evidence that a Judge could use to justify some monetary relief!
I think alot might depend on:
(1) Whether Collins can survive the gubmints upcoming Motions to Dismiss
(2) The gubmints Motion to deny expanded Discovery.
(3) Will Judge Willett or Haynes be assigned to the trial? Will we get a Judge who understands exactly what happened here?
(4) Will JB appoint a lefty Judge to the 5th Circuit who rules in favor of da gubmint on an Appeal or EnBanc Panel ruling and happens to be the deciding vote?
But at a minimum some juicy intra governmental communications may be revealed and if a Judge who understands exactly what happened here is the trial Judge, then they will probably be more likely than not to at least provide some relief.
But it seems like the Unconstitutional Takings Case in COFC? may be the best bet in eventually getting some type of relief from this abusive and coercive 12.75 year+ governmental theft of the shareholders private personal property.
Both are screaming buys, but alot of those who were looking for Quick Silver have or will cut and run. Will some large institutions, mutual funds, and those managing money for others exit their positions prior to 2Q21? Don't know.
But I'm betting that the final chapter of this tortured saga is, "Gubmint decides private capital in a 1st loss position is a good idea", I just hope that I am still around to read it!
KT19 may have cut and run because I believe he originally was going to leave if SM didn't do the instant recap/dilution solution before he left. He decided to hold instead and wait for Collins. After the SCOTUS disappointed ALL OF US (except Jim Parrot!) he may have said that is enough for me!
Shame to, because while I never believed AT ALL in his vision for the future, THE MAN WAS A TREASURE TROVE OF INFORMATION AND HAD A PRETTY GOOD UNDERSTANDING OF THE COMPLEX AND TWISTED STORY HERE!
I don't blame ANYONE FOR SELLING! But multi billion dollar corporate litigation against a recalcitrant gubmint takes time and there is a lot of uncertainty here, but maybe that's why they sell for a buck or two!
This House Representative from Illinois prompted MC to say, "The shareholders should have been wiped out in 08". Bill Foster point blank told MC right before MC said it, "The shareholders should be wiped out!". Bill Foster apparently was a government employee physicist at the Los Alamos Lab and is probably one of the most anti shareholder friendly in Congress!
Certainly he would be a fine pick as the new FHFA Director!
https://foster.house.gov/
Yes! BUT DJT COULDN'T FIRE HIM! SO ONCE HE WAS SENATE CONFIRMED IN MAY 2019, HE WAS ACCOUNTABLE TO NO ONE IN GUBMINT INCLUDING THE HEAD OF THE EXECUTIVE BRANCH OF GUBMINT, POTUS HIMSELF!
So, IF we end up in a trial in the 5th Circuit (hopefully we get Judge Willett or another Judge who has a clue as to what is going on here!) AND we obtain Discovery Documents showing any indication about the administrations displeasure with any of MC'S unaccountable actions that could finally provide some relief. In addition, it may open up some additional Discovery during the 8 years BO was POTUS.
I'm pretty sure that the Collins Plaintiffs will ask for expanded Discovery now and who knows what additional landmines for the government will be out there!
But this could take 1 to 2 years for additional Discovery as well as the government exhausting all the Motions it can muster.
Even Justice Gorsuch was skeptical about the remedial dodge the SCOTUS just heaped on the Plaintiffs! I think all that IS REQUIRED IS A SHOWING VIA A PUBLIC STATEMENT OR INTERNAL EMAIL SHOWING THE POTUS COULDN'T FIRE THE FHFA DIRECTOR!
I am pretty sure that the Plaintiffs DO NOT need to show a casual link because they won't need to create a "but for" world to show that they were harmed, ONLY THAT POTUS THOUGHT THAT HE WAS UNABLE TO FIRE THE FHFA DIRECTOR BECAUSE OF HERA!
From Justice Gorsuch:
"Consider the guidance the Court offers. It says lower
courts should examine clues such as whether the President
made a “public statement expressing displeasure” about
something the Director did, or whether the President “at-
tempted” to remove the Director but was stymied by lower
courts. Ibid. But what if the President never considered
the possibility of removing the Director because he was
never advised of that possibility? What if his advisers
themselves never contemplated the option given statutory
law? And even putting all that aside, what evidence should
courts and parties consult when inquiring into the Presi-
dent’s “displeasure”? Are they restricted to publicly availa-
ble materials, even though the most probative evidence may
be the most sensitive? To ascertain with any degree of con-
fidence the President’s state of mind regarding the Director,
don’t we need testimony from him or his closest staff?
The Court declines to tangle with any of these questions.
It’s hard not to wonder whether that’s because it intends for
this speculative enterprise to go nowhere. Rather than in-
trude on often-privileged executive deliberations, the Court
may calculate that the lower courts on remand in this suit
will simply refuse retroactive relief."
I have little Hopeium left over for the future remedy in Collins on the remand to the 5th. However, there may or may not be something there and so long as the 5th Circuit trial court allows expanded Discovery to include DJT administration emails and such you never know until then. Let's see if we survive the new DOJ Motion to Dismiss that they are surely likely going to take a crack at. It would be nice if we at least get a trial and if the 5th Circuit has Judge Willett or a Jurist who actually has a clue assigned to the trial!
The FHFA Director always had the power to unilaterally suspend quarterly sweeps of the gses profits to the UST. See the May 24, 2017 letter from Alfred Pollard to Mel Watt.
On Page 65:
https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.govinfo.gov/content/pkg/CHRG-115shrg26521/pdf/CHRG-115shrg26521.pdf&ved=2ahUKEwjehpXBs7jxAhVDMVkFHUz1CYkQFjAVegQIDRAC&usg=AOvVaw1Qw4OsrbAbgX83oEkQlG1s
The MBA, NAR, and NHBA, haven't picked their puppet yet!
https://amp.usatoday.com/amp/7771352002
Sheila Bair: "In fact, according to Fannie Mae and Freddie Mac data, in 2020 approximately $185 billion of equity was extracted through cash-out refinances – the most since 2007, right before the Great Financial Crisis."
Sandra L Thompson has been with the FHFA since the OBama administration and was previously one of three Deputy Directors of the FHFA. In a 2015 interview she maintained that affordable sustainable housing lending and safety and soundness are NOT mutually exclusive:
"I can’t say this enough — when we talk about access to credit — some tend to think that safety and soundness gets thrown out the window. I believe that you need to have balance.
Safety and soundness and access to credit are not mutually exclusive."
https://themortgagereports.com/17951/themortgagereports-com-interview-series-sandra-thompson-deputy-director-fhfa
As a hard working, successful long term careerist at FDIC and FHFA, she may be especially well suited to be the next Senate confirmed FHFA Director.
But JB may have someone else in mind for the lead position so we will see in a while who he picks and what their vision is for the future.
Normally Gorsuch and Thomas see eye to eye on more issues than not. Here, Thomas in his concurring opinion listed the 4 reasons why he thought the Collins Plaintiffs should lose on remand! Kagan said in her dissent she didn't even think ANY RELIEF should have been given because the 5th already decided that the POTUS had control over the nws given the UST was a cosigner.
If the 5th allows more Discovery Documents to show DJT wanted Mel Watt out on Day 1, but thought he couldn't that may get us some relief. The public comments that BO made regarding his inability to fire Ed Lockhart for not reducing loan balances for troubled borrowers may also be relevant.
In the meantime we beef up the balance sheet with retained earnings building capital for the 1st loss position.
Seriously, maybe we should start protesting with placards and bullhorns every September 8th in front of the FHFA HQ! We may be required to get a permit but we could do a 9am to 5pm schedule were at least several of us are in front of the building. We could say things like, "I don't stay up at night worrying about the shareholders!", "FHFA is salting the Earth with our shareholder carcasses", "FHFA stole my retirement funds!", "Theft is a crime!", "Nationalization is Socialism", "13 years is too long to be temporary!", "Give me back my damn money!".
Something like that!
Justice Gorsuch, concurring in part: "Few things
could be more perilous to liberty than some “fourth branch”
that does not answer even to the one executive official who
is accountable to the body politic. FTC v. Ruberoid Co., 343
U. S. 470, 487 (1952) (Jackson, J., dissenting).
Instead of applying our traditional remedy for constitu-
tional violations like these, the Court supplies a novel and
feeble substitute. The Court says that, on remand in this
suit, lower courts should inquire whether the President
would have removed or overruled the unconstitutionally in-
sulated official had he known he had the authority to do so.
Ante, at 35. So, if lower courts find that the President would
have removed or overruled the Director, then the for-cause
removal provision “clearly cause[d] harm” and the Direc-
tor’s actions may be set aside. Ibid."
"By once again purporting to do Congress’s job, we
discourage the people’s representatives from taking up for
themselves the task of consulting their oaths, grappling
with constitutional problems, and specifying a solution in
statutory text. “Congress can now simply rely on the courts
to sort [it] out.” Tennessee v. Lane, 541 U. S. 509, 552 (2004)
(Rehnquist, C. J., dissenting).2"
"The Court’s conjecture does not stop there. After guess-
ing what legislative scheme Congress would have adopted
in some hypothetical but-for world, the Court tasks lower
courts and the parties with reconstructing how executive
agents would have reacted to it. On remand, we are told,
the litigants and lower courts must ponder whether the
President would have removed the Director had he known
he was free to do so. Ante, at 35. But how are judges and
lawyers supposed to construct the counterfactual history?
It is no less a speculative enterprise than guessing what
Congress would have done had it known its statutory
scheme was unconstitutional. It’s only that the Court pre-
fers to reserve the big hypothetical (legislative) choice for
itself and leave others for lower courts to sort out."
Consider the guidance the Court offers. It says lower
courts should examine clues such as whether the President
made a “public statement expressing displeasure” about
something the Director did, or whether the President “at-
tempted” to remove the Director but was stymied by lower
courts. Ibid. But what if the President never considered
the possibility of removing the Director because he was
never advised of that possibility? What if his advisers
themselves never contemplated the option given statutory
law? And even putting all that aside, what evidence should
courts and parties consult when inquiring into the Presi-
dent’s “displeasure”? Are they restricted to publicly availa-
ble materials, even though the most probative evidence may
be the most sensitive? To ascertain with any degree of con-
fidence the President’s state of mind regarding the Director,
don’t we need testimony from him or his closest staff?
The Court declines to tangle with any of these questions.
It’s hard not to wonder whether that’s because it intends for
this speculative enterprise to go nowhere. Rather than in-
trude on often-privileged executive deliberations, the Court
may calculate that the lower courts on remand in this suit
will simply refuse retroactive relief."
"Were it not for that pro-
vision, they suggest, the President might have replaced one
of the confirmed Directors who supervised the implementa-
tion of the third amendment, or a confirmed Director might have altered his behavior in a way that would have bene-
fited the shareholders."
Schnabel, ANY type of monetary harm inflicted on the shareholders by the inability of the POTUS to replace the confirmed FHFA Director should be able to see the light of day in the 5th Circuit Federal District Courtroom. Don't you think that the shareholders would have been MUCH BETTER OFF BECAUSE DJT WANTED TO INSTALL A FHFA DIRECTOR AT THE VERY BEGINNING OF HIS TERM, SAY ONE THAT WOULD FOLLOW HERA, LIKE MC?
Think just how far along we would be in the recap and release process HAD DJT BEEN ABLE TO PUT IN HIS OWN LIKE MINDED FHFA DIRECTOR INSTEAD OF HAVING TO WAIT FOR MEL WATT TO LEAVE! Wouldn't it have caused financial harm to the shareholders, since MC was able to get SM to agree to allow retaining earnings by the gses, after they had agreed to the $25B?
I'm sure there is some documents floating around early on in the DJT ADMINISTRATION that shows at least some discussion as to whether or not they thought they could oust Mel Watt but decided they couldn't because of the unconstitionally insulated FHFA Director provision in HERA.
I think Kagan said that because the 5th Circuit EnBanc Panel ruling (with I believe a 1 vote majority) thought that ONLY prospective relief in the form of striking the for cause provision was appropriate. Do you remember during orals, a high pitched female Judge said towards the end of the hearing,"We know what the POTUS wanted because he wouldn't have had his Treasury Secretary sign the nws!", thus she was implying that somehow the POTUS wasn't harmed by the unconstitionally insulated FHFA Director. But that can be debated now at trial.
Was the 4th Amendment to no longer sweep the gses profits into the UST a direct result of the Collins litigation, were it stopped the SCOTUS from issuing an injunction to halt the quarterly cash sweeps of profits or was it to not give JB access to UNAPPROPRIATED funds?
"Or suppose that the President had made a public
statement expressing displeasure with actions taken by a
Director and had asserted that he would remove the Direc-
tor if the statute did not stand in the way. In those situa-
tions, the statutory provision would clearly cause harm."
Isn't this EXACTLY what happened here, O'Bama said he couldn't fire Lockhart because the HERA said I can't replace him!
"Accordingly, continuing to implement
the third amendment was a decision that each confirmed
Director has made since 2012, and because confirmed Di-
rectors chose to continue implementing the third amend-
ment while insulated from plenary Presidential control, the
survival of the shareholders’ constitutional claim does not
depend on the answer to the question whether the Recovery
Act restricted the removal of an Acting Director."
"For all these reasons, we hold that the Recovery Act’s re-
moval restriction does not extend to an Acting Director, and
we now proceed to the merits of the shareholders’ constitu-
tional argument."
"Having found that the removal restriction violates the
Constitution, we turn to the shareholders’ request for relief.
And because the shareholders no longer have a live claim
for prospective relief, see supra, at 19, the only remaining
remedial question concerns retrospective relief."
"We
therefore see no reason to hold that the third amendment
must be completely undone.
That does not necessarily mean, however, that the share-
holders have no entitlement to retrospective relief. Alt-
hough an unconstitutional provision is never really part of
the body of governing law (because the Constitution auto-
matically displaces any conflicting statutory provision from
the moment of the provision’s enactment), it is still possible
for an unconstitutional provision to inflict compensable
harm. And the possibility that the unconstitutional re-
striction on the President’s power to remove a Director of
the FHFA could have such an effect cannot be ruled out.
Suppose, for example, that the President had attempted to
remove a Director but was prevented from doing so by a
lower court decision holding that he did not have “cause” for
removal. Or suppose that the President had made a public
statement expressing displeasure with actions taken by a
Director and had asserted that he would remove the Direc-
tor if the statute did not stand in the way. In those situa-
tions, the statutory provision would clearly cause harm.
In the present case, the situation is less clear-cut, but the
shareholders nevertheless claim that the unconstitutional
removal provision inflicted harm. Were it not for that pro-
vision, they suggest, the President might have replaced one
of the confirmed Directors who supervised the implementa-
tion of the third amendment, or a confirmed Director might have altered his behavior in a way that would have bene-
fited the shareholders.
The federal parties dispute the possibility that the uncon-
stitutional removal restriction caused any such harm. They
argue that, irrespective of the President’s power to remove
the FHFA Director, he “retained the power to supervise the
[Third] Amendment’s adoption . . . because FHFA’s coun-
terparty to the Amendment was Treasury—an executive
department led by a Secretary subject to removal at will by
the President.” Reply Brief for Federal Parties 43. The par-
ties’ arguments should be resolved in the first instance by
the lower courts.26"
"26The lower courts may also consider all issues related to the federal
parties’ argument that the doctrine of laches precludes any relief. The
federal parties argue that Treasury was prejudiced by the shareholders’
delay in filing suit because, for some time after the third amendment was
adopted, there was a chance that it would benefit the shareholders. Ac-
cording to the federal parties, the shareholders waited to file suit until it
became apparent that the third amendment would not have that effect.
The shareholders respond that laches is inapplicable because they filed
their complaint within the time allowed by the statute of limitations, and
they argue that their delay did not cause prejudice because it was “math-
ematically impossible” for Treasury to make less money under the Third
Amendment than under the prior regime. Reply Brief for Collins et al.
4–5 (emphasis deleted). We decline to decide this fact-bound question in
the first instance."
Looks like Melvin "the skirt chaser" Luther Watts became the confirmed director of FHFA on December 10, 2013. Why do we care? Because in the only relief granted to the Collins Plaintiffs: "If the statute does not restrict the removal of an Acting
Director, any harm resulting from actions taken under an Acting Di-
rector would not be attributable to a constitutional violation. Only
harm caused by a confirmed Director’s implementation of the third
amendment could then provide a basis for relief."
"After the third amendment took effect, the companies’ fi-
nancial condition improved, and they ended up transferring
immense amounts of wealth to Treasury. In 2013, the com-
panies paid a total of $130 billion in dividends. In 2014,
they paid over $40 billion. In 2015, they paid almost $16
billion. And in 2016, they paid almost $15 billion.9 These
payments totaled approximately $200 billion, "
So it looks like the maximum relief in the Collins case would be from: 4Q13 to any and every quarter that the nws was authorized to be swept into the UST's coffers BY A SENATE CONFIRMED FHFA DIRECTOR.
Very well said! That's what I like about the equity markets, all these people making individual and group decisions to buy, sell, and hold. So from a technical chart traders standpoint, is it screaming buy, sell, or hold? You know like the 50 day, 200 day signals, or is it mixed or do you know?
One of the Plaintiffs in one of the surviving cases against the Government! Great timing on getting out and coming back in. GLTU!
Well you'd be surprised at just how relevant and effective both the NAR and the MBA are with their lobbying machines. Do they care about the Secondary Mortgage Market? Yes, and they know exactly how to get their message across to the relevant government decision makers. I think originally they wanted to hobble the gses as much as possible, looking for an explicit government guarantee (NAR) and in the case of MBA to move in on the gses business model. But lately they seem to have finally realized that a well capitalized Secondary Mortgage Market is good for them.
Why do think they are irrelevant?
NAR is continuing to advocate for more lender access to investor and second home loans and the utility model:
WASHINGTON (June 23, 2021) – National Association of Realtors® President Charlie Oppler issued the following statement in response to the Supreme Court's ruling on the leadership structure at the Federal Housing Finance Agency.
"NAR has appreciated Director Calabria's willingness to address complex issues and advance GSE reform conversations over the past two years," said Oppler, a Realtor® from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby's International. "While the agency has also worked tirelessly to uphold a safe, stable mortgage market throughout the pandemic, NAR has concerns that recent FHFA policy changes could jeopardize the availability of mortgage credit in the future. Regardless of any potential leadership changes on the horizon, Realtors® will continue working with the FHFA to advance our utility model for GSE reform as conservatorship ends."
NAR also responded to reports that Sandra Thompson, previously the Division of Housing Mission and Goals' deputy director, will assume the role of interim director at the FHFA in the wake of Wednesday's Supreme Court ruling.
"America's Realtors® congratulate Sandra Thompson on her appointment to lead the FHFA," Oppler continued. "We know that her experience at DHMG and the commitment she's shown to incorporating feedback from across the industry will serve the agency well in the effort to protect the safety and soundness of our nation's housing finance system. We look forward to continuing our work with the Acting Director as we seek to ensure all U.S. homebuyers, especially those in underserved communities, have access to affordable mortgage credit."
The National Association of Realtors® is America's largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.
"With the SCOTUS secs is on behind us - listen to the man that many think will be Director Calabria’s replacement, Mark Zandi. He discusses the priorities that a Biden appointed Director would be likely pursue."
https://mobile.twitter.com/tim_rood_?cn=ZmxleGlibGVfcmVjcw%3D%3D&refsrc=email
Asking any Judge for $30B is a big ask (but not when they've stolen $124B!) and the SCOTUS gave zero credence to a very logical and well reasoned answer to the "may be in the best interests of the FHFA" INCIDENTAL POWERS under HERA by J. Brown and the 5th Circuit EnBanc Panel ruling. That the SCOTUS is letting the tail wag the dog here is just wrong. Two well known sayings from historic US Supreme Court decisions say, "Congress doesn't hide elephants in mouse holes" and "You don't hang the muffler on the tail pipe."
But it is whatever the majority opinion at the SCOTUS says it is and that's the way they want it to go.
We'll have to watch and see if he picks Susan Wacher? to replace Sandra Thompson, the current Acting Director. I think fairly recently (Dec 20?) Susan published a piece (funded by the NAR?) that touted the Utility Model as a possible way to exit this almost 13 year conservatorship.
The gses may end up on the back burner for awhile as the US and world deal with the Cov and it's aftermath. In the meantime we build capital on the balance sheet until the government decides it's next move on the never ending saga of what to do with the gses.
To endorse the blatant robbery of the shareholders AND to buy into the death spiral bullshit purely defies both logic and common sense! Unbelievable! This saga is almost like a surreal comedy, EXPECT WE AIN'T LAUGHING and the major business press could care less that two private corporations are being nationalized right in broad daylight and in front of everyones nose! WTF!
Here's some May 2021 Volume Numbers for Freddie:
May 2021 Highlights: ? The total mortgage portfolio increased at an annualized rate of 8.6% in May. ? Single-family refinance-loan purchase and guarantee volume was $57.1 billion in May, representing 66% of total
single-family mortgage portfolio purchases and issuances. ? The aggregate unpaid principal balance (UPB) of our mortgage-related investments portfolio decreased by
approximately $15.9 billion in May. ? Freddie Mac mortgage-related securities and other mortgage-related guarantees increased at an annualized rate
of 12.9% in May. ? Our single-family delinquency rate decreased from 2.15% in April to 2.01% in May. Our multifamily delinquency
rate decreased from 0.20% in April to 0.19% in May. ? The measure of our exposure to changes in portfolio value (PVS-L) averaged $21 million in May. Duration gap
averaged 0 months. ? Since September 2008, Freddie Mac has been operating in conservatorship, with the Federal Housing Finance
Agency (FHFA) acting as Conservator.
If the Feds, the MBA, NAR, NAHB, and Americans ever want private capital in a 1st loss position and a vibrant set of gses to better and more effectively function as a secondary mortgage market buyer (and not as a financially hobbled arm of the government) then, option C seems like the best path forward. I think for a long time the MBA, NAR, and NAHB, enjoyed the Nationalization as a better approach, but now they seemed to have shifted to getting the gses out of government control, especially given last March 2020. They could flip their position again given the SCOTUS blessing of the Nationalization and if they get their preffered FHFA Director in charge.
From TH on the current administrations options: "First of all, I’m sure the Court felt no need to address the implications for ending Fannie and Freddie’s conservatorships when it made its ruling on the APA and constitutional issues. On the issue of political cover, I don’t know how the Biden administration will think about that. Right now it’s in “no man’s land.” The Trump administration began a recap and release process with the January letter agreement suspending the sweep indefinitely (while continuing the liquidation preference indefinitely as well–a fact whose significance seemed to have escaped the Justices when they claimed this suspension mooted the request for a prospective remedy). But with the loss at SCOTUS, you now have two companies who are allowed to build their earnings but have no hope of accessing the capital markets because all of their past accumulated earnings belong to Treasury. As I noted elsewhere, the Biden administration has three ways it can undo this knot: (a) nationalize Fannie and Freddie, and keep the right to their income stream in perpetuity, as it now has with the liquidation preference, (b) “wind them down and replace them” (and we know how past attempts to do that turned out, or (c) deem the senior preferred to be fully paid, cancel the liquidation preference, and release them. My bet is the third option, and their “cover” for that would be to declare that this is the best public policy for the mortgage market, and the nation."
I think TH hinted at this yesterday and expressed a fear of this WAY before the ruling yesterday, that Justice Thomas (and others) would be persuaded by their friends from the Federalist Society to stick it to the gses! Like most Libertarians, the FS HATES GOVERNMENT INTERFERENCE IN "FREE MARKETS" and I am sure many are not fond of Fannie Maes invention whose genesis is from the FDR Administration. Also let's face it, BOTH PARTIES are equal opportunity haters of the twins!
Yesterday, the SCOTUS explained in their decision how they accepted the "Death Spiral" narrative HOOK, LINE, AND SINKER!
Saw this yesterday on TH'S Blog: Soto: "Even if the Biden administration cancelled the SPS liquidation preference and reworked Calabria’s capital rules (two huge if’s), who would invest in the GSEs under HERA’s current SCOTUS-interpreted structure? A new administration could replace the FHFA director immediately and once again sweep funds and rework the capital rule to accomplish anti-GSE policy goals. The agencies are functioning, but the old capital paradigm seems irreversibly broken save legislation to amend HERA.
TH: "You make an excellent point. In the past, investors in Fannie and Freddie common and preferred stock always knew the companies had political risk, but they viewed that risk as being legislative, in the form of a bill adverse to the companies’ interests–which never actually came to pass–not, as it turned out, executive (the conservatorship forced on the companies by Treasury) and certainly not judicial (having the Supreme Court uphold the taking of their profits in perpetuity as legal). It will be the challenge of the Biden administration, or some future one, to figure out how to alleviate the concerns of this now much broader definition of “political risk.”"
The fundamental problem is that the government has the best of both worlds, TOTAL CONTROL OVER EVERY ASPECT OF THESE FORMALLY PRIVATE ENTITIES (INCLUDING THEIR PROFITS) WITHOUT ANY OF THE $7.1T OUTSTANDING OF MBS LIABILITY SHOWING UP ON THEIR BALANCE SHEET. I wonder if Moodys and/or S&P will eventually put the US Government on a negative watch if it drains anymore of the entities capital and directs it to the latest politicians pet project?