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Some mention of this nonsense needs to be in the petition! This directly goes against the purpose of a conservatorship and ought to be illegal.
The Obama Administration's stated rationale for amending the bailout terms was to end the circularity of the prior arrangement. Instead of demanding a 10% dividend rate, the Administration said that the Treasury would be content to take whatever profits the GSEs made that quarter. But the Administration made this change right as it was becoming clear that the GSEs were on the cusp of a huge surge in profitability. The Obama Administration's amendment requires the GSEs to distribute all profits to the Treasury as dividends each quarter. This means that instead of paying the Treasury $2.9 billion in dividends, as required under the old arrangement, Fannie Mae will pay $4.2 billion; similarly, Freddie Mac's dividend obligation will increase from the originally scheduled $1.8 billion to $5.8 billion. What was billed as a reduction in the GSEs' financial obligations to the Treasury was actually a pure money grab.
Good question. If they did: I'd say it was corrupt. If it was imposed upon them without their agreement then it should not be considered legitimate. Either way, it is unacceptable now and it needs to change, unless we're missing some details about the dividend payments counting as paying the debt once it reaches a certain point.
This article tells the FNMA situation how it is. The first few paragraphs really pissed me off, especially the part I highlighted in red.
I hope our top-notch lawyer-CEO will make him pay for the profit-sweep.
Fannie Mae announced yesterday that it earned $17 billion in 2012 – the greatest profit it has ever earned in a single year – and is now generating profits at an astounding $30 billion annual rate. At current rates, Fannie and Freddie will combine to contribute enough dividends to the Treasury in 2013 – $40 billion – to cover the costs of the National Institutes of Health (~$30 billion) and half of the Department of Agriculture (~$20 billion). And due to a looming change to the accounting treatment of deferred tax assets, the actual cash payments to Treasury in 2013 could be a multiple of this figure.
The GSEs have become a de facto slush fund for the general fund of the Treasury as a result of the Obama Administration's August 2012 amendment to the terms of the original bailout. Under the original terms, the Treasury committed to buy senior preferred stock in whatever amount necessary to ensure Fannie and Freddie maintained a positive net worth. This senior preferred stock carried a 10% dividend rate; so if the GSEs required a $100 billion bailout, they would owe the Treasury $10 billion per year in dividends.
The problem was that when Fannie and Freddie were hemorrhaging cash, they had to borrow from the Treasury to meet their dividend payments to Treasury. For example, Fannie and Freddie requested $130 billion from the Treasury between 2008 and 2010, which meant they owed the Treasury $13 billion in dividends in 2011. Yet, since both GSEs continued to post large losses, they had to request an additional $13 billion from the Treasury in 2011 to pay dividends on the bailout received in prior years. Through the end of 2012, the GSEs have requested $187.5 billion from the Treasury but $50 billion of this total had been borrowing to pay dividends. On net, the bailout has cost taxpayers $127 billion.
The Obama Administration's stated rationale for amending the bailout terms was to end the circularity of the prior arrangement. Instead of demanding a 10% dividend rate, the Administration said that the Treasury would be content to take whatever profits the GSEs made that quarter. But the Administration made this change right as it was becoming clear that the GSEs were on the cusp of a huge surge in profitability. The Obama Administration's amendment requires the GSEs to distribute all profits to the Treasury as dividends each quarter. This means that instead of paying the Treasury $2.9 billion in dividends, as required under the old arrangement, Fannie Mae will pay $4.2 billion; similarly, Freddie Mac's dividend obligation will increase from the originally scheduled $1.8 billion to $5.8 billion. What was billed as a reduction in the GSEs' financial obligations to the Treasury was actually a pure money grab.
With no plans for a new mortgage finance system, the Obama Administration appears happy to have the GSEs serve as the federal government's profit center for indefinite future. Consider the host of factors driving the GSEs' record profits: (1) Fannie and Freddie enjoy nearly 100% market share; (2) the fees they collect for guaranteeing mortgage payments to investors have more than doubled; (3) their post-2008 book of business consists exclusively of borrowers with sterling credit histories; (4) the more strict underwriting has reduced refinancing rates since fewer borrowers can qualify for new loans, which means the older, higher interest loans owned by Fannie and Freddie carry higher market values; and (5) house prices have risen and unemployment has declined, which places downward pressure on default rates and loss severities. Between 2011 and 2012, Fannie and Freddie's credit expense – i.e. losses on delinquent mortgage loans – fell by 97%, from a combined $37.4 billion to just over $1 billion. Fannie Mae actually reversed its prior losses by $852 million, as it found that it had overestimated losses on delinquent loans. With ultra-low borrowing costs as a result of government ownership, the GSEs collect $40 billion more in interest payments than they pay out to their creditors.
Time to chew up that resistance at 0.90
Good morning indeed.
What's up with all the simultaneous trades in blocks of 2000 shares??
0.9 - 0.91 channel forming here.
Correct me if I'm wrong but won't T/A chartists see these 0.91 cent ceiling-bounces as a bearish sign?
Nice artificial signals.
Correct me if I'm wrong but won't T/A chartists see these 0.91 cent ceiling-bounces as a bearish sign?
Nice artificial signals.
Good morning everyone!
Today I expect to refresh my TDA account balance page many times... and I only ever refresh it when my portfolio (aka: FNMA) goes UP from the previous price where I last refreshed it at.
GL!
$7.77 Trillion
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.
“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”
Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.
SHORT VOLUME!!! 36.35% LOL BURN!!
Date VolShorted High Low Close Chg ShortVol RegularVol
Apr 05 36.35% NA NA NA NA 7,135,913 19,630,407
http://otcshortreport.com/index.php?index=fnma&action=view
Whats going on in congress on Monday? anyone know?
Good morning everyone!
I pray we hold the .80s today
Did you guys just see them arbitrarily regulate the price back into the 0.82s before the open?
Even MMs on ask don't want it lower
I don't know why but that was surprisingly comforting.
Date VolShorted High Low Close Chg ShortVol RegularVol
Apr 04 38.56% NA NA NA NA 6,803,665 17,644,364
Apr 03 34.00% 0.98 0.82 0.90 0.00% 16,623,499 48,887,633
Apr 02 28.77% 1.00 0.81 0.90 +12.50% 27,534,596 95,690,795
http://otcshortreport.com/index.php?index=fnma&action=view
I don't understand how DLNY can be perpetually selling at or below the last price at times.
Just gained 2 real supporting MMs.. @0.875 IMO
Good morning and good luck everyone.
Gapping it down on no volume and already undervalued shares is CRIMINAL.
They need to cover shorts so they gap it down substantially? Maybe we'll see a short squeeze since this is the case?
Any "trades" 90 seconds after 4:00 PM are considered Form-T trades.
Definition of 'Form T'
A form that FINRA requires brokers to use for reporting equity trades executed outside of normal market hours. Form T trades occur during extended hours - before the market opens and after it closes. The objective of the Form T reports is to maintain market transparency and integrity.
Investopedia explains 'Form T'
Trading in extended hours enables investors to react quickly to events that typically occur outside regular market hours, such as earnings reports. However, liquidity may be constrained during such Form T trading, resulting in wide bid-ask spreads. Form T trading is especially suited for overseas investors, since they may conduct the bulk of their U.S. trading when their markets are open but U.S. markets are closed.
The growing popularity of electronic communication networks means that Form T trading is bound to continue increasing.
He doesn't know what the hell he means, veterantrader
That b!tch running DLNY is still shorting.. lol
Volume is coming back around 11:30 @ ~0.895
Noted, you have 3+ new followers including me.
From watching L2 all day, every day..
it seems that the MMs have settled down since after the dip and subsequent partial-recovery this morning.
Prior to the bottom:
MMs were stacking on the ask AT the last price - sometimes below it.
After hitting bottom @ 0.82:
6-7 MMs chased it back up on the bid side, staying 1/100th of a cent below the last price, until it reached 0.90
I saw RAFF was on the bid supporting the recovery - which confirms what someone has said here earlier - "buy when RAFF is on the bid"
Now:
they seem relaxed; the gap between the ask and bid is larger and neither side is as quick to move.
Just look at that gap! 0.005 cents or more
Perhaps they are patiently waiting for the mice to come out of their holes and the volume to pick up again.
Can't wait to see today's short volume that will add to the 112 million total short volume.
I'm seeing higher lows and higher highs pattern since we nearly broke 1$ mark. it is inevitable.
I'd say we will be knocking on the door to dollar land in about an hour.
JMO
I don't understand how DLNY can perpetually be on top of the ASK. Is she shorting still?
If she were shorting, why would she be at the top of the BID at .0001 cents lower than her shorting ASK? I don't see how this can be profitable.
Massive order being filled at .911?
Our net income of $17.2 billion in 2012 is the largest in our history. We were not required
to draw funds from Treasury under the senior preferred stock purchase agreement for any quarter of 2012, and,
during 2012, we paid Treasury $11.6 billion in senior preferred stock dividends. We paid Treasury additional senior
preferred stock dividends of $4.2 billion for the first quarter of 2013.
Page: labelled 2///7 of pdf
The MMs triggered selling at high .79s because every single one of them was between .798 and .80 at high volumes
If I were a day trader trying make a quick flip that would be a no-brainer. Let them hop out so this rocket can get into orbit.
...aaaaand here it goes
I'm guessing that this will be off to the races once we get past 0.78
Last 1 - 1.5 hours will be similar to Thursday IMO, complete with the run and dips which will recover. JMO
Beautifully said, JT.
I can't wait to see who the new CEO is and the plan moving forward but I suspect we will have to piece the puzzle together ourselves.
I would almost be surprised if they didn't bother telling us when they appoint a CEO.. assuming there isn't already a new one.
Either way, they have yet to make even a couple bucks on this new, real, public company due to the Rule 144 and the restraint of selling restricted/controlled shares in the open market.
First of all, give a link for this "article".
I seriously doubt you can produce one since it looks like someone with a kindergarten education wrote that (aka: you [Pennyhunt]).
IF this were true that congress had to vote to release the DTA, which I also doubt - enough to bet my body parts on - they would side with the treasury and the FHFA/conservators due to the fact that they are already doing what is in the best interest of the taxpayers. For god sakes, they have waived the dividend payments on the senior preferred stock for the whole year of 2011 and then some of 2012 just because they knew the money staying in FNMA's pocket would be more valuable to the taxpayers than the dividend payment up front.
Why do accounts that post nothing but nonsense not get banned from this site? Are the subscription payments really that valuable? Or perhaps it's the traffic for advertisements?
-- I digress.
Good luck tomorrow, everyone! Burn in h311 shorts.
Does anyone know whether the settlement money would be the property of the GSEs or the FHFA?
I only am curious because I would like to know if the money could be put toward paying off the debt.
If Fannie gets half - $100 billion - and also recognizes their $64 billion DTA, they would have more than paid off the government.
I imagine (JMO) that they could resume operations as a non-government owned public company as soon as they have paid their debt.
Also, once the debt is paid, would the government-owned senior preferred shares be voided? ..essentially bought back through the payments?
Thanks for any relevant answers/insight in advance.
I wonder what the friction would be if they began the calculation @ 2:00PM, before the big run began, and ended it at the close.
I considered doing this calculation but I don't know how I would determine the total buy volume and total sell volume from a stock chart where I could only determine the actual trade volume without a disparity between bought vs sold.
There still will be news of a new CEO. This is not necessarily over.
For all we know: Sam might be taking the hot seat as CEO.
Additionally, the previous CEO, Marc Wexler is sticking with the company so his connections and experience are still assets to the company.
JMO and GLTA
Proof or get the FCUK out!
wall @0.718 TRAMPLED