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The original date on that article is "September 26, 2008"
No problem.
Obama is referring to the mass refinancing project proposed by Hubbard. That's my guess.
Yes, correct. But I think only Hubbard worked on mass refi.
Obama probably made a reference to Glenn Hubbard:
http://glennhubbard.net/images/stories/pdfs/CBO_public_response-BHM-v3-final.pdf
Game on!
And this too:
http://www.businessweek.com/news/2013-07-23/freddie-mac-said-to-boost-size-of-risk-sharing-mortgage-bonds
From your link
That is the opposite of conservatorship and it violates virtually every limitation that Congress imposed on the government's authority to intervene in Fannie and Freddie.
Awesome podcast! 5 stars.
It probably refers to the Jack Reed bill that only involves *reform*. All rumor so far.
Principal reduction will be ok. Banks might restart the lending process in short order without the second lien burden. More loans, more GSE fees. The trickle down may take a while but it will be a positive for Fannie and Freddie.
Thomas J. Barrack / Colonial Capital.
Thank you, 20c
Are injunctive reliefs retroactive? Do you think it may be granted before Freddie declares a 25 bill dividend scheduled by the CBO for this quarter and the pending portion from Fannie Mae?
Actually, these lawsuits improve the chances of Capuano's bill as they all bring to the surface all the inherent contradictions, the role played by Treasury and the not-all-bright decisions made by beloved DeMarco. This will be the background to Capuano's bill provided it ever reaches the floor.
It is also likely that DeMarco will move forward with the securitization platform, that we will achieve net zero in the process and that Treasury will think twice about its next move.
We are reviewing each lawsuit carefully, but it is important to remember that Fannie Mae and Freddie Mac remain in conservatorship and their financial future remain uncertain except for support from the American taxpayer.
FNMAS strong in premarket.
$5.45 100k 8:07
$5.50 500k
$5.45 400k
$5.45 500k
$5.50 100k 8:30
Net zero has some risks. Remember, capital base for both companies has been set at 3 billion each becoming less every year. Treasury may decide no funding commitment is needed anymore, yet the companies would be technically insolvent and DeMarco could raise the r-ship issue. For "net zero" to really represent net zero -meaning Taxpayers have been paid back and the need for funding commitment is over-, it should be accompanied by simultaneous recapitalization.
This is why the Perry lawsuit comes at the right time.
I completely agree with you that this last lawsuit is a straight shot to the essence of the problem and that it comes at the right time, before all dividends payments cover the funds supplied by Treasury... a risky event/moment. I believe there are enough contradictions in the whole set up to make it a viable challenge with the Supreme Court, if it gets to that. Of course, a move towards Capuano's bill could largely remedy the problem.
The remedy for the government to this is Capuano's bill by which all profits/dividends are converted into repayments of traditional loans at 5%. Together with the elimination of the cap in the capital base.
In a previous post you stated,
Conitnued profitability and earnings are also key as well as the effect of the 600 million annual reduction in the capital reserve.
The Treasury amended the original contract without giving anything in return.
What's important about that line is that if the commitment is terminated both companies will become technically insolvent giving a chance to DeMarco to call for receivership. This is a direct consequence of the 3rd amendment to the PSPA by which companies are only allowed a maximum of 3 billion in capital, and moving lower every year. It is the funding commitment what keeps the companies afloat.
Finishing the commitment is a fine line.
The new lawsuit is good because it brings up the inherent contradiction between HERA 2008 Act, Conservatorship and SPSPA's. Specifically, the wind down intent by Treasury against preserving and conserving by the conservator and the obvious conflict of interest of both GSEs agreeing to the terms set by the Treasury with its 3rd amendment with the conservator's consent.
"There are no damages being sought".
Here you go, Joe.
This is our lawsuit!
http://finance.yahoo.com/news/investment-group-sues-u-over-005245088.html
Joining the rest of the posters.
Obit, could you please help with this given your credibility around here?
A Way To Show Support To Rep. Capuano's Bill:
https://www.popvox.com/bills/us/113/hr2435/comment/support
This is specific support to HR 2435 Capuano's bill. It's ok to include a personal comment about what is what you support. Nicks will be public but any personal information will only be made known to Congress.
Please help spread the word and please apologize any hijacking. Thank you!
Please participate! Send support to Capuano's bill here:
https://www.popvox.com/bills/us/113/hr2435/comment/support
This is specific support to HR 2435 Capuano's bill. Include a personal comment about what is what you support. Your nick will be public but your personal (real) name and address will only be made known to Congress (supposedly, Rep. Capuano). This information is requested on the next steps.
I think this is important. Please show your support and help spread the word. Thank you!
I would add -if I may- that Capuano's 2-pages plan would be a great precursor to any Jack Reed's bill. Provided the senator continues his work on a "reform" bill that could come soon.
Here, straight from the source:
Fannie Mae and Freddie Mac
Last week I introduced H.R. 2435: “Let the GSEs Pay Us Back” Act to give Fannie Mae and Freddie Mac, which are Government Sponsored Entities (GSEs), a mechanism to repay the money that they owe Treasury. During the 2008 financial crisis, they received $187.5 billion in taxpayer funds to stabilize their operations. Now, fees paid by middle-class homeowners to the GSEs are turned over to Treasury to pay down this debt. By the end of this month, Fannie and Freddie will have returned almost $132 billion to Treasury. While this represents 70% of their total debt, NONE of it is counted towards the money owed to taxpayers for the bailout. Unless something changes, average homeowners will continue to be forced to make payments toward a debt that never budges.
Originally, the two entities were required to pay quarterly dividends to Treasury on the borrowed funds. In some quarters, Fannie and Freddie didn’t have sufficient funds and had to borrow from Treasury in order to make their dividend payments to Treasury. Last year, Treasury changed the agreement to fix this. Instead, Fannie and Freddie are now required to return any and all quarterly profits to Treasury. But if all of their profits are turned over to Treasury and counted as dividends, they can’t accumulate enough funds to pay down their debt.
Not counting the GSEs’ payments towards the principal that they owe represents outrageous usury on homeowners. If any other creditor refused to reduce the balance of a paying consumer, we would never tolerate it. AIG, GM and others were given the opportunity to pay back their debt from the financial crisis – and the U.S. has profited from these loans. Fannie and Freddie, and by extension homeowners, should have the same chance.
The GSEs’ payments should also not go towards reducing the national debt as this is a burden to be borne by all Americans. Homeowners should not be forced to pay more than their fair share in the process of national debt reduction.
My legislation requires a new agreement to allow payments that Fannie and Freddie make to Treasury to count towards paying down their debt. It will help make taxpayers whole on the money borrowed and will stop homeowners from being treated as piggy banks. Instead, I hope this bill will provide incentive to hasten reform of Fannie and Freddie. America needs affordable mortgages for average people and strong, safe agencies to provide them.
Regarding the Capuano bill that has already been referred to committee, I think it is best that it goes unnoticed. No media attention. This way it can make the progress we'd like to see with no headwinds or opposition. In this case, splash could be bad.
It is a fine line. Today, Crapo dug deep into the subject (dividends offsetting like in net investment) and he sounded critical of the idea stating that "some analysts and politicians out there" think of the payments as going towards the principal.
20c, if I may, how do you see this playing out in that case? Your best guess... Watt head of FHFA, Jack Lew on top of the SPSPA... Looks like Obama will have the front and back door to the GSEs. A can-do, win-win scenario for D's. Where do we go from here? And how does the C-W bill fit into this picture? Capuano's? Jack Reed's?
It's all good :)
ok. Thanks... just wasted 30 minutes of my time then, lol.
He was introduced as a "good person".
"Very strong choice by BO" by Warren and Jack Reed. Warren, at the end, said she would vote twice for him if she could.
Watt said dividends are just that, do not offset principal and taxpayers are still owed total funds. Undecided on principal reduction. He said he assumes he will be asked to look at this again and that is what he will do, look at how DeMarco arrived at his conclusion. Corker spent 10 minutes justifying his past statements about a technician only capable of running FHFA. Watt's response was good in that he mentioned "good judgment" overrides technical aspects as technicians could not prevent the housing collapse, good judgment and responsibility is what is needed now for the "transition period". Throughout his responses it was clear his tendency towards the "social aspect" of the FHFA/GSEs. Corker made clear he doesn't want a politician in the shoes of the FHFA director. From Watt's answers it appears the single securitization platform will happen and it's coming.
Watt dodged the question from Corker as to "winding down the entities out of business in a reasonable amount of time". Watt's answer to that was that he will listen to all proposals ("cooperate with anybody in the House and the Senate who has ideas about what the next iteration for Fannie and Freddie will be, including Corker's").
He messed up in the last question by Crapo -my view- by not being precise regarding the role of the conservator (preserve and conserve as opposed to using FF funds for social programs, something authorized by statute but in conflict with HERA). But then, he kind of fixed it.
My feelings: he might be better for shareholders *only* because he might consider alternatives to C-W, specially those that may simply reform FF (Reed's) and move FF in a different direction than wind down. But unsure to what extent this means Jrs. are money good.
Mel Watt tomorrow.
Here is his statement
http://www.banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=64c0ae9f-45b8-4629-b414-e1a93cb29d9b
If the above doesn't work try this:
http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Testimony&Hearing_ID=2945bb90-054f-474b-9fa5-aa2b5571e4b0&Witness_ID=ccf06cd2-b9ac-4cd5-9920-4edd800e4c49
Then, click "view file".
From his statement,
...we’ll continue to test risk-sharing models that move housing finance aggressively to the private sector
I tend to think that the letter from Rep. Capuano to the Sec. Treasury where the congressman states in writing that getting overcompensated by the GSEs would equate to usury by the government is a big deal.
This is not the media nor a hedgie pressing for its own interest neither it is some antagonist journalist being vocal. This is a member of the United States government talking to another branch of the same government.
Let's hope that the bill he introduced and was referred to committee on 6/19 leads somewhere.
“ICBA commends the bipartisan efforts of Sens. Warner, Corker, Tester, Johanns, Heitkamp, Heller, Hagan and Moran for introducing legislation to reform the housing government-sponsored enterprises… ICBA appreciates and is encouraged by the inclusion of certain provisions in the bill that would help provide access for community banks to the secondary market without requiring them to take on the additional risk and cost of securitizing loans… ICBA and the nation’s community banks look forward to continuing to work with Congress on this issue as the debate continues.” – Independent Community Bankers of America® (ICBA)
seller's remorse.
Don't tell any of this to Jamie Dimon.
JPM already stole Washington Mutual from its shareholders, whom he hated. With a C-W bill, JPM with its wamu branches everywhere in the thousands will be one of the main beneficiaries of Fannie and Freddie's business while still keeping its back covered by Uncle Sam. Can't get any better.
Unfortunately for us, the AB piece has a bias -we all know who the author is- and will not help in conveying a sense of objectivity and neutral analysis.
The Corker Bill has the most bi-partisan support and IMO will the the basis of GSE reform. I just hope that there will be congressmen or women who will give at least something back to shareholders.
Aggregate refers to the quarterly draws x4 to make a "yearly loan" and then apply the yearly dividends (aggregated) to that principal + interests.
I agree with 20c. This is a very favorable bill for Jrs. if they remove the cap on retained earnings. Also, it will be more than 22b for Fannie, as 20c is not counting the accrual on dividends starting in 08/09.