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I hear ya...I bought back in at .19...have held this over the years off and on and has always been a good money maker if one is patient.
Thats an interesting thought...I wonder if they can be forced to dump a stock they already hold if it is dropped from the big boards. I know a ton still hold fannie mae and freddie mac...and they have been off the big boards for years.
yeah it is...swan dive into the crap bucket...and I can't find anything to base such a massive drop over the past few weeks.
maybe the loss of the asset sale to Escalera????
why the huge nose dive this morning?
is this a permanent stop for him...or is he just passing through to his final luxury resort location?
U.S. Attorney’s Office February 23, 2012
HARRIS was sentenced to 23 years in prison to be followed by five years of supervised release. STANLEY was sentenced to 16 years in prison to be followed by five years of supervised release. HORTON was sentenced to 4½ years in prison to be followed by three years of supervised release. Each defendant will be jointly and severally liable to repay $44,025,620.06 in restitution to over 5,000 investor victims.
for some...not a bad ROI...for others...they lost a ton of money that will never be recovered.
Is it Time to Buy Low on Fannie and Freddie?
http://deadcompanieswalking.tumblr.com/post/133402445536/is-it-time-to-buy-low-on-fannie-and-freddie
Scott Fearon
Finance Contributor
deadcompanieswalking
9:30 AM
(Only if you’ve got billions to spare, plenty of lawyers, and questionable ethics.)
On the plane ride back from the Booth Investment Management Conference in Chicago on Sunday, I read the great new book by veteran financial journalist Bethany McLean, Shaky Ground: The Strange Saga of the US Mortgage Giants. The book tells the story of Fannie Mae and Freddie Mac, the two massive GSEs (government sponsored enterprises) that buy, package, and sell pools of mortgage loans. It’s a fascinating, if distressing history. Unfortunately, because our government failed to do away with Fannie and Freddie during the 2008 financial crisis, that history is still unfolding.
Fannie Mae was a government agency until 1968, when it was “privatized” by President Johnson, partly to pay for the Vietnam War. Freddie was created by Congress in 1970 to both compete with and complement Fannie. As with so many government programs, the initial purpose of Fannie and Freddie was laudable—to help increase homeownership. But, as with so many government programs, those good intentions have had disastrous unintended consequences.
By early 2008, Fannie and Freddie were guaranteeing 80 percent of all US mortgages, up from 40 percent just a few years earlier. All told, the two GSEs had packaged and sold over $5 trillion of outstanding mortgage debt. Roughly 20 percent of that securitized debt was held by foreign investors, with the central banks of China and Japan owning about $1 trillion between them.
At the time, Fannie and Freddie only had a sliver of capital—about $84 billion—so when the financial crisis exploded and homeowners defaulted on their mortgages in record numbers, both firms quickly required an immediate bailout. The path not taken (and the correct path, in my opinion) would have been to put them into bankruptcy, or receivership. For years, smart folks on the left and the right had wanted to wind down Fannie and Freddie. (In 2011, former Federal Reserve head Paul Voelker said the financial crisis “was the opportunity to get rid of institutions that shouldn’t exist.”) But then-Treasury Secretary Henry Paulson was concerned that if foreign buyers of GSE securitized paper were burned, they might stop buying US Treasury debt (which we need to fund our $18 trillion federal debt) so he opted for conservatorship instead.
The terms of the deal were complicated. The government injected over $200 billion, and took 79.9 percent of both companies. Dividends on Fannie and Freddie preferred shares were suspended, and it was implied that if either company paid these dividends again, the funds would go to the US Treasury. This is where it gets interesting, because both entities are making sizable profits again. As of earlier this year, they had paid $231 billion back to the US Treasury. You’d think their stocks would be climbing back towards pre-crisis highs. Instead, they’re barely above $2. Why? In 2012, the federal government changed the bailout terms and is now directing all of those profits to Washington.
Last week, an article in Fortune magazine dubbed this rule switch a de facto nationalization of Fannie and Freddie. To which I say: so what? Government created these monsters. If it’s not willing to kill them off entirely, why shouldn’t it use their earnings to help pay back some of the staggering national debt?
Not surprisingly, some people on Wall Street see things differently and want those profits transferred from the US Treasury to their own pockets. A handful of a high-profile, multi-billion dollar hedge fund managers sensed an opportunity when the stocks of Fannie and Freddie were trading for pennies. Now, they’re clamoring for the companies’ dividends to flow back to them. Pershing Square’s Bill Ackman has even claimed that Washington has “stolen” those funds. Multiple lawsuits have been filed. Some have already been thrown out and are working their way up the appeals system. If successful, these actions could result in what Bloomberg called “one of the biggest potential payments in history.”
While this saga is far from over, I find it disturbing that these money managers–a number of whom probably agree that Fannie and Freddie should not exist–are legally pursuing a Quixotic quest to enrich themselves at the expense of American taxpayers. I also find it curious, and worth noting, that many of these same managers are also huge investors in Valeant, which we now know has been overcharging taxpayer-funded Medicare and Medicaid for years. Putting these issues aside, I believe ordinary investors should avoid buying the stocks, preferred stocks, or debt of Fannie Mae and Freddie Mac. There are easier ways to make money.
2 COMMENTS
Michael • 18 minutes ago
If one want to learn how to twist the fact. This is an good learning material.
Fact:
1) Government injected 187B not over 200B at that time.
2) Some one cooked the books and made FnF appeared to be on the edge of bankrupt.
3) Hedge fund only ask for the 20% that should belong to them based on the Constitution right of the United State.
You could suggest to avoid to buy these stock etc., but you should get the fact straight before you publish such thing.
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Triumph • 21 minutes ago
You're an idiot.
here is the link where I get my data...I do the math myself.
http://projects.propublica.org/bailout/list
Current as of November 10, 2015
Bailout Recipients
Fannie Mae
RECEIVED FROM TAXPAYERS - $116,149,000,000.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $142,510,000,000.00 BILLION DOLLARS
Profit to the Taxpayer - 22.6959 % - $26,361,000,000 BILLION DOLLARS
Fannie Mae has paid $14,746,000,000 BILLION dollars OVER the 10% dividend to date.
*************
Freddie Mac
RECEIVED FROM TAXPAYERS - $71,336,000,000.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $96,452,000,000.00 BILLION DOLLARS
Profit to the Taxpayer - 35.2081 % - $25,216,000,000 BILLION DOLLARS
Freddie Mac has paid $17,982,400,000 BILLION dollars OVER the 10% dividend to date
This equates to a total paid back to date of $238,962,000,000 BILLION dollars.
Initial bailout total for both GSE's - $187,485,000,000.00 BILLION dollars.
Amount repaid to date for both GSE's - $238,962,000,000 BILLION dollars.
Profit to the "taxpayer" from the GSE's - $51,477,000,000.00 BILLION dollars
Total paid over the initial 10% bailout dividend - $32,728,000,000.00 BILLION dollars
This equates to a total paid to date of 27.4565 % profit to the "taxpayers"
**************
AIG
RECEIVED FROM TAXPAYERS - $67,835,000,000.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $,7286,0967,492.00 BILLION DOLLARS
Profit to Taxpayer - 07.40911 % - 5.025 BILLION DOLLARS
*************
GM
RECEIVED FROM TAXPAYERS - $50,744,648,329.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $39,334,175,747.00 BILLION DOLLARS
GM Still OWES the Taxpayers $11.41 BILLION DOLLARS.
This should clear all that up...link was supplied by hvpatel
http://gselinks.com/Court_Filings/Fairholme/13-465-0249.pdf
Carney is a media whore...his job is to create controversy and get people to read his stuff. He has in the past said positive things about the GSE's...but they are extremely few and far between...he will most often be extremely prejudiced against the GSE's and will blatantly ignore some factual information and pump other extremely speculative information as if it were fact. think of him as a Kardashian...he will say or do about anything for the attention...lol
thank you sir
For Corker to make such a statement is completely irresponsible at best, and quite possibly criminal, as he undoubtedly has access to FnF information that is not public. For a representative of the people to suggest they destroy the value of not just the two most important companies on the planet, but also the value the "taxpayers" hold in the form of the 79.9% ownership in said companies. This guy does NOT need to be in a leadership position.
Why not send your complaint to the DOJ as well. He is suggesting that the "taxpayers" whom happen to own 79.9% of both companies at present...(possibly illegally and yet to be decided) destroy the value of said companies, and in effect, cost the taxpayers more money to "fix" them in the future by destroying both stock value and assets value. Not to mention the many hundreds of thousands of "taxpayers" that hold both FnF in their retirement accounts through their work, or on their own as many do. Most people can not afford that kind of catastrophic loss to their retirement savings. A person in his position of power and influence should NEVER make such an irresponsible statement. If I lived in the state he represents I would certainly be voting for someone...possibly anyone...to replace him.
Is Federal National Mortgage an Incredible Value Stock? 3 Reasons Why FNMA Will Be Tough to Beat
http://finance.yahoo.com/news/federal-national-mortgage-incredible-value-124212975.html
Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.
This method discovered several great candidates for value-oriented investors, but today let’s focus on Federal National Mortgage Association (FNMA) as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for FNMA’s status as a solid value stock below:
Price to Forward Sales for Federal National Mortgage
One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.
With a P/S ratio of 0.02, FNMA investors are paying 2 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of $1.01, and it is safe to say that FNMA is undervalued compared to many of its peers on this important metric.
Related Quotes
Forward PE for Federal National Mortgage
Easily one of the most popular readings for value investors, the forward PE ratio shows us the current price of a stock divided by the full year earnings. Generally speaking, value investors like to see this ratio below 20, though it can vary by industry.
Right now, FNMA has a forward PE of just 1.28, which means that investors are paying $1.28 for each dollar in expected Federal National Mortgage earnings this year. Compared to the industry at large this is pretty favorable as the overall space has an average PE of 9.10 in comparison.
FNMA Earnings Estimate Revisions Moving in the Right Direction
The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow FNMA stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for Federal National Mortgage now.
Over the past 30 days 1 earnings estimate have gone higher compared to 0 lower for the full year. These revisions have helped to boost the consensus estimate as 30 days ago FNMA was expected to post earnings of $1.80 per share for the full year though today it looks to have EPS of $2.01 for the full year.
Bottom Line
For the reasons detailed above, investors shouldn’t be surprised to read that we have FNMA as a stock with a Value Score of ‘A’ and a Zacks Rank #2 (Buy). So if you are a value investor, definitely keep FNMA on your short list as this looks be a stock that is very well-positioned for gains in the near term.
yes sir...I see that now...the "BOD" is hand picked by FHFA
http://www.fanniemae.com/portal/about-us/governance/board-directors.html
Correct me if I'm wrong, but isn't this article just a little inaccurate? This part highlighted below would be true if you remove Freddie and Fannie from being involved with making this agreement as they were/are both under conservatorship at the time the third amendment sweep was initiated, and as such, neither of their BOD's had or currently have any authority to agree to anything. Soooo...that means the agreement was made soley by Treasury and FHFA....which incidentally violates the requirements of conservatorship by FHFA. Fannie and Freddie BOD's had no authority or power to agree to anything.
In August 2012, Fannie, Freddie, the Department of Treasury and Federal Housing Finance Agency (FHFA) amended their deal with what is called “the Third Amendment.” Under the Third Amendment, the government began sweeping all the companies’ profits into the Treasury.
Here is the full story
Fannie Mae Unveils Mortgage Program to Help Minority Borrowers
By Dow Jones Business News, August 25, 2015, 01:45:00 PM EDT
Fannie Mae wants to make it easier for working-class and multigenerational households to get mortgages.
The mortgage-finance company said Tuesday that it will roll out a program this year that lets lenders include income from nonborrowers within a household, such as extended family members, toward qualifying for a loan.
The move is expected to open up mortgage access to a segment of the population that doesn't fit the typical family structure and has had trouble obtaining mortgages. In households of some minority groups, such as Hispanics, it is common to have extended family members contributing income to the cost of housing, though until now that income couldn't be used to help qualify for a loan.
The new program, which is only open to low-income borrowers or those living in low-income or minority-dominated areas, will also in some cases let nonoccupant borrowers, such as parents, contribute income toward qualifying for a loan. Families with boarders will also be allowed to count that rent toward qualifying.
Fannie officials said their research indicated that extended households have incomes as stable or more stable than other kinds of households.
Fannie Mae and competitor Freddie Mac don't make loans. They buy them from lenders, package them into securities and provide guarantees to make investors whole if the loans default.
After the financial crisis, Fannie, Freddie and lenders greatly strengthened the requirements borrowers had to meet to get loans. The moves, such as increasing down-payment and credit-score requirements, had the effect of lowering default rates for homeowners but also shut out from the mortgage market many borrowers who previously qualified.
Over the past couple of years, Fannie, Freddie and lenders have loosened some of those restrictions. In late 2014 and early 2015, Fannie and Freddie, for example, reintroduced programs that allow down payments of as little as 3%, down from the previous 5% minimum.
However, some advocates for increased minority homeownership have argued that the companies should also make changes reflecting the unique characteristics of the minority groups that are making up an increasing share of new households.
Some groups, for example, have pushed the Federal Housing Finance Agency, which regulates Fannie and Freddie, to adopt more modern credit-scoring models that can take into account rent or utility payments, which would help minority borrowers with scant credit history.
Some lenders believe that such changes are critical to addressing the country's changing demographics. In the next decade, three in four new households will be formed by minorities, according to researchers at the Urban Institute.
To qualify for loans under Fannie's new program, borrowers must make less than 80% of their area's median income, buy a home in a low-income census tract, or make less than 100% of the area's median and buy a home in a high-minority census tract or designated natural disaster area.
Fannie said the new program, which starts in late 2015, will allow down payments of as little as 3%.
Write to Joe Light at joe.light@wsj.com
Here is the entire article
Fannie and Freddie Shares Still Look Unappealing
August 22, 2015
By Bloomberg
Fairholme Funds has stepped up efforts to paint the U.S. government’s treatment of Fannie Mae and Freddie Mac as illegal. But scoring even a small victory looks unlikely.
Fairholme has a large investment in the preferred shares of the two mortgage companies. These, along with the common stock, fell sharply last year when a federal district court judge dismissed Fairholme’s lawsuit claiming the government acted unlawfully in 2012 when it changed the terms of its support for Fannie and Freddie so that they now turn over nearly all of their profits to the U.S. Treasury.
In a recent note to shareholders, Fairholme touted its efforts to get a federal appeals court in Washington, D.C., to allow it to submit materials uncovered in a lawsuit before a different federal court, the U.S. Court of Claims, where investors have been arguing that the profit sweep requires compensation under the U.S. constitution.
Fairholme claims the documents reveal the government improperly concealed information from the judge who issued the dismissal. It also says they undermine the notion that the 2012 changes were necessary because the companies were in danger of depleting their government support because they could not afford the fixed 10% dividend.
But those arguments may not matter legally. The district court’s dismissal assumed that Fairholme’s allegations about the government’s motivation were true. Yet it ruled that even so, Fairholme’s lawsuit had to be dismissed because the law authorizing Fannie’s and Freddie’s rescue barred courts from second-guessing the decisions of the conservator, the Federal Housing Finance Agency. The government’s reasons were irrelevant, the court said.
So it seems very likely that the appeals court will refuse to consider the new materials, insisting instead that the appeal focus on purely legal questions, not factual or historical ones. If so, the shares might take another tumble.
Write to John Carney at john.carney@wsj.com
Current as of August 12, 2015
Bailout Recipients
Fannie Mae
RECEIVED FROM TAXPAYERS - $116,149,000,000.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $138,151,000,000.00 BILLION DOLLARS
Profit to the Taxpayer - 18.9429 % - $22,002,000,000 BILLION DOLLARS
Fannie Mae has paid $10,387,000,000 BILLION dollars OVER the 10% dividend to date.
*************
Freddie Mac
RECEIVED FROM TAXPAYERS - $71,336,000,000.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $92,552,000,000.00 BILLION DOLLARS
Profit to the Taxpayer - 29.7409 % - $21,216,000,000 BILLION DOLLARS
Freddie Mac has paid $14,080,000,000 BILLION dollars OVER the 10% dividend to date
This equates to a total paid back to date of $230,703,000,000 BILLION dollars.
Initial bailout total for both GSE's - $187,485,000,000.00 BILLION dollars.
Amount repaid to date for both GSE's - $230,703,000,000 BILLION dollars.
Profit to the "taxpayer" from the GSE's - $43,218,000,000.00 BILLION
**************
AIG
RECEIVED FROM TAXPAYERS - $67,835,000,000.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $,7286,0967,492.00 BILLION DOLLARS
Profit to Taxpayer - 07.40911 % - 5.025 BILLION DOLLARS
*************
GM
RECEIVED FROM TAXPAYERS - $50,744,648,329.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $39,334,175,747.00 BILLION DOLLARS
GM Still OWES the Taxpayers $11.41 BILLION DOLLARS.
The US Constitution: 14th Amendment
http://www.14thamendment.us/amendment/14th_amendment.html
Fourteenth Amendment to the US Constitution - Rights Guaranteed Privileges
and Immunities of Citizenship, Due Process and Equal Protection
AMENDMENT XIV of the UNITED STATES CONSTITUTION
Passed by Congress June 13, 1866. Ratified July 9, 1868.
Section 1. All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
https://www.law.cornell.edu/wex/due_process
Due Process
Introduction
The Constitution states only one command twice. The Fifth Amendment says to the federal government that no one shall be "deprived of life, liberty or property without due process of law." The Fourteenth Amendment, ratified in 1868, uses the same eleven words, called the Due Process Clause, to describe a legal obligation of all states. These words have as their
central promise an assurance that all levels of American government must operate within the law ("legality") and provide fair procedures. Most of this essay concerns that promise. We should briefly note, however, three other uses these words have had in American constitutional law.
Incorporation
The Fifth Amendment's reference to “due process” is only one of many promises of protection the Bill of Rights gives citizens against the federal government. Originally these promises had no application at all against the states. Did the
Fourteenth Amendment change that? In the middle of the Twentieth Century, about a century after its adoption, a series of Supreme Court decisions found that the Due Process Clause "incorporated" most of the important elements of the Bill of
Rights and made them applicable to the states. These decisions almost obliterated any difference between the Bill of Rights and the Fourteenth Amendment. If a Bill of Rights guarantee is "incorporated" in the "due process" requirement of the
Fourteenth Amendment, state and federal obligations are exactly the same. The right to a jury trial, to take just one example, means the same in state and federal courts; there are no differences about the number of jurors required, whether they
have to be unanimous in their verdicts, and so forth.
The promise of legality and fair procedure
While the text of the due process clause is extremely general, the fact that it appears twice makes clear that it states a central proposition. Historically, the clause reflects
the Magna Carta of Great Britain, King John's thirteenth century promise to his noblemen that he would act only in accordance with law (“legality”) and that all would receive the ordinary processes (procedures) of law. It also echoes that country's Seventeenth Century struggles for political and legal regularity, and the American colonies' strong insistence during the pre-Revolutionary period on observance of regular legal order. The requirement that government function in accordance with law is, in itself, ample basis for understanding the stress given these words. A commitment to legality is at the heart of all advanced legal systems, and the Due Process Clause often thought to embody that commitment. The clause also promises that before depriving a citizen of life, liberty or property, government must follow fair procedures. Thus, it is not always enough for the government just to act in accordance with whatever law there may happen to be. Citizens may also be entitled to have the government observe or offer fair procedures, whether or not those procedures have been provided for in the law on the basis of which it is acting. Action denying the process that is “due” would be unconstitutional. Suppose, for example, state law gives students a right to a public education, but doesn't say anything about discipline. Before the state could take that right
away from a student, by expelling her for misbehavior, it would have to provide fair procedures,
i.e. “due process.”
Equal Protection
Equal Protection: An Overview
The Equal Protection Clause of the 14th amendment of the U.S. Constitution prohibits states from denying any person within its jurisdiction the equal protection of the laws. See U.S. Const. amend. XIV. In other words, the laws of a state must treat an individual in the same manner as others in similar conditions and circumstances. A violation would occur, for example, if a state prohibited an individual from entering into an employment contract because he or she was a member of a particular
race. The equal protection clause is not intended to provide "equality" among individuals or classes but only "equal application" of the laws. The result, therefore, of a law is not relevant so long as there is no discrimination in its application. By denying states the ability to discriminate, the
equal protection clause of the Constitution is crucial to the protection of civil rights. See Civil Rights. Generally, the question of whether the equal protection clause has been violated arises when a state grants a particular class of individuals the right to engage in an activity yet denies other individuals the same right. There is no clear rule for deciding when a classification is unconstitutional. The Supreme Court has dictated the application of different tests depending on the type of classification and its effect on fundamental rights. Traditionally, the Court finds a state classification constitutional if it has "a rational basis" to a "legitimate state purpose." The Supreme Court, however, has applied
more stringent analysis in certain cases. It will "strictly scrutinize" a distinction when it embodies a "suspect classification." In order for a classification to be subject to strict scrutiny, it must be shown that the state law or its administration is meant to discriminate. Usually, if a purpose to
discriminate is found the classification will be strictly scrutinized if it is based on race, national origin, or, in some situations, non U.S. citizenship (the suspect classes). In order for a classification to be found permissible under this test it must be proven, by the state, that there is a compelling
interest to the law and that the classification is necessary to further that interest. The Court will also apply a strict scrutiny test if the classification interferes with fundamental rights such as first amendment rights, the right to privacy, or the right to travel. The Supreme Court also requires states
to show more than a rational basis (though it does not apply the strictly scrutiny test) for classifications
based on gender or a child's status as illegitimate.
The 14th amendment is not by its terms applicable to the federal government. Actions by the federal government, however, that classify individuals in a discriminatory manner will, under similar circumstances, violate the due process of the fifth amendment.
See U.S. Const. amend. V.
they haven't done away with the div....they actually increased it a tiny bit.
yes ma'am...DARPA does have a variety of contests periodically...depends on whats going on in the world....how to resolve a technical problem... or....could be something with robotics....cyber security...GPS technology....how to build a better chair.....you never know what they will come up with.....they vary over a wide spectrum of fields.
yeah...I thought it was funny as well...lol. Some quick research came up with this.
http://12160.info/profiles/blogs/itanimullicom-ltlt-the-facts
I decided to forward the domain Itanimulli.com domain to the NSA as a joke... kind of like a rickroll + shock site. I registered the website years ago precisely because it does spell Illuminati backwards, but didn't really do anything with it for a long time. When I had the idea to forward the domain to the NSA I couldn't pass it up, and couldn't stop laughing...
I don't believe that the Illuminati actually exists, and only one black helicopter has ever buzzed my house (that's a whole other story). I'm not sure what the New World Order Plan is, but if you have more information, I'll gladly tell you what I think of it.
I am not an employee of the NSA or DARPA, though I have participated in several DARPA contests including the 2 Grand Challenges, the Urban Challenge and the recent Network Challenge.
Thanks for your interest,
John Fenley
if you own the website, you can link it anywhere you want...as long as you don't pizz off the linked site. I doubt the NSA gives a crap about it.
the guy was sooooo full of himself and all his conspiracy theories...I bet if he had enough working brain cells, he would take credit for "exposing" this.....and proclaim it's some sort of covert personal attack on him in some twisted way...lol
Typing 'illuminati' backwards into the address bar, followed by '.com', will take you to U.S. government's National Security Agency
Bruce Berkowitz's Fairholme Fund - Ownership of Fannie Mae and Freddie Mac preferred stock
http://www.valuewalk.com/2015/07/fairholme-skewers-government-on-fannie-mae/99999/
Today, shareholders of The Fairholme Fund collectively own $3.4 billion liquidation value of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) preferred stock. That means each shareholder effectively owns approximately $25,000 (on average) of two of the most profitable franchises in America.
Yet for reasons that are not entirely understood, some in government apparently want their friends in the mortgage-industrial complex to take for free what you, the shareholders of these companies, paid for with cash. So we continue to search for the truth:
Why did federal regulators design a financial support program for Fannie and Freddie on the basis of academic estimates of future performance rather than tried and true statutory accounting and claims-paying ability (which is the standard for all regulated mortgage insurers)?
Why did federal regulators require Fannie and Freddie, while in conservatorship, to purchase $40 billion per month in underperforming junk bonds from competitors?
Why did federal regulators force Fannie and Freddie, while in conservatorship, to participate in Treasury’s Home Affordable Modification Program (HAMP) and Home Affordable Refinance Program (HARP), which resulted in more than $46 billion of losses that the companies would not have otherwise incurred?
Why did mortgage-backed securities issued by Fannie and Freddie perform dramatically better than private label securities issued by big banks throughout the financial crisis?
Why did federal regulators settle litigation cases initiated by Fannie and Freddie against major financial institutions for significantly less than what other similarly situated plaintiffs recovered?
Why did federal regulators seize more than $18 billion in litigation proceeds recovered by Fannie and Freddie to date?
Why did federal regulators order Fannie and Freddie to delist their securities from the New York Stock Exchange in 2010?
Why did federal regulators prohibit Fannie Mae from selling $3 billion of Low Income Housing Tax Credits to third-party investors?
Why were Fannie and Freddie, while in conservatorship, forced to divert billions of dollars in guaranty fees to Treasury to offset the cost of a payroll tax cut?
Why did FHFA, as conservator, force Fannie and Freddie to gift all of their capital and all future earnings to Treasury in perpetuity?
Why were Fannie and Freddie, while in conservatorship, forced to pay “voluntary” cash dividends to Treasury if funds were not available and the regulated entities were “not in capital compliance?”
Why did FHFA force Fannie and Freddie, while in conservatorship, to issue debt in order to monetize their deferred tax assets and pay the proceeds to Treasury in 2013, particularly when FHFA had previously stated that deferred tax assets “[could] not be monetized?”
Why did Fannie Mae CEO Tim Mayapoulos describe the Net Worth Sweep as a “positive change” with “a lot of good in it” in his August 2012 announcement to employees? Was he coerced by federal regulators?
Why has the Securities and Exchange Commission permitted a single controlling shareholder (i.e., Treasury) and its affiliates to simultaneously act as director, regulator, conservator, supervisor, contingent capital provider, and preferred stock investor of two publicly traded companies?
Why do some Treasury officials question the sustainability of Fannie and Freddie’s earnings power in the years ahead, when Treasury’s own 2014 Annual Report indicates that the companies will be c onsistently profitable for each of the next 25 years?
Were certain federal government employees who crafted the Net Worth Sweep acting at the behest of crony capitalists seeking to displace Fannie and Freddie?
As owners, we demand answers to these and many other questions. Administration officials and their beneficiaries respond with alternative narratives that are wholly unsupported by the facts. They delay discovery and judicial proceedings at every opportunity. They deliberately conceal and withhold pertinent information. They conduct the business of government with little regard for the law.
In the Court of Federal Claims, the Federal Housing Finance Agency and United States Treasury produced “final” privilege logs listing 11,292 relevant documents (perhaps 100,000 pages of information) that they will not release – not to the public, not to the Fund’s lawyers under a protective seal, not even to the Courts. The administration’s sweeping effort to veil their conduct in secrecy has not gone unnoticed; The The New York Times Company (NYSE:NYT) recently filed motions before the Court of Federal Claims requesting that various documents, which “have been improperly designated as Protected Information and kept confidential” by the government, be released to the public. In its motions, the Times noted that:
The courts have repeatedly recognized that disclosure of discovery is particularly appropriate when a lawsuit sheds light on the performance of governmental agencies and entities – which is precisely the case here . . . The public’s interest in the underlying facts of this case is undeniable . . . The case directly addresses how the Government is going about recouping public funds used in the bailout and whether other investors are being treated lawfully. The Government should not be able to hide from the public – voters and taxpayers – the facts that were central to the decisions that the Government made as part of the far-reaching effort to safeguard the U.S. economy. To the contrary, access to the evidence will enable the public to understand more fully the decisions the Government has made in the public’s name and to assess the wisdom and effect of those decisions . . . [The defendants’] disregard for the public interest is sadly of a piece with the Government’s decision to make the depositions confidential in the first place. There is no reason that citizens should be denied the ability to effectively monitor this important lawsuit as it unfolds.
Bruce Berkowitz's Fairholme Fund - Fannie Mae & Freddie Mac's illegal 2012 Net Worth Sweep
In the U.S. Court of Appeals (D.C. Circuit), the Fund’s recently filed opening brief explains why the unprecedented and illegal 2012 Net Worth Sweep is antithetical to the fiduciary duties Congress imposed on FHFA as conservator of Fannie Mae and Freddie Mac – and should be vacated. The well-established duties of a conservator prohibit FHFA from running a ward for the government’s exclusive enrichment, at the expense of all other interested parties and completely shielded from judicial review. Common sense dictates that a conservator conserves. In imposing the Net Worth Sweep, the FHFA, as conservator, unlawfully acts as an “anti-conservator.” Eight briefs
from various amicus curiae (“friends of the court”) support the Fund’s case. Here are a few highlights:
Myron Steele, the former Chief Justice of the Delaware Supreme Court, persuasively argues that the Net Worth Sweep is “unenforceable and void ab initio under Section 151 of the Delaware General Corporation Law (“DGCL”). Preferred stock of a Delaware corporation cannot be given a cumulative dividend right equal to all the net worth of the corporation in perpetuity. The Net Worth Sweep is a flatly illegal term for any preferred stock instrument, whether or not held by the federal government . . . Preferred stockholders cannot have a perpetual claim on all the residual earnings of the Companies to the exclusion of common stockholders under Delaware law . . . Because the Net Worth Sweep diverts, in perpetuity, all of the net worth of the Companies (assets minus liabilities) to Treasury, it neither is paid at a ‘rate’ nor is it payable ‘in preference to’ or ‘in relation to’ the dividends payable to other classes or series of stock.”
Thomas Vartanian, a former bank regulatory General Counsel for the federal government, emphasizes that “as a purported method of financing the operations of the companies, the net worth sweep bears no resemblance to any prior financing arrangement ever entered into by the FDIC as conservator. [T]he common and well-understood function of an FDIC conservator is to place the regulated entity into a sound and solvent condition, and to preserve and conserve its assets for the eventual benefit of all shareholders and creditors, so that the entity can be returned to the control of its board of directors and shareholders . . . not an evasion of statutory duties and an end-run around a legal capital structure.”
Michael Krimminger, the former Deputy to the Chairman and General Counsel of the Federal Deposit Insurance Corporation, cogently articulates that, “Nothing in HERA authorizes the de facto nationalization of the Companies, such as occurred here, under the guise of a conservatorship. FHFA acted outside its authority as a conservator because it affirmatively acted to strip, rather than ‘preserve and conserve,’ the assets of the Companies and to bar any prospect that the Companies could return to a ‘sound and solvent’ condition.”
Timothy Howard, the former Chief Financial Officer for Fannie Mae, explains that “unlike the rescues of various commercial and investment banks at around the same time, Treasury directed FHFA to place Fannie and Freddie into conservatorship not in response to any imminent threat of failure, but rather for policy reasons and over the objections of Fannie’s and Freddie’s boards. Once in conservatorship, the Companies’ managements had no role in negotiating the terms on which they would be offered assistance; Treasury and FHFA set these terms unilaterally. Treasury and FHFA [had] an extremely strong incentive to make accounting choices for the Companies that accelerated or exaggerated their expenses and greatly increased their losses, in order to create a large and permanent flow of revenue to Treasury . . . Treasury’s effective nationalization of Fannie and Freddie was a policy decision, and the compensation Treasury granted itself upon taking over Fannie and Freddie was grossly disproportionate to the true economic risk it faced, both at the time and subsequently.”
A brief on behalf of the National Black Chamber of Commerce makes clear that the Net Worth Sweep forces Fannie and Freddie “to operate on the edge of insolvency – even though they would otherwise post billions of dollars in profits annually – until they are subsumed by the federal government . . . Fannie Mae and Freddie Mac play a vital role in minority communities by expanding access to credit and ensuring affordable housing. If allowed to stand, the Government’s ‘Net Worth Sweep’ and winding down of Fannie and Freddie will damage those communities by drying up credit and denying African-Americans and other minorities the opportunity – the dream – of homeownership.”
While common sense and the law are clearly on the Fund’s side, critics continue to obfuscate the facts. Freddie Mac CEO Donald Layton noted recently that the company “might actually begin to do things that would be GAAP-oriented rather than economically oriented.” This is a stunning admission that defies all logic, except in this unprecedented scenario whereby the company’s assets are drained by its regulators. The implications are clear: Fannie Mae and Freddie Mac are purposely being rendered less safe and less sound each quarter – in direct contravention to the conservator’s explicit mandate. Some may think that the regulators are simply suffering from cognitive dissonance given their feverish push for higher capital standards embodied in the Dodd-Frank Act, but there are clear indications of more disturbing elements at work – including greed, spite, and ulterior political motives. Thankfully, our constitutional system includes an independent judiciary.
Despite the progress that the Fund’s portfolio companies have made, price performance has been weak and the gulf between our estimates of intrinsic values and market prices has widened in recent months. History teaches us time and time again that investment prices can experience periods of underperformance before becoming “overnight successes.” Unfortunately, we are not proven market timers. Fortunately, we have high confidence in our company-specific analyses and ample liquidity (cash and cash equivalents comprise 14.3% of the Fund portfolio), and we recognize Mr. Market’s propensity for sudden mood swings.
Onward and upward,
Bruce R. Berkowitz
Chief Investment Officer
Fairholme Capital Management
See full PDF below.
Government Restricting Returns To Fannie Mae, Freddie Mac Shareholders
http://www.certifiedforensicloanauditors.com/articles/02.14/governments-restricting-returns-to-fannie-mae-freddie-mac-shareholders.html
valuewalk.com | February 19, 2014
By Mark Melin
Investors in Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) common stock may have had their fate sealed on December 20, 2010. This is when, unknown to investors, a memo to then-Treasury Secretary Timothy Geithner from the Treasury Department’s Under Secretary for Domestic Finance Jeffrey Goldstein placed restrictions on shareholders receiving earnings from the troubled firms.
Fannie Mae, Freddie Mac: Government not following disclosure rules
That the government would limit a shareholder’s earnings is unusual, but even more eye-opening is the failure to disclose this material information to shareholders, none of which was disclosed in financial filings of Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA), an interesting tidbit first published by Gretchen Morgenson in the New York Times.
The information came to light in a legal filing this month. The failure to disclose material information to investors appears to stand in contrast with U.S. securities rules. “If there is disclosure regarding future Fannie Mae and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) earnings and the administration has a commitment that existing Fannie Mae and Freddie Mac common equity holders will never receive any future positive earnings,” Lewis D. Lowenfels, a securities law expert in New York, was quoted as saying, “this commitment would be material to investors and should be disclosed.”
Morgenson notes that failing to disclose the administration’s harsh treatment of shareholders is disturbing because, when bailing out Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), the Treasury received warrants — option-like securities that rise in value when the shares underlying them do. When investors, hoping for a housing recovery, flocked to the shares and pushed them higher, the value of the warrants increased. As previously noted in ValueWalk, Fannie Mae and Freddie Mac have significantly ramped up in recent years. Fannie Mae’s common stock now trades at $3.06 a share, while it traded at just 34 cents when the memo was written.
“I have been critical of these companies, but this change in the bailout terms seems punitive, especially when considering how other bailout recipients were treated,” Morgenson said. This has led to lawsuits against the government from Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) shareholders, as reported in ValueWalk.
Shareholder court fight seeks nullification of memo, return to 2008 law
With Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) so profitable, and profits going to the U.S. general treasury account rather than investors, the issue is likely to be contentious. Technically Fannie Mae and Freddie Mac still owe the government $189.5 billion, due to changes in the repayment process. Shareholder lawsuits seek to force the government to follow laws that harken back to 2008 and nullify the 2010 memo to Geithner.
Justice Department Readies New Bank Settlements
This is a few months old, but still good to see that more banks are being pursued for mortgage related fraudulent activities.
http://www.onestopbrokers.com/2015/06/05/justice-department-readies-new-bank-settlements/
Posted on 12:23, 05/06/2015 by OneStopBrokers
British banks
Federal and state officials are preparing the next round of billion-dollar mortgage settlements involving U.S. and European banks
Up to nine banks are in line for the next round of billion-dollar payments related to soured mortgages as federal and state officials prepare their next set of cases, people familiar with the matter said.
The Justice Department and state officials, which already have reaped almost $37 billion from the largest U.S. banks, are now targeting U.S. and European banks. Settlements with Goldman Sachs Group Inc. and Morgan Stanley could be finalized as early as late June, these people said.
The settlements relate to securities backed by residential mortgages that plunged in value during the financial crisis. Banks are expected to pay from a few hundred million dollars to $2 billion or $3 billion each, depending on their size and the level of misconduct they allegedly employed in arranging the securities, some of these people said. The deals, which are expected to come individually rather than as a group, are likely to stretch out over months as details are worked out, these people said. Negotiations with most banks are still in early stages, these people said.
The new parade would follow the pacts relating to residential mortgage-backed securities that the nation’s three largest banks by assets— J.P. Morgan Chase & Co., Citigroup Inc.and Bank of America Corp.—paid between late 2013 and summer 2014.
In those cases, the government accused the banks of selling shoddy mortgage securities to investors without fully disclosing their quality.
The Justice Department could pursue settlements with large U.S. regional banks when these settlements are over, in part based on the amount of mortgage-related securities they underwrote and sold, some of these people said.
While regional banks have been large players in mortgages, the trading desks of the largest banks were the ones that sliced and diced mortgages and sold them to investors around the world. The losses on those securities have driven much of the legal morass that followed the banks after the housing market fell sharply.
Other banks expected to settle in coming months include Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC, Royal Bank of Scotland Group PLC,UBS AG and Wells Fargo & Co.
Most of them have disclosed that they are being investigated for mortgage matters, but the timing and size of potential fines haven’t been reported before.
Prosecutors are bringing the cases through the RMBS Working Group, which includes state attorneys general, U.S. attorney’s offices and other government officials. Its name is a reference to residential mortgage-backed securities.
The attorneys general of New York, Massachusetts, Illinois and other states were involved in at least some of the previous settlements and are expected to play a role in the next round. So are the U.S. attorney’s offices for the Eastern District of New York, Colorado and others.
The government has viewed the investigations as a way to hold the banks accountable for wrongdoing that led to the financial crisis. The banks have viewed them as a punishment for activities that they have since stopped and as a distraction from their efforts to ramp up lending and help aid economic growth.
These settlements would represent a passing of the torch to new U.S. Attorney General Loretta Lynch, since settlements with J.P. Morgan, Citigroup and Bank of America were negotiated under her predecessor, Eric Holder.
Morgan Stanley already reached an agreement in principle this year to pay $2.6 billion to the Justice Department and the U.S. attorney’s office of Northern California. Goldman is expected to pay a similar sum in the coming weeks, according to people familiar with the matter.
Morgan Stanley is still negotiating a settlement with the New York attorney general.
Goldman disclosed this year that it had been contacted by the U.S. attorney’s office for the Eastern District of California about a potential civil case, and that the office had “preliminarily concluded” that the bank had broken federal law. The bank said at the time that it was cooperating with regulators and other authorities. The Sacramento office was a key player in the investigation of J.P. Morgan.
Other banks have made similar disclosures. For example, HSBC has disclosed that it received a subpoena from the U.S. attorney’s office of Colorado. HSBC has said it is fully cooperating. Deutsche Bank has said it has received subpoenas and requests for information from regulators and government entities, including the RMBS Working Group, on these matters, is fully cooperating.
Meanwhile, Wells Fargo has said in filings that it is responding to requests for information from government agencies related to the origination, underwriting and securitization of certain mortgages. The bank has produced documents for the Justice Department, but people familiar with the matter say the process hasn’t progressed.
DARRYL HORTON going to halfway house next year
U.S. Department of Justice - VNS - Inmate Number 14557-040
This notice is to inform you that DARRYL HORTON has been approved for placement in a Community Corrections Center (CCC), otherwise known as a halfway house, and will transfer from this institution on February 16, 2016. After the transfer, the inmate will be located at RENAISSANCE CSC in DETROIT, Michigan.
In addition to the information provided regarding this offender's CCC transfer, the following information is relevant to the inmate's eventual release. The inmate is scheduled to release on July 19, 2016. The inmate is not eligible for parole
Citi posts highest profit since financial crisis, shares rise
http://finance.yahoo.com/news/citi-posts-highest-profit-eight-120546462.html
By Neha Dimri and David Henry
(Reuters) - Citigroup Inc, the third biggest U.S. bank by assets, reported its highest quarterly profit since the financial crisis as Chief Executive Michael Corbat's restructuring and cost-cutting efforts paid off and the bank's legal expenses plunged.
Under Corbat, who replaced Vikram Pandit as CEO in 2012, Citi has been selling retail operations in several countries, shrinking its U.S. branch network and disposing of non-core businesses.
The bank's shares rose 3 percent to a six-and-a-half year high of $58.18 on Thursday after its adjusted earnings handily beat analysts' estimates.
Operating expenses in Citicorp, which holds the bank's core businesses, fell 6 percent to $9.8 billion in the second quarter.
Citi shrank the assets of Citi Holdings, which houses businesses it plans to sell, by 22 percent compared with 19 percent in the first quarter. The unit posted earnings of $157 million.
"Through active expense and balance sheet discipline, we are on track to reach our financial targets for the year," Corbat said in a statement.
Corbat set out two years ago to increase Citi's return on assets and make it more efficient. He also aimed to raise the bank's return on equity, but faced hurdles when the U.S. Federal Reserve rejected his capital return plan.
The Fed finally approved the bank's new buyback plan in March and allowed it to raise dividend for the first time since 2008.
Citi's return on average assets was 1.06 percent in the quarter ended June 30, higher than Corbat's target of at least 0.9 percent for the year.
Efficiency ratio in the Citicorp unit was 55 percent, the midpoint of Corbat's target of 53-57 percent.
Revenue from Citi's fixed income business fell 1 percent to $3.06 billion, a much smaller decline than that reported by other Wall Street banks.
Goldman Sachs Group Inc, which reported a steep fall in profit earlier on Thursday, said net revenue from fixed-income, currency and commodity trading plunged 28 percent.
Bank of America Corp's fixed income revenue fell 9.3 percent, while JPMorgan Chase & Co posted a 10 percent drop.
Citi's net income rose to $4.85 billion, or $1.51 per share, from $181 million, or 3 cents per share, a year earlier, when the bank was hit by a $3.8 billion legal charge.
Adjusting for legal costs and some accounting items, earnings rose 18 percent to $4.65 billion, or $1.45 per share, beating the average analyst estimate of $1.34 per share, according to Thomson Reuters I/B/E/S.
Total adjusted revenue fell 1.5 percent to $19.16 billion, coming slightly above analysts' expectations of $19.11 billion.
Current as of July 13, 2015
Bailout Recipients
Fannie Mae
RECEIVED FROM TAXPAYERS - $116,149,000,000.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $138,151,000,000.00 BILLION DOLLARS
Profit to the Taxpayer - 18.9429 % - 22.002 BILLION DOLLARS
Fannie Mae has paid - $10.3871 BILLION DOLLARS OVER the 10% dividend to date.
*************
Freddie Mac
RECEIVED FROM TAXPAYERS - $71,336,000,000.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $92,552,000,000.00 BILLION DOLLARS
Profit to the Taxpayer - 29.7409 % - 21.216 BILLION DOLLARS
Freddie Mac has paid - $14.0824 BILLION DOLLARS OVER the 10% dividend to date
*************
Combined GSE's
This equates to a total paid back to date of - $230.703 BILLION DOLLARS.
Initial bailout total for both GSE's - $187,485,000,000.00 BILLION DOLLARS
Amount repaid to date for both GSE's - $230,703,000,000.00 BILLION DOLLARS
Profit to the "taxpayer" from both GSE's - $43,218,000,000.00 BILLION DOLLARS
This equates to an overage of $24.4695 BILLION DOLLARS combined paid to the Treasury by both GSE's above the "original" 10% dividend.
**************
AIG
RECEIVED FROM TAXPAYERS - $67,835,000,000.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $72860967492.00 BILLION DOLLARS
Profit to Taxpayer - 07.40911 % - 5.025 BILLION DOLLARS
*************
GM
RECEIVED FROM TAXPAYERS - $50,744,648,329.00 BILLION DOLLARS
TOTAL REPAID TO DATE - $39,334,175,747.00 BILLION DOLLARS
GM Still OWES the Taxpayers - $11.41 BILLION DOLLARS.
I agree with you as well...the huge pay raise while in conservatorship does not look to be a responsible move for a company that is supposedly not doing well or still needs help getting their collective $hit together.
On the flip side, everyone KNOWS the GSE's are doing quite well, so the pay raises are a logical progressive move in my thinking.
Also...and this is just my personal opinion...the people at that level don't need the money by any means as they are typically quite wealthy already, and are more tuned to the power and political connections those positions afford them as they move along after they "fix" the company's problems, and pass the reins to the next one in line.
The "compensation" these people get are geared more to feed their ego's and show the rest of their peers they are at the top of their game and are a much needed and indispensable leader that any large corporation (or political position) would jump at the chance to bring on board....they watch each others back to maintain their lofty positions, pay, and power....a "team player" at a much, much higher level.
I think what is most important in this move is that Watt has now contradicted his past stance regarding who makes the decisions for the GSE's and who is in charge. He has made it clear in the past that Treas. called the shots...or the WH...or Congress....anyone but FHFA. This shows he is fully aware of, and has exercised his position of power over the GSE's as the conservator.
I think this is added fuel for the lawsuits to show the GSE's are in a sound and stable condition, and are fully capable of returning to their private company status and be released from conservatoship. Who gives a 550% plus pay raise to a failing or struggling companies' CEO.
This also throws it in the face of Treas., the WH, and Congress as this means FHFA has willfully decided to send them less money...peanuts in comparison to what they deliver in the sweeps...but it's the principle of the act that I think adds to the support of freeing the GSE's....and adds a bit more for the lawsuits to toss on the ever growing pile of reasons to have them released back to the shareholders and terminate the sweep.
FAIRHOLME FUNDS vs THE UNITED STATES
REDACTED VERSION
Case 1:13-cv-00465-MMS Document 168 Filed 06/25/15
https://www.evernote.com/shard/s227/sh/c7501dc9-dfc8-4f47-9273-cce93affa706/f8552ee9495f4917fd84405ff04c051e/res/637007f6-1974-4111-98ce-f7f21e1c400a/13-465-0168.pdf
it usually is....in this case, like with CIM...it may be for the better on down the road. CIM took a bit of a drop after the RS a couple months ago and is now starting to recover. ARR management is not thought of as a stellar group, so we shall see how it works out.
ARMOUR Residential REIT, Inc. Announces Expected Increased Common Stock Dividends in Q3 2015; Reverse Stock Split
ARMOUR Residential REIT, Inc.
6 hours ago
GlobeNewswire
VERO BEACH, Fla., June 18, 2015 (GLOBE NEWSWIRE) -- ARMOUR Residential REIT, Inc. (NYSE: ARR, ARR PrA and ARR PrB) ("ARMOUR" or the "Company") today announced that it expects to increase common stock dividends in Q3 2015 and that its Board of Directors has approved a reverse stock split of ARMOUR's outstanding shares of common stock at a ratio of one-for-eight.
One-for-Eight Reverse Stock Split
The reverse stock split is scheduled to take effect at about 5:00 p.m. Eastern Time on July 31, 2015 (the "Effective Time"). At the Effective Time, every eight issued and outstanding shares of common stock of the Company will be converted into one share of common stock of the Company. In addition, at the Effective Time, the number of authorized shares of common stock will also be reduced on a one-for-eight basis. The par value of each share of common stock will remain unchanged. Trading in ARMOUR's common stock on a split adjusted basis is expected to begin at the market open on August 3, 2015. ARMOUR's common stock will continue trading on the NYSE under the symbol "ARR" but will be assigned a new CUSIP number. The Company believes that existing stockholders will benefit from the ability to attract a broader range of investors as a result of the reverse stock split and a higher per share stock price. In this regard, the Company notes that the average book value of ARMOUR's common stock over the last five trading sessions was approximately $4.00 per share, which is approximately 28% above last night's closing price of $2.87.
As a result of the reverse stock split, the number of outstanding shares of ARMOUR's common stock will be reduced from approximately 350,000,000 to approximately 43,750,000. Concurrently, the authorized number of shares of common stock will be reduced from 1,000,000,000 to 125,000,000.
No fractional shares will be issued in connection with the reverse stock split. Instead, each stockholder holding fractional shares will be entitled to receive, in lieu of such fractional shares, cash in an amount determined on the basis of the average closing price of ARMOUR's common stock on the NYSE for the three consecutive trading days ending on July 31, 2015. The reverse stock split will apply to all of ARMOUR's authorized and outstanding shares of common stock as of the Effective Time. Stockholders of record will be receiving information from Continental Stock Transfer & Trust Company, ARMOUR's transfer agent, regarding their stock ownership following the reverse stock split and cash in lieu of fractional share payments, if applicable. Stockholders who hold their shares in brokerage accounts or "street name" are not required to take any action in connection with the reverse stock split.
Q3 2015 Common Stock Dividends
The Board of Directors of ARMOUR today announced the Company's expected third quarter 2015 cash dividend rates per common share as set forth below.
Month Dividend Holder of Record Date Payment Date
July 2015 $0.04 July 15, 2015 July 27, 2015
August 2015 $0.33 August 17, 2015 August 27, 2015
September 2015 $0.33 September 15, 2015 September 28, 2015
The expected July 2015 dividend rate of $0.04 per common share, which is the same as the Q2 2015 dividend rate, does not reflect the effect of the reverse stock split and would be equivalent to $0.32 per common share on a basis reflecting the one-for-eight reverse stock split. After the completion of the reverse stock split on July 31, 2015, ARMOUR's August 2015 and September 2015 dividend rates are expected to be set at $0.33 per share. As a result, the aggregate dividends per common share that ARMOUR expects to pay in Q3 2015 is an increase over the aggregate dividends per common share that the Company paid in Q2 2015.