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Well, that will not happen. Maybe an angel on the inside will leak something helpful to fnf but the good stuff will never be seen by the public.
never mind my computer was frozen lol
otc frozen again
trading again
Fidelity shows day range with 6.50 as high
Mortgage Rates Hit New 2014 Lows By admin on Friday, October 17th, 2014 | No Comments
MCLEAN, VA–(Marketwired – Oct 16, 2014) – Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates hitting new lows for the year as 10-year bond yields briefly dipped below 2 percent. At 3.97 percent the average 30-year fixed rate is at its lowest level since the week of June 20, 2013 when it averaged 3.93 percent. This was also the last time the 30-year fixed averaged below 4 percent in the PMMS until this week.
News Facts
•30-year fixed-rate mortgage (FRM) averaged 3.97 percent with an average 0.5 point for the week ending October 16, 2014, down from last week when it averaged 4.12 percent. A year ago at this time, the 30-year FRM averaged 4.28 percent.
•15-year FRM this week averaged 3.18 percent with an average 0.5 point, down from last week when it averaged 3.30 percent. A year ago at this time, the 15-year FRM averaged 3.33 percent.
•5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.92 percent this week with an average 0.5 point, down from last week when it averaged 3.05 percent. A year ago, the 5-year ARM averaged 3.07 percent.
•1-year Treasury-indexed ARM averaged 2.38 percent this week with an average 0.4 point, down from last week when it averaged 2.42 percent. At this time last year, the 1-year ARM averaged 2.63 percent.
Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following links for the Regional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.
Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.
“Mortgage rates were down sharply following the decline in the 10-year Treasury yield for the second straight week. Rates are at their lowest levels since June 2013 amidst continued investor skepticism regarding the precarious economic situation in Europe.”
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.
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Posted in Freddie Mac | Tags Freddie mac, Housing, Mortgages | Leave a comment
http://originatortimes.com/
Nader, Epstein on Fannie Mae, Freddie Mac [TRANSCRIPT]
By admin on Friday, October 17th, 2014 | No Comments
Operator: Good day and welcome to today’s Investors Unite Teleconference hosted by Investors Unite Executive Director Tim Pagliara with special guest Mr. Ralph Nader and featuring New York University Law Professor Dr. Richard Epstein. On today’s call, Mr. Pagliara and Professor Epstein will provide an overview and analysis of current litigation challenging the Department of Treasury Conservatorship of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC). I will now turn the conference over to Mr. Pagliara. Please go ahead.
Tim Pagliara: Well, good morning everyone. Thank you for joining us today. We have two distinguished guests. First we have nationally known consumer advocate, author and presidential candidate Ralph Nader. Second, joining us is New York University law professor Richard Epstein. Professor Epstein is a very influential legal scholar and a Laurence A. Tisch professor of law at New York University School of Law. He’s also an adjunct scholar at the Cato Institute, the Peter and Kirsten Bedford Senior Fellow at Stanford University’s Hoover Institution, the James Parker Hall Distinguished Service Professor Emeritus of Law and a Senior Lecturer at the University of Chicago Law School and a policy advisor for The Heartland Institute. He also serves as a consultant to several institutional investors that are concerned with Judge Lamberth’s recent decision. A constitutional law expert, Professor Epstein’s most recent publication is The Classical Liberal Constitution: The Uncertain Quest for Limited Government. So we’re going to have a great program for you this morning and an opportunity for you to ask questions after both of our guests speak, but before I turn the program over to them, I want to give you two brief updates.
First, today we posted a clip of former Federal Housing Finance Administrator Ed DeMarco’s speech at a recent Washington, D.C. forum. We posted it to the website and here’s what it says and the DeMarco clip goes like this. “During my tenure, I believe that the Federal Housing Finance Agency had a responsibility not just to operate the conservatorships according to the law, but to be attentive to the direction the administration and lawmakers were going.” Now, let me read you what HERA says about DeMarco’s role in the Federal Housing Finance Administration. “Federal Housing Finance powers as conservator as outlined in HERA is to take such action as may be, one, necessary to put the regulated entity in a sound and sovereign condition, and two, action that is appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity.” So our point for putting this up on the website is that here we have an unelected bureaucrat like DeMarco deciding what he thought HERA meant and admitting that he thought he could expand upon the law himself based upon conversations he had with members of Congress. The fact is that if Congress wants to change the law, it can do so, but it’s not okay for DeMarco to make laws on his own and with select members of Congress. This is outrageous. It ought to be outrageous to Congress; it ought to be outrageous to the American people, and this is exactly what the litigation is about – the Federal Housing Finance Administration violating its duties as a conservatorship, the unconstitutional taking of shareholder property with no compensation. So you can find this clip of DeMarco on our website, www.InvestorsUnite.org and the accompanying information.
The second point and update that I want to give you today is that yesterday there was a column in The Wall Street Journal defending the administration committing the largest unconstitutional taking in the history of this country. So putting aside the obvious bias against Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) and shareholder rights that The Wall Street Journal has shown throughout this whole process, I’d like to set those records straight about something that John Carney said that was completely inaccurate. He said that the third amendment sweep was required because Fannie Mac and Freddie Mac were insolvent and needed another bailout. The government had to turn over documents, part of this administrative record, in some of the litigation so far and none of those documents show anything to support their claim. In fact, there were no projections or financial analyses whatsoever showing Fannie Mae and Freddie Mac needed more money or that the conservatorship financing from the treasury would be exhausted. This is probably because the government knew they were already profitable in 2012 and would be for the foreseeable future, and I’ll remind you, these are still publicly-traded entities. They still have to file quarterly and annual statements with the Securities and Exchange Commission, and it was less than three months after the implementation of the third amendment sweep that they delayed their filing with the Securities and Exchange Commission, and in the filing when they finally made it in April of 2013, they made the statement publicly on the record, under oath, that they were profitable and they would be profitable for the foreseeable future.
So what Carney said was that there was absolutely nothing to support what he put in his column on the record. The only justification for the sweep is that it was self-serving, it’s unsupported, it’s an after-the-fact declaration by the Treasury and the Federal Housing Finance Administration in 2013 a year after the sweep began and the government had already been sued to undo the sweep as improper. The story never existed before the litigation. In fact, the government’s own documents tell a very different story from the one they’re putting out now. We know that the government first considered taking all of the Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) profits in 2010 when they discussed their policy not to let private shareholders share in future earnings. The New York Times put this memo on their website when Gretchen Morgenson reported on it. Blackstone told the Treasury Department in 2011 that Fannie Mae and Freddie Mac would be profitable and that they would have to deal with the private shareholders. It was only after we saw two quarters of profits in 2012 that the government moved to seize those profits immediately before the enterprises started making enough money to repay the government in full. Now the profits are being taken without any knowledge or any acknowledgement that the Treasury is paid back, and keep this riddle in your head: who borrows $189.5 billion dollars at 10% interest and pays it back in an average of three and a half years? Answer: somebody that didn’t need it in the first place.
So at this point, I’d like to turn the call over to our two guests. Each of them will speak for a few minutes on how they see the state of play given last week’s decision by Judge Lamberth and then we’ll open it up for questions. So now I want to turn it over to you, Mr. Nader, and you have the floor, sir.
Ralph Nader: Thank you very much. I’m going to make the equitable argument which often nourishes legal change whether it’s in the courts or in Congress. This issue is not going to go away with one district court decision by any means. We’ve been involved in investor rights activity since the 1960s as advocates, not as investors, but in this situation, I’m both an advocate in the old style as well as a shareholder, and my shares in Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) were invested before the conservatorship. So that’s my perspective and it’s a very simple set of events that occurred. Before the conservatorship in the spring and summer of 2008, Mr. Lockhart, the head of OFHEO, followed a few weeks later by Chairman Bernanke and Treasury Secretary Paulson, reassured Fannie Mae and Freddie Mac investors – and this is rightly reported – that the two companies were adequately capitalized, inferring of course that there’s nothing to worry about. Within a few weeks, the conservatorship was initiated and the shares plummeted to pennies. This was deception of the first order. If any corporate executives engaged in this, even the slumbering SEC would’ve moved to action, so there is an accountability issue there in terms of the shareholders.
The second event was the unilateral announcement by OFHEO and DeMarco that they were going to delist the shares for the New York Stock Exchange. The Stock Exchange hadn’t indicated any desire. The shares really weren’t below the figure when the danger signals occurred. I think Freddie may have dropped below a dollar, but there was no indication that a demand for delisting was coming. The delisting immediately cost shareholders hundreds and hundreds of millions of dollars because the stock value plummeted after that, and when DeMarco delisted without really any explanation, when he was finally asked, it was to head off legal costs for an eventual delisting, a rather weak argument to be sure, but this is an example of the unbridled discretion that the government thinks it has just because it has carved out something called the conservatorship instead of the bankruptcy.
The third event that was important was the use and abuse of the Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) shareholders. For example, when the government bailed out Citigroup Inc (NYSE:C) and American International Group Inc (NYSE:AIG), they did not vaporize the shareholders. They bailed them out and they gave the remaining shareholders an opportunity to recover. Nobody’s asking for Fannie Mae and Freddie Mac shareholders to be subsidized, just to allow them to exist in whatever future transformation, whether it’s a public utility model or what. Just ask them to exist so they have a chance to recover some of their losses or to benefit from the value, but the government using and abusing the shareholders, by that I mean they needed the shareholders in Fannie Mae and Freddie Mac to get under the 80% barrier, which you all know if they got above the 80%, they would have to assume the huge liabilities of Fannie Mae and Freddie Mac which would increase the federal deficit. The federal deficit issue looms behind a lot of this. Now, the government really is viewing Fannie Mae and Freddie Mac as a cash cow to keep the deficit lower than it ordinarily would be. So here they used the shareholders. The shareholders are necessary to keep the government’s share under 80%, but they’re constantly threatened with being vaporized or stripped of all value completely.
So under equitable law or equitable theory, there’s a responsibility there. You cannot simply use the shareholders and then vaporize them later after you’ve bled the companies of all various profits and returns to the Treasury to pay off the taxpayer which some people think has already been done, some people think is a little questionable, but certainly if it hasn’t been done, it’s on the way. The comparison with Citigroup, AIG and other New York firms that were clearly bailed out directly and indirectly with Citigroup shareholders and AIG shareholders now beginning to recover is another factor in making an equitable argument for allowing the shareholders of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) to survive. That’s generally the argument. For anybody who’s predicting that this is the end of the matter, that Lamberth has made a decision in a cul-de-sac, I think it’s not the full concentric circle that you’ll hear from Professor Epstein and the other federal judge who admires Lamberth is going to go his way. I think that’s a very shortsighted view. This is not going to go away. This is a horrible precedent, by the way, for any future Treasury Department action, any future problem of trying to deal with an economic collapse that started with the financial shenanigans of Wall Street. We’ll leave it at that.
Tim Pagliara: Well, that’s terrific. Thank you, Mr. Nader. Dr. Epstein, you had a really great piece in Forbes last week. What I’d like to do, if you would, please expand upon that article and how you see the legal landscape shaping up in light of last week’s ruling and some of these other developments.
Richard Epstein: Sure, I’m happy to do so. Look, this is, as Ralph said, going to be a very long and complicated saga. Right now there are many other lawsuits involved. There is the one before the Court of Federal Claims before Judge Margaret Sweeney. There is a lawsuit in Iowa and lord knows, there’re probably another 10 and 20, so it’s not as though a single district court opinion is necessarily going to set the sights, although it certainly has had much more influence I think by virtue of being first than its merits would otherwise justify, but I do think it’s important to go back and try to understand the statutory framework with which these particular decisions have been made as well as the particular run-up to the particular case, to this case, and some of the litigation. The first thing to note is in fact that there’s a very complicated statutory system with respect to the bailout and the two separate sets of duties. One set of duty falls upon Ed DeMarco and now Mel Watt with respect to FHFA and then there’s a second set of duties and rights that fall to the Treasury Department and the way in which these two things start to interact I think is a subject of real importance.
The first thing to understand is that what happens is on the bailout side from Treasury, what the basic statute provides is that the Treasury Department has the power in order to benefit the taxpayers – that’s what it says – to enter into transactions with any corporation that is in need of some kind of a bailout. The second provision right after that announces that it can’t force themselves down on these corporations; they have to get an agreement and they don’t talk about whether or not economic duress or some such thing might be involved. I quite agree with Ralph in the AIG case which I regard as very weak by AIG. What happened is they were in a very bad situation, Treasury gave them a very tough deal, they had their own board and they accepted the deal and it turns out they probably would’ve gone under unlike Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) because they were on the hook for a whole variety of obligations with respect to these derivative contracts which would’ve come immediately payable. They have given collateral out to Goldman Sachs and to several other companies and so it wasn’t a question as it is with respect to Fannie Mae as to whether or not you can liquidate in time the mortgages or other assets that you have in order to meet any current liabilities. I think they were probably a cooked goose under these circumstances because the financial underlying situation there was so different from the one that we have here.
So anyhow, this government has this power and then it starts to tell you the things that it has to take into account. Many of these things have to do with the time of the payback, it hast to do with the nature of the securities given, but it also has to do with the obligations which is to make sure that when these bailouts are finished, the companies can be returned in an orderly fashion to the private market. So essentially what the bailout is designed to do is to make sure that these things get back on their feet. The bailout is not, from the government’s point of view, to try to liquidate these things, and so they have this particular power. Now, normally what would happen is they would negotiate with the private directors of the corporation, but Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), unlike AIG, is a chameleon. It’s a government-sponsored enterprise and the more you hear about that term, the more you realize that the status is the source of endless confusion. So if you then look at the case, what they did is they essentially made it very clear that they were going to take over this organization in 2008 and the deal comes through and you look at that particular bailout, you may like it or you may not like it, there’re some difficulties with it, but at least with respect to the current litigation on the third amendment, the basic assumption is that this particular arrangement was perfectly okay, that what happened is that the government took a 10% preferred which became then senior preferred, the old preferred became a new junior preferred that was still common and then the government took the right to acquire 79.9% of the common shares at about $0.00001 cent per share which is not a lot of money at all, to put it mildly.
So this thing goes through for about four years. The original bailout takes place in early September and then on August 17, what we do is we have this thing re-jiggered by the third amendment. I want to stress there is no thing remotely comparable to a third amendment with respect to the situation with AIG and it’s also the case that the AIG had its own board all the way through and when the option came up to join with Starr International in the suit against the Federal Reserve Board of New York, it declined to do so which I think was in fact the right decision. So what the third amendment does is it starts to change everything, but instead of having an amendment which is negotiated by a board of trustees or a director whose sole duty of loyalty is, at it is under corporate law, to the Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) shareholders, what happens is Ed DeMarco and afterwards Mel Watt both announce that they’re representing the shareholders.
But they’re not representing the shareholders. They’re conservators. Their job is to maintain these particular assets and they’re supposed to bargain in a fashion which is adverse to that of the Treasury Department in an [Unintelligible] arrangement, but DeMarco is himself a former Treasury Department employee and what he does in effect with this thing is to sign away the entire company. What happens is this third amendment comes out late afternoon on a Friday, there’s no evidence whatsoever of any financial work that has been done, any due diligence, any study by anybody telling this thing and it becomes inconceivable that whatever the position is of Fannie Mae and Freddie Mac, whether it’s profitable or not profitable, it cannot be in the interest of the shareholders to say “We’re giving you everything that we own in exchange for nothing in return.” John Carney spins this term which says “Look, it’s really terrible because the government was in this dangerous cycle. If they didn’t get the 10% in cash, then you could defer the dividend and make it up to 12% and it turns out therefore you could dig a deeper and deeper hole,” but he forgets to mention – because he’s going to get the economics right – every time you decide to defer a payment, this is actually going to be an implicit cost with respect to the junior preferred and to the common stock because they’re going to have to pay back more money on the principal loan before they could get anything, so it’s not really in their interest to want to do this indefinitely because if it happens indefinitely, they’re going to be out of money.
So what you should try to do is to figure out whether or not there’s any particular problem in this particular case which warrants you to move. At this point, I mean the salient facts that matter the most are that Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) took its last draw in late 2011. Freddie took it in 2011, Fannie Mae took it in early 2012, so you have about a six-month period in which there are no further draws which makes it odd to say that there’s a debt spiral and then within the next year it becomes perfectly clear that $100 billion in excess money is paid over to the Treasury which suggests that the financial situation did not change on August 18; it was probably that way before this was done, and as Ralph said, if you don’t publish your financials on time, it means that you’re trying to conceal something rather than to reveal something. So the government I think has to be put to the proof as to whether or not anything that it says is remotely true on the facts and I think it’s not, but even if this thing were in serious trouble, that is a problem on the Treasury side; it’s not a trouble on Fannie Mae and Freddie Mac’s side. What those conservators have to do is to bargain hard to get whatever they can for the shareholders and then work out some modification that makes sense, but there’s no evidence that any modification turns out to be needed.
So what you do here is you have somebody who is in a very strong position, they have the cash to pay off the 10% interest which is about $18 billion a year and they wanted to, they had a deferral option which Judge Lamberth in an incomprehensible way says it’s a penalty when in fact if you look at the full [Unintelligible] which he doesn’t bother to quote, it ends with the observation that in the event that we defer payments, the dividend rate shall mean 12%. That doesn’t sound like a penalty; it sounds like a definition of provision which is exactly what it is. You want to put a penalty in there, you make them pay the money that they owe like you do on a standard mortgage, and then on top of that, you add a penalty of additional cash. A deferment option at no cost except the 2% interest isn’t a penalty; it’s an option.
So given all of this situation, what does he do? Well, what he does in effect is what the government urges him to do in its brief, and I have to say, I thought the government brief was particularly poor in terms of its candor and its sense. The basic proposition that it wants to make are two: the first one has to do with the way in which you conceptualize this case and the government basically says there’s no case for anybody to bring because if you look at the basic HERA statute, what it says is that the conservator succeeds to all the rights not only of the board of directors themselves, but also the shareholders, and “Since we have all the rights of the shareholders,” they say, “nobody could possibly sue us.” Well, I mean if in fact it really was meant to be the case that you had all the rights of the shareholders, then the statute would be clearly unconstitutional because what you’ve done is you’ve taken all the value of the shares and the only question would be what the valuation was. It cannot be that when you strip assets from a private corporation, that you are immune from all sorts of liabilities with respect to the takings clause. If you can do that, the government could announce any corporation in fact has to surrender its assets by passing a statute which makes it the conservator of General Motors or Apple or any other company on the face of the globe. So it can’t mean that and the correct way to read this particular statute as other courts have done is to say, “Look, when it comes to pursuing claims against third parties, we want the conservator to have a lot of pop.” You can then bring all this stuff back into the company and then we can decide what to do in accordance with the senior preferred stockholder agreement which was entered into in 2008.
So what you do is you say, “Well, there’s no conflict of interest. You have all those rights, but if there is a serious conflict of interest, then the shareholders are in a position to protest what you’ve done and you have to account for them.” You can call this either a breach of fiduciary duty or a takings claim, but in either case what happens is given the manifest of dealing between two branches of the federal government with each other, all the monies that they call a dividend have to be re-characterized. You first get the 10% and there’re now lots of money to pay that off, and then in effect, the rest of them should be treated as a return of capital so that the underlying debt goes down. We don’t want to say and it would be wrong to say that since they paid over now about $150 billion on this thing, that the government has taken $150 billion. No, they’ve paid back the debt and whatever the shares turn out to be worth, that’s what they’re worth after you pay off the rest of the debt and put the company back to the private market in accordance with the original bailout plan.
So what the judge does is essentially he doesn’t even let them speak in court because of this exaggerated reading of the statute. He then has to face the takings claim and basically what he says there is incomprehensible unless you know something about the mysteries of the law, at which point it just becomes wrong. What he says in effect is that there is no cognizable interest in this particular case which is meriting protection. The question you want to ask is what do we mean by a cognizable interest? Cognizable means something which is known or observed, and the term has a perfectly sensible meaning at common law which bears no relationship to the situation here. So typically what happens is there are large numbers of cases in the world where somebody does something that somebody else doesn’t like and he is, in some broad sense of the word, harmed by it, and yet we realize that to take notice of that particular interest in the court, i.e., to call it cognizable, will shut down the entire universe.
So to give you an illustration, if I built a house on my land which blocks you a view, it’s not a cognizable interest because otherwise nobody would ever be able to develop real estate at any time. If I go into business and competition with you and take away your customers by offering them better prices and better products, your losses are not cognizable because otherwise, essentially any incumbent firm would have a monopoly position over its customers. So you say that something is not a cognizable interest when to protect it would lead to very socially destructive results where the norm that one tends to judge this against is whether or not you’re trying to advance or retard a competitive market, the theory being that competition is in fact the optimal way to allocate various kind of resources. Well, that’s what one means by it. Now, what happens in this particular case is the government does the following game. It says that “We’ve got control over this entity because we now are running Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) through FHFA. We’ve now run this sweep, so what we’ve done is we’ve taken away all the dividends and we’ve taken away all the liquidation preferences.” Well, there’s nothing else that a corporation has other than these three kinds of interest, but it says “You know what? We haven’t taken anything because we’ve left you with titles to the shares.”
Well, if that were all that it would take, then the government could do this with respect to anything, and there’s a very instructive case that you all ought to read from very early on called Pumpelly against The Green Bay Company in which what the United States government does is it floods somebody’s land permanently and then it says it doesn’t owe any compensation for the destruction because it didn’t bother to take the title. What the court says quite rightly is not taking title is a terrible way to allow for massive evasions of constitutional responsibility because when the government takes anything, it could always announce it leaves the title in the private owner and then takes all the beneficial interest for itself. Well, that’s what it’s done here. Right now the shares trade at a positive price, but the only value that the shares have depends upon the ability to knock out the third amendment. If in fact the third amendment is good law, then the shares trade at 0.0 price because there’s absolutely nothing whatsoever of value that’s left in the corporation.
So if you can’t do this title cognizable interest game with respect to real estate, you cannot do it with respect to corporations, and when the government puts forward this argument, it is just an open invitation for a complete kind of lawless behavior which his really hard to understand. I mean property law is difficult, I’m certainly going to concede that. I’ve spent the last 40-odd years of my career trying to understand how all these systems get put together, but the crude misunderstandings that pervaded the government’s brief and that pervaded Lamberth’s opinion are not entitled to the slightest bit of respect. So I think I’ve said enough now and I’m happy to turn this open and leave it for questions if that’s what you would like. Tim, back to you.
Tim Pagliara: Alright. Well, thank you, Dr. Epstein. We’ll be queuing up questions and as soon as you’re ready, Operator, jump in and we’ll do that. In the meantime, just a general question for you while they’re getting that ready, Dr. Epstein, the third amendment sweep, there’s been over $200 billion returned back to the treasury. You took notice of the fact that it is reducing the federal budget deficit. We’ve got a court action going on. They say Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) aren’t worth anything, yet they’re keeping the $189.5 billion on the books as an asset. Comment just a minute on the accounting of this and how it differs from the private sector. I mean I’m fascinating these are still publicly-traded companies that do filings with the Securities and Exchange Commission and how they’re able to ignore the traditional rule of law and accounting practice.
Richard Epstein: I mean, look, one of the things that starts out, this goes back to the position that the government has in our simple justice system and this was true not only here, but it was also true for example in the Chrysler bankruptcy where everything was done in an irregular fashion. When people ask me just to evaluate this case, what I tell them as follows is that the government case, in my judgment here, unlike the AIG case, is utterly meritless and therefore it has no greater than a 50% chance of winning. This I think is that the government always gets to play by separate rules vis-à-vis everybody else, and that is certainly evident in this kind of litigation where Judge Lamberth judged out of his way to read everything in their particular favor and it turns out that the government generally wanted [Unintelligible] to go before its own regulatory agencies also [Unintelligible] treated in a much more benevolent fashion. What one really has to understand, this is a kind of comprehensive syndrome here which is, as I like to put it in other litigation that I’ve been involved in, if the government does one thing right and you do one thing wrong, they win. If you do something perfect and the government makes a complete set of blunders, then you have a 50% chance of winning.
So all you’re seeing here is this manifest preference starting to play itself out. Now, it doesn’t work in every case because at the same time that Judge Lamberth has done this, Judge Sweeney has taken a very different position. The argument made against her by the same lawyers who were involved in this case is “Look, we think we can show that there were cahoots between Mr. DeMarco and Mr. Geithner when they put these things out, that they were in elaborate collaboration with one another. At that point, the FHFA loses its status as an independent entity and becomes an arm of the government,” and they said, “We think that we can prove, although the discovery on this may be delayed, that what they allege on their motion to dismiss that these companies were insolvent is a question of fact that you have to prove up, and we’re therefore entitled to take depositions of it.”
So what’s going to happen in this particular situation, just to continue the story for a second, is Lamberth’s decision is now under immediate appeal by Perry Capital at the very least – I don’t know what Fairholme will do – and at the same time this discovery is going forward with some very aggressive [requests]. My hope is that the discovery gets out very quickly because what that will do is change the shape of the thing on the appeal. What Judge Lamberth said is it’s not unreasonable for people to be upset about the fact that $150 billion has gone out of corporate coffers, but he says “I can’t do anything about this, my hands are tied, but if in fact there’s rampant collusion between two branches of government, then in fact I think people will start to take a rather different view of this” because the precedents on the book are already there, the most famous one being the Winstar case which was actually argued by Chuck Cooper in 1996 where it had an identical kind of clause and what they said essentially is when you’re dealing with contracts which is what a senior preferred shareholder agreement is, you use ordinary rules of contract constructions and those rules would certainly cover fiduciary duties and contract modification, and it cannot be an equitable bargain when you give away everything in exchange for nothing. There’s no possible way that the shareholders could win under any future state of affairs given the third amendment, and to say therefore that it managed to make an agreement that include its position along with that of the government which is what the modifications are supposed to do, becomes just a farfetched brief.
Operator: Pardon the interruption, we do have a question from Jody Chen from Bloomberg. Please go ahead, your line is open.
Tim Pagliara: Go ahead, Jody.
Jody Chen: Hi guys, thanks for the time. I was curious, Tim and Ralph – I’m not sure, Richard, if you would have a similar answer to a similar question – have you guys been buying more shares after this massive decline we’ve seen in the past week or so or are you sitting still or selling a bit? How have you been approaching what seems to be something you guys are reading as an overselling of these shares considering there’re still a lot of legal cases and [Crosstalk]?
Ralph Nader: No, I haven’t made any trades since the purchase before the conservatorship agreement.
Tim Pagliara: This is Tim, and I do follow the rules of the Securities and Exchange Commission and so I can’t comment on that.
Richard Epstein: By the way, I have absolutely no knowledge or financial interest in any share of either Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) at any time. I simply look at the legal documents and comment on them. I’m not a trader or an investor or anything of the sort.
Jody Chen: Why not? It sounds like you seem to…
Ralph Nader: Ralph here, I just want to inject. There’s another party here which is the affordable housing people and I mean they see the survival of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) in different terms in terms of not getting rid of them and destabilizing the whole housing market, and that’s why you’re going to see, shall we say, a non-economic interest by the affordable housing people in order to make the government proceed under due process and fairness the way Professor Epstein has been talking about in terms of any eventual reorganization of Fannie Mae and Freddie Mac so that the already skittery housing market doesn’t take another blow.
Richard Epstein: By the way, just let me add something to that. Everyone can have very different views on affirmative action [Unintelligible] affordable housing, and so let me make the following question. There are two pieces of this thing and this is typically in discussions given to one ignoring the other. The piece that gets all the attention is the implicit guarantee that the government makes which allows Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) to lend it below market rates which is true, but if you look at the Community Redevelopment Act, this is a huge requirement that you make 55% of your loans to certain people in preferred categories and so forth with no increase in risk we’re told, which of course is a fantasy. So what happens is the guarantee to some extent is the offset for this lending policy which the federal government puts on. There’s a real lesson here. I do not like mixed entities because you never know whether it’s fish or fowl and one could always say “Oh, this is a government entity” or “This is a private entity,” but one of the reasons why it is that the situation with respect to AIG was resolved much more smoothly was that it was a private corporation and everybody understood that.
In this particular case, the equities early on are much more clouded because you have all the extra burdens of being a government-sponsored entity and all the extra benefits of being a government-sponsored enterprise and as far as I’m concerned, that muddiness creates this indistinct notion and leaves the government people with the efficiency, “Well, we really own this stuff anyhow,” wink, wink, at which point the third amendment tries to make good on that particular claim. It is a matter of incredible audacity. If they had tried to do that I think with the AIG situation, there would’ve been a huge uproar which would’ve taken place, but in this situation, what makes this so appalling in my judgment is that it’s perfect bipartisan. Lamberth is a republican appointee to the district court and the reforms [Unintelligible] to both republicans. We’re trying in the mortgage reforms to wipe out all the equity holders and Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), and what’s going to happen of course is that they want to recapitalize the market going forward and they stiff the claims in this particular case, it will be the end of private funding of mortgage markets. They could perfectly well restructure Fannie Mae and Freddie Mac with the authority that they have right now without going to Congress because if you go back and you look at the certificates of these shares and you look at the agreement, there’s a lot of room there for people to try to change the nature and the organization of these companies which would permit them to actually raise private capital, but it’s not going to happen.
Operator: Pardon the interruption. At this time, if you’d like to ask a question, please press * and 1 on your touchtone phone. You may withdraw your question at any time by pressing the # key. We do have a question from Isaac Boltansky from Compass Point. Please go ahead, your line is open.
Isaac Boltansky: Hey, good morning. Thanks for holding this call. I have two very quick questions and the first I think is for Dr. Epstein. You mentioned the idea of using the discovery process from Judge Sweeney’s court to better inform the appeal. Can you speak for a moment about the timing and how that works? I’ll just ask my second question [Crosstalk] and then I’ll mute my line. Tim and Ralph as well, if you don’t mind, can you spend just one moment talking about what your legislative strategy will be in 2015 and beyond, especially if there is a change in leadership in the Senate? I’ve heard you before say that litigation can influence legislation. I’d like to get your view on how that would work in 2015.
Richard Epstein: Well, I’ll answer my question first because it’s actually part answer to the second question. What happens is the appeals process is drawn out of necessity because you have to file papers, give answers before you get oral argument. If at the same time that’s going forward, you’ll get public statements in a deposition which reflect on some of the propositions that were taken [Unintelligible] by Judge Lamberth, it’s going to be very hard for a court on an appeal not to take judicial notice of something which is perfectly evident. Under the circumstances, you could argue about its admissibility and so forth, but it’s going to be very difficult to keep it out and the same thing is going to be true with respect to the political process even more so because politics is an open-ended game. It’s not like the restrictive rules that you have for appellate jurisdiction, and the stuff that you learn may influence the discussions that take place. I don’t think the change in control of Congress actually makes that much difference here between the parties because there’s been no difference between the Democrats and the Republicans on this issue to date anyhow.
Ralph Nader: This is Ralph Nader. Good question.
Tim Pagliara: Go ahead, Ralph.
Ralph Nader: Yes. I think what it’s going to come down to politically, even though the realtor lobby is on the sidelines and nominally supportive of Crapo-Johnson, is that if it moves to the Congress and the issue basically is the stability of the housing market and you’ve got Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) doing their job everyday in terms of the secondary market and so forth, the whole realtor lobby which is, as you know, very powerful and decentralized all over the country, will come to realize that to try to replace Fannie Mae and Freddie Mac with some unknown entities and all the huge transitional problems there is very, very risky and the market will reflect that way beyond Fannie Mae and Freddie Mac shares. In the process of restructuring – and Secretary Paulson actually, in his book mentioned a public utility model and as Professor Epstein said, there are a lot of ways to make sure that Fannie Mae and Freddie Mac do not misbehave the way they did before the reorganization. There are a lot of ways to do it and just to preserve the shareholders, it’s no big deal.
I mean no one’s asking for a subsidy as part of any restructuring legislation. It’s just to maintain their right to hang on and to recover such as may be the case. It’s very significant that in the litigation between Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) and Bank of America Corp (NYSE:BAC) and Citi Corp and so on, who’s been winning? To see that this ideological attack on Fannie Mae and Freddie Mac as if to blame them for everything – they’re the progenitors of the whole risk pattern and the subprime market, etcetera, but in the litigation that’s been going on and in the settlement between Fannie Mae and Freddie Mac and the big banks in New York, who’s been winning? It’s been Fannie Mae and Freddie Mac.
Isaac Boltansky: They’ve been winning pretty much everything.
Ralph Nader: From my standpoint, you’ve got administrative, you’ve got legislative and you’ve got judicial, and there are potential for settlements at each of the three levels. The legislative settlement to this is hopelessly deadlocked. I mean Crapo-Johnson is nothing but bipartisan confusion. The judicial part of this is just getting teed up and so the last week, we presented a paper with Dr. Cliff Rossi about a path out of conservatorship that really dealt with the administrative authority that Director Watt has to bring these entities out of conservatorship and maybe it’s going to take some bold moves like that and some congressional reform as a follow-up, but this situation needs to be acted upon, it needs to be dealt with by the next Congress. A change in leadership will help and for our members that are listening and members of the press, we met with several members of Congress while we were on the hill last week and I have a sense that the wild card in this is that you could see the administrative legislative part of this act in a favorable way for reform prior to even the courts dealing with it. So next question.
Operator: Once again, members of the media are allowed to ask a question by pressing * and 1 on your touchtone phone. We do have a question from Jody Chen from Bloomberg. Please go ahead, your line is open.
Jody Chen: Hi guys again. Thanks. I was wondering, with this recent decision, how much of a shift in the calculus of whether this is going to be something that could be won in the courts or in Washington has occurred. I mean it sounds like to some degree – Mr. Epstein, you were saying – the government does have a lot of power in the courts and they often win even if they shouldn’t. Is this a big red flag that says this is going to have to be something done politically? I had a quick follow-up after that, so just curious of your thoughts on that.
Richard Epstein: I think that basically what Ralph said is correct. All avenues will be open at all times, nobody could bottle this thing down. The question is whether or not some other court looking at this will take the same view. We already have seen in effect that Judge Sweeney takes a very different view of the case because she allowed discovery. What should be remembered about the Lamberth decision is there was no discovery allowed and he did not even have an oral argument between the two parties. The [Unintelligible] was coming out beforehand and this guy’s moving so slowly, he’s lost control over the litigation because he isn’t this orderly schedule that Judge Sweeney’s on. I think virtually nobody expected that it would come out this way and so emphatically, and it certainly is a real gut punch to Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) shareholders, but as Ralph said, this thing is going on in multiple courts. It’s a single district court opinion, you do have an appeal and I think as the record becomes clearer, you can make fairly strong arguments that they surely misbehaved. I mean if you just listen to what Tim said about the progression of the negotiations that took place beforehand, none of this makes its way into anything that [Unintelligible] and Lamberth said that is what happens when he denies standing and denies the fact of taking, he’s able to issue a fact-free decision, and if you issue fact-free decisions, that renders you much more vulnerable to somebody who puts forward a fairly detailed and exhaustive count of the record saying “How can you go ahead and ignore all of this stuff?”
So I think in effect that clearly it affects the probabilities and estimations of the judgment, but I would think it would be a big mistake to think of this as a knockout punch. This is a lawsuit worth potentially billions of dollars, it will cost a few million dollars to prosecute, but it is not one which is extremely expensive to do. It’s not like BP trying to figure out all the thousands of claimants for oil spills and stuff and indirect damage claims. This is a manageable, focused lawsuit hitting on a single event and it’s [Unintelligible] and I think it would be madness for the parties who are attacking it to abandon it given the huge stakes that are involved. I mean the litigation cost in this case, they couldn’t even begin to amount to 1% of the potential gains. That would require you to have to spend several hundred million dollars on this and even at current rates for Washington lawyers with their fevered imaginations, they couldn’t run up the bill that high.
Operator: We do have another question from Hieron Patel, an Investors Unite member.
Hieron Patel: Hi, my name’s Hieron. I just had a question. Do you know approximately how long it would take for the Sweeney case to litigate? I understand that the jurisdiction of discovery would be complete by approximately March and…
Richard Epstein: It could be at least two years, but the question stuff will come in the interim, and it’s the releases that are, in many cases, more important. So I mean if this big battle as to whether or not the government can keep all the information that it hands over by way of documents secret because it doesn’t want it go out and it made what I thought to be a genuinely preposterous claim which that the deliberation that it had several years ago had to be kept in confidence because otherwise what would happen is it could roil the market, this is basically government by a kleptocracy. Of course one wants to be able to put this stuff out there so that one can see what is relevant, and I think it’s extremely important for the political debate. My sense is that when you actually get the full record out, the tip of the iceberg which was the Morgenson revelations about the December 2010 meetings and the recent discussions about the Blackstone presentation in 2011 to the government are part of a very consistent pattern. I mean listen to Tim. He sounded rather angry about it which of course is an appropriate response.
I suspect there’s a lot more in this particular case because we know that if you’re doing a standard corporate number and you wish to enter into a major self-dealing transaction, you have to have exhaustive documentation both of the procedural fairness and the substance of parity in the position. Well, there was no procedure that was followed that have been made public and there can’t be any parity because all the money flows in one direction. I mean when Jason Carney says that this was really necessary to stabilize the market, you have to explain why it is that gutting all of the shareholder value of a company somehow will reassure people that this market is working just fine, where in fact what it does is it indicates that all markets are now subject to very heavy high-handed government intervention in which there’s no apology and no backing off. The government’s position in this is not saying “Gee, maybe we overstated it.” They basically regard themselves as the rescuers of the human race and the financial market by these kinds of actions, and frankly, I don’t think that if you had the testimony put forward by Tim Geithner about what happened in 2012, he’s going to come off sounding as good as Henry Paulson did when he testified yesterday in the AIG case.
Tim Pagliara: Dr. Epstein, can I have a follow-up? What are the conditions that Judge Sweeney would recognize that would finally cause her to release this record publicly? What’s a timeframe for that and what are the things that would hold her to the gag order she’s got right now?
Richard Epstein: I think what will eventually persuade this is when she starts looking at the documents, she’ll have to ask the question. There’re some important public deliberative functions which can only take place in private, so if you turn them over, people will not have sufficient candor in the way in which they do things, or is this an effort to have massive cover-up with respect to what’s going on? I mean this is not an unprecedented issue. If you think back to something which has similarities unfortunately with the whole Watergate stuff, you could’ve argued that it’s a complete and absolute presidential privilege which extends to all of his aides and that was rejected in those cases. The president has a privilege, but the staff did not and it was qualified and it was overridden, and in this case, I think she will make the judgment that the revelations that you start to see in this thing are so important that they should be matters of public because how else do you comment on what governments do unless you have some access to what they’re having?
Operator: Pardon the interruption. We’ll take our last question from Fred Fraenkel from Fairholme. Please go ahead, your line is open.
Fred Fraenkel: Hi, gentlemen. I wanted to thank Mr. Nader for all his comments and his perspective, and Professor Epstein, I want to tell you I’ve read every word you’ve written on this and I think you’re unbelievably bright, learned and have sound judgment of one of the issues that not all the people that sit on the bench are necessarily in the same position and seem to have some vested interests, so you’re always up against that in legal proceedings. I just want to make one quick observation and then I have one question for Professor Epstein. I was a bank analyst 40 years ago with Dick Bove who’s still a bank analyst and I consider him the dean of all bank analysts, and he’s made a case which I wouldn’t say is screaming in the woods, but I would say it’s not widely perceived that we are already in a tremendously degraded situation as an economy because of the effect of taking out all of the capital of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) for the last many quarters and that he expects a housing emergency in this country next year. I don’t think anything would prompt administrative action more quickly than the recognition that there really is a problem in having the two biggest [Unintelligible] in the world, but demeaned of all their retained earnings over an extended period of time.
Not only are we in the housing emergency relative to mortgage availability, but certainly relative to the next cycle. I mean this does become a self-fulfilling prophecy if the two pump-priming mechanisms for coming out of recessions still World War II are devoid of any capital to do that in the next cycle, then the government would have to act in a way that would be a transition to something completely different and that would be, obviously from our vantage point, a huge shame, but the question I wanted to ask Professor Epstein was the downward spiral argument is constantly made against trying to prove that they didn’t need the money which we certainly know from all of our analysis they didn’t, but it’s never seemed to have made the light of day and certainly didn’t in this judge’s decision that there always and continue to be a pick option for them to not have to pay cash and not be in that spiral. I’ve been on many boards and anytime financing came about where we had a pick option, we certainly considered it, so it’s against the backdrop where you say there isn’t a board, there’s just a conservator single vantage point that wasn’t considered. The question is why isn’t this pick option being raised legally?
Richard Epstein: It was. I mean that was the preposterous point – is if you look at it, Judge Lamberth puts it in a series of [Unintelligible] footnotes and he announces this was not an option at all, but he announces that this was a penalty even though if you read the full sentence it says exactly the opposite. As I said in my opening remarks, if you’re talking about a penalty, you have to pay the cash and then you have to pay something above and beyond interest and in this case you’re allowed to defer, so you have two choices rather than one. Therefore, essentially if you are the Fanny and Freddie guy and you’re simply looking after the welfare of your parties, you have to make the choice as to whether or not you want to do this or whether you want to pay it off. Now, the government in effect may well have advanced different monies and you turned around and took some of the capital that advanced and used it to pay off and that’s an odd cycle, but in effect, if the government decided that it didn’t want to make those kinds of advances which it was obliged to do anyhow under contract, then you would start to take the deferred option and pay it off as quickly as you can. What happens is this is a line of credit that you can draw down. It’s not in the interest of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) shareholders to say “We can’t touch this line of credit whatsoever.” That’s the government’s claim. If they want to pull out from the line of credit which they extended to $400 billion, they’re going to have to pay something for that.
Now, it turns out that this, to some extent, isn’t irrelevant because the total amount that was actually lent was $188.5 billion which was within the original $200 billion capital. I mean it’s close to it. You may want to have that extra stuff, but this is the basic judgment that you make of the government. If you decide to increase the cap to either $300 billion or $400 billion and in fact you are saying to the markets, “We think we can actually make this thing work. We’re not going to try and put the plug on it,” and if it wants to pull the plug on this thing, it can’t do so by a contract modification. It has to do so via foreclosure proceedings and then on the other side they should be allowed to present evidence that this thing is not in danger, but what happens here is you get no hearing. You get the Carney columns and you get the government briefs, but there’s actually no authoritative disposition on this particular type of issue which is again, in every home mortgage foreclosure, you have to give a judicial hearing and if in fact you recovery your principal interest in course, then the rest of it goes to the holder of the equity. None of those procedures were followed in this case. You’re just dealing with a completely different set of rules tailored and favored to the government without any sensible or substantive justification.
Ralph Nader: So if I may add to Professor Epstein – this is Ralph Nader – whenever the government carves out an area of activity which is what the conservatorship is and never recognizes any boundaries whatsoever as to what it can do, it’s almost, per se, unconstitutional. There is no boundary that the government has recognized about what it can do in this area. Would you agree with that?
Richard Epstein: Yes, I mean because they basically have said exactly the opposite. They say, A, “We don’t have any duty to answer anybody. Nobody has any standing to challenge us even though you’ve been wiped out, and in effect, that any decision we make is fine because you don’t have any cognizable interest in the shares that exist in this particular company.” Well, if you have no standing and no property, then in effect, there is no hook that you have into the government, so there’s no limit on what it can do. Judge Lamberth calls this “enormous discretion,” but the correct term is “total abject and complete discretion,” but that’s the discretion of an owner and the one thing we know when we look at HERA and the obligations that it puts on the government when it makes the loans and the obligation it puts on FHFA when it administers the situation is those things are replete with loans. The most striking feature about this opinion in many cases are the explicit statutory sections that Judge Lamberth never bothers to cite, and these are the same sections which the government never quotes to distinguish. In fact, in this long article that I wrote about this, what is striking is every kind of government quotation from statutes are clipped in such a way as to turn their meaning upside down.
Operator: Pardon the interruption. I’ll now turn the conference over to Tim Pagliara. Please go ahead.
Tim Pagliara: Professor Epstein, thank you for your insight and wisdom. Mr. Nader, it’s always great to have you on the program for your insight. We’re committed to continue to give you this kind of information at Investors Unite. There’s a lot of background noise and as both speakers today suggested, the background noise has very little to do to the reality of how these cases will eventually be decided and we’re here to bring you the facts and the truth and separate the wide, divergent opinions that exist out there. So again, thank you both for participating this morning and we will keep you posted. Watch our website, www.InvestorsUnite.org. Thank you for your attention this morning.
END
http://originatortimes.com/
Central banks to the rescue could be dollar positive
FOREX.com Fri, Oct 17 2014, 12:47 GMT
by Kathleen Brooks | FOREX.com
Best analysis
Market sentiment is back at the end of the week, stocks in Europe are higher, oil prices are rising and even Greek bond yields are falling. Central bankers from the US and UK have saved the day, but will volatility recede from here?
Although Fed Governor Yellen did not mention Fed policy or the economic outlook during her speech on Friday, it seems she left the talking to other members of the Fed, Thursday’s comments from Bullard, a member of the Federal Reserve and a noted dove, said that inflation was a “little off target” and the Fed should consider delaying the end of QE at this month’s meeting. While Bullard is a non-voter on this year’s Federal Reserve Board, and he won’t actually have a say in monetary policy changes until 2016, we still think that his thoughts reflect a majority of views at the Fed.
Staying the Fed’s hand
We mentioned recently, that there was a subtle shift in the rhetoric coming from the Federal Reserve recently, from employment growth to weak inflation. Prices are king for the Fed these days, and if prices continue to fall then we could see the Fed delaying the end of QE3, or even extending the programme through to the end of the year. The Fed’s Rosengren, another noted dove, told CNBC this afternoon that he does not want to see the inflation rate going down. However, unless we see a prolonged recovery in the oil price, global disinflation pressure could continue to weigh on US prices, which could stay the Fed’s hand.
BOE follows Fed’s lead
The prospect of central bank support, in particular Fed support, has boosted the markets. However, other central bankers have joined in the Fed’s chorus. The Bank of England’s chief economist has joined in the fray, and said that interest rates could stay lower for longer in a “gloomier economy”. He also mentioned the low inflation pressure in the UK as a cause for concern for the BOE, and said that the BOE could be on the “back foot” (a cricket analogy), when it comes to raising interest rates, due to the weakening economic data.
The Bundesbank bucks the dovish trend
The ECB is the one exception to the rule. Even though some of this week’s volatility was caused by rising sovereign fears (Greek bond yields surged to nearly 9% on Thursday, they have since fallen on Friday), the ECB is not singing from the same dovish hymn sheet. The head of Germany’s Bundesbank, Jens Weidmann, has said that deflation risks to the Eurozone are low, and he also voiced his concern about ABS asset purchases (the ECB’s version of QE-lite), saying that it is a move towards a “QE philosophy”, and he didn’t mean it as a complement. Weidmann is also not in favour of giving Germany any more stimuli, saying that it could backfire, even though the currency bloc’s largest economy is showing signs that growth contracted last quarter. His comments were reflected by ECB member Nowotny, who also dismissed inflation fears, saying that low inflation due to oil is actually positive.
The comments from Weidmann and Nowotny are in contrast to other ECB members, including Coeure, who said that the ECB is committed to taking additional measures if necessary. A split at the ECB, with the powerful Northern bloc sounding hawkish, and other members sounding dovish, could cause trouble if we see further sovereign fears.
One to watch: EURUSD
While the Fed is in focus this is helping markets to stage a recovery. However, if Eurozone sovereign fears rise once more, loggerheads at the ECB could hurt market sentiment, and European assets in particular, which is why we expect EUR to trade back towards 1.25 in the coming days. Although EURUSD has bounced in the last 5 days, the retracement of the May – October down-move has been shallow so far, suggesting that the bears are in control and this recent pullback will be temporary only.
A dovish Fed could be dollar positive…
This may sound odd, but if Fed members stick to their dovish mantras then it could benefit the US dollar. If volatility continues to recede US Treasury yields may move higher, as the markets breathe a sigh of relief, which may also be dollar positive. If this plays out, then it could boost our view that the EUR could come under pressure in the coming days.
http://www.fxstreet.com/analysis/indices-insider/2014/10/17/03/
Fannie Mae Prices $1.32 Billion Multifamily DUS REMIC (FNA 2014-M12) Under Its
Fannie Mae GeMS(tm) Program
10/17 08:00 CDT
Fannie Mae Prices $1.32 Billion Multifamily DUS REMIC (FNA 2014-M12) Under Its Fannie Mae GeMS(tm) Program WASHINGTON, Oct. 17, 2014
WASHINGTON, Oct. 17, 2014 /PRNewswire/ -- Fannie Mae (OTC Bulletin Board: FNMA) priced its tenth Multifamily DUS(r) REMIC in 2014 totaling $1.32 billion under its Fannie Mae Guaranteed Multifamily Structures (Fannie Mae GeMS) program on October 10, 2014.
"FNA 2014-M12 is our second securitization of ARM 7-6(tm) collateral. The ARM 7-6 is an innovative product that allows us to provide competitive floating-rate funding to multifamily borrowers of all sizes. The flexibility is great for borrowers, and the deal was well received by investors," said Josh Seiff, Fannie Mae Vice President of Multifamily Capital Markets.
All classes of FNA 2014-M12 are guaranteed by Fannie Mae with respect to the full and timely payment of interest and principal. The structure details for the multi-tranche offering are in the table below:
Weighted CouponCoupon Offered ClassOriginal Face Average Life(%) Type Spread Price
FA $719,949,655 5.67 0.453 Floater/AFCS+30 100.00
FX $719,949,655 0.27 1.318 WAC IO Not OfferedNot Offered
ASV1 $53,300,000 3.52 1.928 Fixed S+28 101.00
ASV2 $548,180,025 6.73 2.614 Fixed/AFC S+38 101.00
X2 $601,480,025 5.99 0.393 WAC IO Not OfferedNot Offered
Total$1,321,429,680
Group 1 Collateral
UPB: $719,949,655
Collateral: 105 Fannie Mae DUS MBS
Geographic Distribution: TX (32.0%), CA (22.4%), TN (7.7%)
Weighted Average Debt Service Coverage Ratio (DSCR): 1.93x
Weighted Average
Loan-to-Value (LTV): 70.2%
Group 2 Collateral
UPB: $601,480,025
Collateral: 52 Fannie Mae DUS MBS
Geographic Distribution: IL (20.6%), CA (17.6%), NY (9.1%)
Weighted Average Debt Service Coverage Ratio (DSCR): 1.73x
Weighted Average Loan-to-Value (LTV): 67.9%
Settlement Date: October 30, 2014
Lead Manager: Credit Suisse
Co-Managers: Citigroup and Deutsche Bank Securities
For additional information, please refer to the Fannie Mae GeMS REMIC Term Sheet (FNA 2014-M12) available on the Fannie Mae GeMS Archive page on www.fanniemae.com.
Certain statements in this release may be considered forward-looking statements within the meaning of federal securities laws. In addition, not all securities will have the characteristics discussed in this release. Before investing in any Fannie Mae issued security, you should read the prospectus and prospectus supplement pursuant to which such security is offered. You should also read our most current Annual Report on Form 10-K and our reports on Form 10-Q and Form 8-K filed with the U.S. Securities and Exchange Commission ("SEC") available on theInvestor Relationspage of our Web site atwww.fanniemae.com and on the SEC's Web site atwww.sec.gov.
Fannie Mae enables people to buy, refinance, or rent a home.
Visit us at:www.fanniemae.com/progress
Follow us on Twitter:http://twitter.com/FannieMae.
SOURCE Fannie Mae
(TS:FNMA;FNMA;)
http://www.finwin.com/demo/index.cfm?tab=News&story_id=17370078&distributor=DTN,RTT,PRN,BW&showLatest=false
Fannie Mae Privileged Info Could Threaten Financial Markets: Sweeney
by Michael IdeOctober 16, 2014, 5:40 pm
Judge Sweeney rejected Fairholme’s request to let former Fannie Mae CFO review privileged documents because their disclosure could ‘place the nation’s financial markets in jeopardy’
When Bruce Berkowitz’s Fairholme Funds brought in Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) former CFO Tim Howard to help them with discovery, the government got defensive pretty quickly. But yesterday Judge Margaret Sweeney ruled (h/t David Sims) that he wouldn’t be allowed to view any of the documents “because disclosure of the protected information could place this nation’s financial markets in jeopardy, a risk that the court is not willing to take.”
Fannie Mae, Freddie Mac
Howard’s “need for vindication” disqualified him
Howard certainly isn’t disinterested. Aside from the fact that he is a Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) shareholder, he was pushed out as Fannie Mae CFO in 2004 amid allegations that he and two other executives had cooked the books to increase the bonuses by more than $100 million. All three were eventually cleared in a summary judgment and Howard wrote The Mortgage Wars in which he claims that his removal was politically motivated and that the US Treasury took advantage of the financial crisis to take over Fannie Mae when the GSE could have survived on its own.
“Even as the court agrees with plaintiffs that Mr. Howard has the right to opine about such matters and recognizes plaintiffs’ litigation needs, his desire for vindication in the public arena and his stock ownership give the court pause with respect to his admission to the protective order,” Sweeney wrote in her ruling.
She was also skeptical that Howard was uniquely suited to review the privileged information considering he had been dismissed four years before the financial crisis struck.
The privileged files could harm US financial markets, says Sweeney
None of that is really surprising, even if it’s a little disappointing. The real surprise is that Judge Sweeney was persuaded by US government argument that “clearly defined a serious injury that could occur if protected information is disclosed—not merely to one discrete business, which would, in itself, justify denial of the motion, but rather, to United States financial markets.”
At this point, your speculation is as good as ours. Somewhere in the Fairholme Funds v US discovery process are documents that, according to the government and Judge Sweeney, could plausibly threaten US financial markets if released. Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) bulls have been promising that sparks will fly once court documents start coming out, and it’s starting to sound like they’re right.
http://www.valuewalk.com/2014/10/fannie-mae-privileged-info-threaten-financial-markets/
Hedges... I guess that is me, Capital Shrinking Fund !
Ready for what?
I wonder if Lamberth made referance to a 4th or 5th amendment because he had a meeting or two with a representative from FHFA or Treasury in chambers or behind closed doors or otherwise in private.
Yes hopefully means nothing but throws defendants a bone. Courtroom chess.
Plaintiffs can still have pontential expert testimony from others but Howard still has an axe to grind so he is out.
I believe it only means that Howard can not have access to the privelaged documents in order to assist plaintiffs. Plaintiffs attys. and the judge are not excluded. That is my take.
Judge denies former Fannie CFO access in GSE lawsuit
Access to two-year-old records would “damage” econonomy
The federal judge overseeing the Fairholme Fund’s lawsuit against Treasury has denied former Fannie Mae CFO J. Tim Howard admission as an expert to view the material from discovery.
Government attorneys opposed Fairholme’s move to bring Howard on as an expert to view discovery, which is covered under a protective order. They argued that Howard’s knowledge and bias would cause “damage to the economy.”
Howard was hired by Fairholme Funds in their lawsuit against the U.S. Treasury.
Back in August, U.S. Judge Margaret Sweeney handed Fairholme Funds a huge victory when she ruled in favor of broad access in discovery to FHFA records going back years, rather than the narrow period in 2012 that the FHFA wanted to limit discovery to.
This opened up, on a limited basis, more than 800,000 documents to discovery.
Attorneys for the federal government have argued that Howard should not get to serve as a consultant with access under the limited discovery a federal judge granted, arguing that Howard was forced out of Fannie in an accounting scandal, even though investor lawsuits against Howard were found to be without merit and his case was settled with the Securities and Exchange Commission.
Why either allegation should matter was not explained.
The judge's order can be read here.
Howard, as former chief financial officer for the GSE, is both highly knowledgeable about the inner workings of the institution and its inter-agency activities, and is regarded as an unbiased counselor who can decipher the information that’s revealed.
“The government has consistently opposed discovery as being “dangerous” to the economy if these two year old documents were to become public. Now it is opposing a qualified expert to view these documents over charges of ‘bias,’” a spokesperson for Investors Unite told HousingWire. “Even though he’s been out of the company for 10 years. Bottom line — they’re hiding something. It’s going to come out.”
Investors Unite was formed by Tim Pagliara, a Tennessee activist investor and CapWealth Advisors Chairman and CEO. It is a coalition of nearly 1,000 private investors from all walks of life, committed to the preservation of shareholder rights for all invested in Fannie Mae and Freddie Mac.
Late last month, retiring District Judge Royce Lamberth threw out a separate lawsuit brought by investors led by Perry Capital against the Federal government's control over Fannie Mae and Freddie Mac.
http://www.housingwire.com/articles/31741-judge-denies-former-fannie-cfo-access-in-gse-lawsuit
Ebola crisis: Air France flight carrying 183 passengers grounded in Madrid Barajas airport
Not good for the market in general. Could be another wild day!
Officials have activated emergency protocol
Heather Saul Author Biography
Thursday 16 October 2014
A passenger on an Air France plane carrying 180 passengers has reportedly been quarantined in Madrid after showing Ebola-like symptoms.
The crew on flight AF1300, which departed from Paris-Charles de Gaulle Airport, alerted authorities on the ground at Adolfo Suárez Madrid-Barajas airport when the passenger complained of feeling unwell and was apparently shivering.
An Air France spokesperson told The Local the passenger has been isolated for medical checks. The passenger was reportedly coming from Africa and was on a connecting flight to Paris.
"Initial indications are that it’s not a case of Ebola," the spokesperson said. "We understand the passenger did not have a temperature."
Medical investigations are ongoing.
The spokesperson said the plane has been grounded in Madrid so it can be disinfected as a precautionary measure.
Spain's health ministry confirmed the Ebola emergency protocol had been set in motion but declined to give further details.
http://www.independent.co.uk/news/world/europe/ebola-crisis-air-france-flight-carrying-183-passengers-quarantined-in-madrid-barajas-airport-9798873.html
It seems that the wind down bills brought that fact into the light well after the bailout scam was hatched
Investors Unite: We Have Grown
October 15, 2014
It started with two simple questions: who are the Fannie Mae and Freddie Mac investors, and do they know what's happening halls of Congress regarding their stakes in the companies? After a little searching, the answer became clear and resulted in Investors Unite. Founded by Executive Director Tim Pagliara, a financial advisor in Tennessee and a stakeholder in the companies himself, the IU coalition initially sought to put a human face on the tens of thousands of Fannie & Freddie investors and to educate them on proposed housing reform legislation that would unlawfully wipe out their positions.
Investors Unite challenged the media's perception that Fannie and Freddie investors were hedge funds. We are not. We are school teachers, computer engineers, insurance salespeople, retirees, U.S. Navy veterans, and others who believe in the American Dream of home ownership and believe that Fannie and Freddie help make that dream happen.
In our first three weeks, we spoke with dozens of investors who each had varying levels of knowledge about the government-sponsored enterprises in which they invested their hard-earned money. We arranged a fly-in to Capitol Hill in Washington, D.C., for investors to speak with their Members of Congress. We rallied in front of the Capitol building, and spoke about our American Dreams. Those dreams, by the way, do not include the federal government illegally taking shareholder profits and stuffing them into the U.S. Treasury general fund to make the deficit appear not as bad as it actually is.
In the six months since Investors Unite formed, we've grown to 1,100 members. Among those who have expressed interest in learning more are Capitol Hill staffers, staff at the Federal Housing Finance Agency and U.S. Treasury, and national financial and policy reporters who cover this issue and now recognize us as an important force for those whom we represent. Our investors come from 48 states, from all walks of life, and they range in age from the age of 21 to over 65.
The noted consumer champion Ralph Nader, himself a Fannie Mae investor, has spoken with our group. Financial blogs have started reposting our in-house blog posts. We have posted nearly 900 tweets.
All of this, investors, is because of you. You, who deserve to be treated better than a depositor in a piggy bank by your government. You, who are legally and contractually owed dividends realized through your investments. You. Investors Unite will keep fighting every day against wrong-headed legislative initiatives that would wipe you out. We will keep fighting to make sure your voice – the voice of the individual investor – is heard on Capitol Hill and that bureaucrats and elected officials are held accountable for their actions against you.
About Investors Unite: Formed by Tennessee investor and CapWealth Advisors Chairman and CEO, Tim Pagliara, Investors Unite (www.investorsunite.org) is a coalition of private investors from all walks of life, committed to the preservation of shareholder rights for all invested in Fannie Mae and Freddie Mac. The coalition works to educate shareholders and lawmakers on the importance of adopting GSE reform that fully respects the legal rights of Fannie Mae and Freddie Mac shareholders and offers full restitution on investments.
In all of this... I mean all of this bail out business, I think it was planned for the banks to take over the mortgage industry.
AIG Bailout Architects Leave Questions for Executives
OCT 15, 2014
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By Bloomberg News Service
The trial over the American International Group Inc. (AIG) bailout shifts this week from the architects of the 2008 rescue, who spent days testifying as to why they imposed the terms they did on the ailing insurer, to the executives who accepted their demands.
Maurice “Hank” Greenberg’s Starr International Co., AIG’s biggest shareholder before the bailout, accuses the U.S. of imposing illegally severe conditions in the rescue and is seeking at least $25 billion in damages.
Robert Willumstad and Edward Liddy, two of Greenberg’s successors as chief executive officer at the insurance giant, are set to testify this week in the U.S. Court of Federal Claims in Washington, where Judge Thomas Wheeler is hearing the case without a jury. The trial started Sept. 29.
Key regulators involved in the rescue, including Federal Reserve Bank of New York executives Sarah Dahlgren and Margaret McConnell, and Eric Dinallo, former superintendent of the State of New York Department of Insurance, also are expected to take the witness stand.
Starr alleges in its shareholder suit that the U.S. didn’t have the authority to demand 80 percent of AIG’s equity in consideration for a loan and didn’t pay a fair price for the stock it took. It also claims the government imposed a punitive 14 percent interest rate on the initial $85 billion loan.
Bailout Leaders
The leaders of the bailout, Henry Paulson, Timothy Geithner and Ben Bernanke, all told the court last week that the rescue was needed because AIG’s failure would have been catastrophic to the financial system.
They added little new information about how the government determined it had the authority to demand equity in setting terms for a loan.
Willumstad was forced to resign as CEO as a condition of the bailout, which began on Sept. 16, 2008. He’s expected to testify about his efforts to cobble together a private-sector rescue of the company and his discussion of the terms of the government’s last-minute intervention to prevent an AIG bankruptcy. Willumstad, 69, is now chairman of Adelphi University in Garden City, New York.
Liddy, his successor, was hand-picked by regulators and headed AIG until August 2009. He’s expected to discuss his interactions with government officials regarding the form of stock the U.S. ultimately took from AIG and the creation of a trust to hold it. The 68-year-old former insurance executive is now chairman at US Foodservice in Rosemont, Illinois.
‘Crazily High’
McConnell, of the Federal Reserve Bank of New York, wrote an October 2008 e-mail to Geithner and others describing a “crazily high” interest rate on the bailout loan that was “forced on us (meaning FRBNY) by people that have since punted on all the hard things.”
Dahlgren was involved in the monitoring of AIG at the time of the bailout and is expected to testify about the selection of Liddy and involvement of the New York Fed and Treasury in the insurer’s internal governance.
Dinallo participated in discussions about using money from AIG’s insurance subsidiaries to help bail out the parent just before the government stepped in.
The government has argued that Starr and other shareholders are seeking a benefit they’re not entitled to since the alternative to the bailout was bankruptcy.
‘Worth More’
“Twenty percent of something is worth more than 100 percent of nothing,” a Justice Department lawyer said in his opening statement.
Geithner, who led the New York Fed at the time of the bailout, testified he was “aware of a substantial back-and-forth” over “the legal questions around whether the Fed could directly hold equity” as part of a rescue. He also said he was unaware of any other emergency loan by the Fed conditioned on a surrender of equity.
Bernanke told the court he didn’t think about the specifics of the Fed’s emergency lending powers.
“All I knew was that our authority was broad and that I would rely on counsel in individual cases,” the former Fed chairman testified.
Bernanke, who along with other members of the Fed’s board of governors authorized the emergency loan, told the court the central bank “used its powers in an ad hoc way” because it had no other option for safely dealing with a financially troubled “systemic firm.”
‘As Necessary’
He said he didn’t know how some elements of the loan -- the interest rate and the equity demand, or the form of equity -- were arrived at. The central bank approved the general conditions for the financing and gave the New York Fed the discretion “to make adjustments to the term sheet as necessary,” Bernanke said.
Paulson, who was treasury secretary in 2008, wasn’t asked about the Fed’s powers to set the loan terms. He testified that he supported harsh conditions for AIG to send a message to markets that government assistance would come only at a stiff price.
The case is Starr International Co. v. U.S., 11-cv-00779, U.S. Court of Federal Claims
http://www.insurancebroadcasting.com/news/AIG-2744384-1.html
Investors hold ‘worthless paper’ after feds seize billions in private dollars
By Chris Butler / October 15, 2014 / No Comments
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By Chris Butler | Tennessee Watchdog
NASHVILLE — Fannie Mae and Freddie Mac have essentially paid back the $187 billion U.S. taxpayers loaned them after the economy
tanked in 2008, but the feds are still seizing all of their profits.
The U.S. Treasury Department is doing this under something known as a “Third Amendment Sweep.”
But these profits, said Tim Pagliara, chairman and CEO of the Franklin-based CapWealth Advisors, belong in the private sector.
The government’s actions leave Fannie Mae’s and Freddie Mac’s shareholders with nothing.
Photo courtesy of Flickr
Photo courtesy of Flickr
FANNIE MAE: The feds are seizing private money from Fannie Mae and Freddie Mac.
“The government had a political agenda for whatever reason to shut them down and decided not to compensate the shareholders,” Pagliara told Tennessee Watchdog, adding Treasury officials are putting that money toward the federal deficit.
Regardless of how one feels about these two Government Sponsored Enterprises, especially after their role in the subprime mortgage crisis, there are more disturbing ramifications behind the Treasury’s actions.
“The Treasury has usurped the authority of the legislative branch because they have taken the position that they are going to shut down the GSEs,” Pagliara said. “They don’t have the authority to do that under the U.S. Constitution. Only Congress and the Senate can do that.”
So what do U.S. Treasury officials have to say in their defense?
Evidently nothing.
A U.S. Treasury spokesman, who asked that Tennessee Watchdog not identify him, referred all questions to the U.S. Department of Justice.
U.S. Department of Justice spokeswoman Nicole Navas had nothing to say either.
Photo by Chris Butler
Photo by Chris Butler
Tim Pagliara
“We decline to comment beyond what has been publicly filed due to the pending litigation,” Navas said in an emailed statement.
A variety of people, including former U.S. Solicitor General Ted Olsen, have filed a variety of lawsuits against the feds, although one federal judge threw out some of those lawsuits earlier this month.
If the U.S. government has the power to do this, could they do the same to General Motors or any of the banks that accepted bailout money? Worse yet, could the feds do the same to any publicly traded company and take anything that belongs to a private citizen?
Those were among the questions Treasury and Justice officials declined to answer Tuesday and Wednesday.
Because of this “Third Amendment Sweep” the feds will recover $51 billion more than they invested in Fannie and Freddie six years ago, according to Olsen.
“It’s a complete destruction of the investments of private shareholders,” Olsen wrote last year in the Wall Street Journal.
The feds put Fannie and Freddie in conservatorship in 2008, but Olsen argues their actions are the polar opposite of what conservatorship calls on the government to do — protect and manage the GSEs’ money.
Until the situation is resolved, banks, credit unions, insurance companies and even taxpayers are holding worthless paper, Pagliara said.
Pagliara said he’s working with U.S. Rep. Marsha Blackburn, R-Brentwood, on legislation that would put Fannie and Freddie’s profits in escrow until the situation resolves itself.
A spokesman for Blackburn’s office didn’t immediately return a message seeking comment on the matter Tuesday or Wednesday.
http://watchdog.org/177289/freddie-mac/
The editor was drunk. Must be why all of it was printed.
Mortgage banking industry weighs in support for single GSE
A common securitization platform and a single GSE bond is coming soon enough from the Federal Housing Finance Agency, and while details are still under discussion the mortgage banking industry is weighing in with their thoughts.
The Mortgage Bankers Association, for two years, backs the idea of a single GSE security rather than separate securities issued by the Fannie Mae and Freddie Mac.
“Adopting a single security would enable the GSEs to compete on a more level playing field, providing benefits to homebuyers, taxpayers and lenders,” says David Stevens, president and CEO of the MBA in a letter to the FHFA. “Ending the trading differential between Fannie Mae and Freddie Mac securities should make our housing finance system more efficient, allowing borrowers to receive the best price on their respective loans. It should also eliminate the Market-Adjusted Pricing payments.”
The MBA says that this would be entirely consistent with sustaining the GSEs’ important role within the current market, while also providing a bridge to an even more competitive and efficient market following reform along the lines of recently proposed legislation.
“Additionally, a single security is a key step on the path to GSE reform, a bipartisan goal shared by both Houses of Congress and this Administration. Indeed, a common, ‘qualified’ security formed the basis of the Johnson-Crapo Bill that was voted out of the Senate Banking Committee earlier this year,” Stevens says. “For these reasons, MBA commends FHFA for exercising leadership in this debate and producing a strong concept for the structure and functioning of a single GSE security.”
Although FHFA has been clear regarding the importance of this issue, MBA believes that the extended timeframe to implementation poses a potentially unacceptable risk to its successful completion.
Market participants need sufficient time to prepare for the change, MBA says, but a multi-year timeframe coupled with the linkage of the single security to the as yet undeveloped common securitization platform pose a risk that the status quo will continue to prevail. FHFA should act quickly to have the GSEs make the necessary changes to their processes within a relatively short timeframe and uncouple the single security process from the worthy, but necessarily complicated development of the CSP.
“If the GSEs are unable to utilize their own systems in the near-term to issue the single security, FHFA should move instead to other solutions such as MBA’s transition steps proposal that FHFA seek an opinion from the Securities Industry and Financial Markets Association deeming the Fannie MBS and Freddie PC fungible for TBA purposes,” Stevens says.
Meanwhile, the National Association of Federal Credit Unions supports the FHFA’s proposal to improve the overall liquidity of the GSEs by creating a single security eligible to be traded in the to-be-announced market.
NAFCU believes that the proposal has the potential to reduce the training and compliance burdens for credit unions that transact business with the GSEs and to allow greater accessibility to the TBA market.
“NAFCU encourages the FHFA to continue to pursue a transparent and level playing field and to avoid unnecessary exclusions or special options that would give a comparative advantage only to certain types of market participants in transactions involving the single security and in the TBA market in general,” says Angela Meyster
senior regulatory affairs counsel for NAFCU. “NAFCU also urges the FHFA to ensure that any existing GSE securities held by credit unions do not lose their marketability after the introduction of any single security.”
NAFCU says that the FHFA should strive to meet its goal of full fungibility between legacy and new securities and, should the market demonstrate a distinct preference for the new single security, allow credit unions to exchange legacy securities for new ones.
The FHFA should also seek to prevent the single security and TBA market from having a negative impact on the marketability or price of loans sold by credit unions to the GSEs.
http://www.housingwire.com/articles/31704-mortgage-banking-industry-weighs-in-support-for-single-gse-bond
Wall Street 10/14/2014 @ 1:53PMInvestors Return To Fannie Mae and Freddie Mac
When U.S. District Judge Royce Lamberth threw out lawsuits filed by funds managed by Richard Perry and Bruce Berkowitz that claimed the government acted illegally by getting Fannie Mae and Freddie Mac to pay the government nearly all of their profits, investors in Fannie Mae and Freddie Mac rushed for the exits.
Now, they’re back, at least in the common shares. Shares of Fannie Mae rose by 10.2% on Tuesday to $2.49. That means the stock, which plunged by about 40% after Judge Lamberth’s ruling, is now down by only about 7% from where it closed moments before the ruling was issued.
While the U.S. stock market suffered a broad sell-off in recent days, shares of Fannie Mae have increased by 48% in the last week. Shares of Freddie Mac increased by more than 11% on Tuesday and are now trading about 9% lower than where they closed prior to Judge Lamberth’s ruling. Shares of the mortgage giants trade on the Over The Counter Bulletin Board.
Interestingly, the Fannie Mae and Freddie Mac bounce back has not extended to some of the preferred shares of the government-sponsored enterprises. Shares of the popularly traded Fannie Mae Series S preferred shares inched up less than 1% on Tuesday and remain down by more than 50% since Judge Lamberth’s ruling.
English: The Colonial Revival headquarters of ...
English: The Colonial Revival headquarters of Fannie Mae, designed by architect Leon Chatelain, Jr. in 1956, located at 3900 Wisconsin Avenue, N.W., in the Cathedral Heights neighborhood of Washington, D.C. (Photo credit: Wikipedia)
Berkowtiz and Perry, whose funds are planning to appeal Judge Lamberth’s ruling, have bet more on the preferred shares of Fannie Mae and Freddie Mac, an investment that has often been viewed as less speculative than betting on the common shares. As a result, Berkowtiz’s Fairholme Fund has not recovered from the declined it suffered after Judge Lamberth’s ruling.
But hedge fund billionaire William Ackman’s Pershing Square hedge fund, which has placed a large bet on the common shares of Fannie Mae and Freddie Mac, is probably in a better position with its Fannie Mae and Freddie Mac investment. Ackman’s hedge fund is also suing the federal government over Fannie Mae and Freddie Mac, but in a different court than the lawsuits filed by Berkowitz and Perry that were dismissed. Ackman reportedly added to his position in Fannie and Freddie following the recent declines in the common shares.
The Obama Administration wants to wind down the mortgage giants that have been operating in conservatorship since receiving $188 billion from the Treasury Department amid the financial crisis. But Fannie and Freddie paid the bailout out money back and are now hugely profitable and the mortgage market still depends on them. Investors like Perry, Berkowitz and Ackman are trying to make a big score out of these securities through efforts in Washington and the courts.
http://www.forbes.com/sites/nathanvardi/2014/10/14/investors-return-to-fannie-mae-and-freddie-mac/
(Watch Dog) - Tennessee U.S. Sen. Bob Corker, a Republican, is pushing for legislation creating a federal entity to regulate the housing market, six years after the government’s subprime loans nearly tanked the U.S. economy.
But is it a good idea?
Two experts, one a Franklin-based financial adviser, the other a Heritage Foundation research fellow, oppose housing finance reform legislation from U.S. senators Tim Johnson, D-S.D. and Mike Crapo, R-Idaho — but for very different reasons.
SEND CONGRESS A PINK SLIP: Gun grabs, Martial Law, amnesty, executive orders, unconstitutional laws, bypassing Congress and the Constitution— Obama has committed a string high crimes and misdemeanors. YOU can send a PINK SLIP to every member of Congress putting them on notice: “IMPEACH OBAMA NOW OR WE’RE KICKING YOU OUT!”
Johnson’s and Crapo’s legislation, which they’re calling Housing Finance Reform, evolved from legislation previously introduced by Corker.
Tim Pagliara, who said he donated $7,000 to Corker’s U.S. Senate campaign and once had direct access to the senator, calls the legislation “residential Obamacare,” which, if passed, will raise mortgage rates.
“I like Bob Corker, but I’m mad at him because he’s a blockhead and he won’t listen to me. He’s also spent too much time in D.C.,” said Pagliara, chairman and CEO of CapWealth Advisors.
“The media never writes about planes that don’t crash, so I’ve got to make an impact and I’ve got to get the facts out on the table. It’s not exciting stuff, but I don’t want people to wake up after this legislation has passed and realize their mortgage rates are going to be higher.”
So what, precisely, does this legislation do?
According to its text, it eliminates Fannie Mae and Freddie Mac and brings in “a diverse set of private entities to step in and replace most of the functions of the Government Sponsored Enterprises” as it pertains to home loan financing.
A Federal Mortgage Insurance Corporation, modeled after the FDIC, would regulate the new system and include a reinsurance fund to protect taxpayers, according to the legislation.
The housing market, the legislation adds, accounts for nearly 20 percent of the U.S. economy.
A board of five members, appointed by the president and confirmed by the U.S. Senate, will manage the FMIC, the legislation said.
In an emailed statement, Corker suggested to Tennessee Watchdog that Pagliara and others have an ulterior motive for speaking out against this legislation.
“There are some entities that are doing everything they can to distort the truth and kill efforts to reform the housing finance system because they benefit more from the status quo at the expense of taxpayers,” Corker said.
“Fannie and Freddie would not generate one dime of revenue without the government backstop, and I do not believe we should conflate private investors’ investment concerns with the importance of enacting sound housing policy in our country.”
Pagliara said 270 of his clients invested in Fannie Mae and Freddie Mac on his advice between 2008 through 2009.
But Pagliara said Fannie and Freddie need reform, not elimination, particularly given past government pressure for high-risk subprime loans, which led to the 2008 economic collapse.
Norbert Michel, with the Washington, D.C.-based Heritage Foundation, said he’s studied the legislation and has argued against it.
Unlike Pagilara, Michel said he’s opposed because he wants all GSE’s eliminated, including Fannie Mae and Freddie Mac. He says the government should not replace them, period.
“We don’t believe there should be an explicit guarantee in the market for housing, just as we don’t believe there should be an explicit government safety guarantee for any markets,” Michel told Tennessee Watchdog.
“You’ve already got enough regulators. You’ve already got an FDIC. Now you’re going to create something similar to it just for the housing market. It literally creates a new federal financial safety net, which is exactly the wrong direction that we should be going. It’s just really a continuation of the direction that we’ve been going and for quite a while.”
Additionally, getting government involvement out, Michel added, would not hurt the U.S. housing market.
“No matter what happens, you’ve got a 65 percent homeownership rate. If you get rid of the GSE’s right now, you don’t take all those people who are in their homes and throw them out on the street,” Michel said.
“Not a single thing happens to those existing mortgages.”
Pagliara said he strongly disagrees with Michel, but the two men agree that nothing will happen between now and the end of the year.
The bill’s fate may rest with whichever party wins control of the U.S. Senate next month, Pagliara said.
http://watchdog.org/176696/the-u-s-economy/
http://www.teaparty.org/senate-housing-finance-bill-decried-residential-obamacare-61455/?utm_source=rss&utm_medium=rss&utm_campaign=senate-housing-finance-bill-decried-residential-obamacare
Fannie Mae Common Shares Rally, Rebounding From Judge’s Ruling
By Jody Shenn October 14, 2014
Fannie Mae and Freddie Mac common shares rose for a fifth day in New York trading, erasing most of their drop tied to a court ruling last month, while the companies’ preferred securities posted smaller gains.
Fannie Mae’s (FNMA:US) common shares climbed 11 percent to $2.49 as of 12:49 p.m., after trading as low as $1.44 on Oct. 2. The stock closed at $2.69 on Sept. 30, the day that U.S. District Judge Royce Lamberth threw out a lawsuit that sought to force the U.S. to share the government-controlled companies’ profits with private shareholders.
“Whether it’s in the courts or Congress, this issue is not going to go away with one district court decision,” former presidential candidate Ralph Nader, a common shareholder who has been advocating for others, said on an Oct. 7 conference call for reporters organized by Investors Unite.
Video: Isaac Boltansky on Fannie Mae, Freddie Mac Profit Ruling
One series of Fannie Mae preferred stock, with a face value of $25, rose 2.6 percent today to $4.36. That is less than half of the closing price on Sept. 30, meaning some of the Wall Street investors with the largest bets are enjoying a more modest recovery because they favor the preferred securities.
Fannie Mae and Freddie Mac investor Perry Capital LLC on Oct. 2 appealed Lamberth’s ruling, which involved suits by investors also including Bruce Berkowitz’s Fairholme Capital Management LLC. The $7.9 billion Fairholme Fund has declined 13 percent this month, after making bets on Fannie Mae and Freddie Mac (FMCC:US) focused on the preferred shares.
Claren Road Asset Management LLC, the hedge-fund firm majority owned by Carlyle Group LP, slumped 5 percent in the first week of October after its investments in Fannie Mae and Freddie Mac preferreds lost about two-thirds of their value, according to an investor in the fund. Marathon Asset Management LP told investors in its $12.5 billion firm in a conference call that week that it was selling its preferred shares, people with knowledge of the call said.
Video: Isaac Boltansky on Fannie Mae, Freddie Mac Profit Ruling
Freddie Mac common shares advanced 11 percent to $2.39. That compares with a closing price of $2.64 on Sept. 30.
To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net
To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net Dan Kraut, Steve Dickson
http://www.businessweek.com/news/2014-10-14/fannie-mae-common-shares-rally-rebounding-from-judge-s-ruling
23 mil. vol. I wonder what the last hour will be like.
timhoward717 ~ Fannie Mae-Straight Talk Mon.Oct. 13
Posted by timhoward717 in Fannie Mae Freddie Mac
This post was promised as a companion piece to (http://timhoward717.com/2014/10/05/light-of-truths-profound-effects-on-dc/ )
There still appears to be a bit of confusion regarding the republicans role in the battle over Fannie and Freddie I hope we can clear some of this up here. I realize that until now we have simply stated that the Republicans have always sought Fannie and Freddies demise due to their ideological beliefs.
To explain further, I want to discuss a portion of the proposed language of the bill the house Republicans passed out of House Financial Services by a unanimous Republican vote. The republicans proposed a requirement that would have raised the minimum down payment to buy a home from 3 to 10%. Now this would have been incrementally raised over time from 3 to 5 to 7 and finally 10. This reflects their philosophy that the actual person buying a home should have to assume a 10 percent first-loss position that the three other housing bills wanted covered by private capital. The Republicans feel that if someone can’t save the 10% to put down a home then why should people who can save that pay a higher interest rate to cover those who can’t. To some this may seem selfish to others it simply reflects personal responsibility. The other guiding principle that guides Republicans on this issue is their small government philosophy.They believe that the government has no business meddling in the mortgage markets. They would wipe out all of the mandates that have been established over decades to help ensure that Americas housing market is accessible to all Americans equally. Although it is widely viewed that a transition such as theirs would be devastating to both the housing market and the economy as a whole, they feel that these sacrifices would be worth it. They feel whatever pain we would have to go through to ween housing off of government involvement us is worth the sacrifice. I want to say here that this is America, and we are all free to follow our own political philosophies.
Now as far as what we can expect from Republicans as the final innings of our battle play out. More and more they are coming to terms with the fact that there is no way Fannie and Freddie will be eliminated in the next two years. House republicans realize that any housing reform bill that could possibly pass the Senate will offer them two bleak options.To vote in favor of the new improved big government home mortgage program or vote against it and essentially vote to keep Fannie and Freddie around. Many conservative groups referred to the Johnson/Crapo bill as Fannie and Freddie on steroids. Their strategy now is to feign a willingness to want to reform housing but truly they feel if they can run out the clock till 2016 their long-sought goal to eliminate Fannie and Freddie may finally be reached. Their current strategy to try and stall reforms until 2016 would spell utter disaster for our nations housing market and effectively shut many low to moderate home buyers out of housing for generations.Their “vision” for American housing would leave us about as close as one could get to an apartheid type housing policy.Most of them have doubts that the democrats will bypass legislation and release Fannie and Freddie on their own. I boldly predict that on this issue more than any other they will ultimately and finally be forced to accept that “elections have consequences’.
Although we are sympathetic and respect the Republican free market ideals that have a large emphasis on personal responsibility, we must look at reality. The reality right now is that currently we have a socialist state-owned secondary mortgage market which was brought about by the illegal seizure of two private companies by our government. To watch so many elected Republicans sit in silent complicity as this carries on makes one question your true values. We are not asking you to violate your ideals and support Fannie and Freddie or their equivalent. We are simply asking that you honor all of your ideals and join the 17 conservative groups in speaking out against the governments unprecedented and brazen attempt to illegally seize two private companies. (http://timhoward717.com//?s=15+conservative+groups&search=Go).
Now I just want to reiterate that our simple message of truth has reached the highest levels of power in America. Our thoughts can be seen throughout every discussion and debate. I was thrilled to see this letter to the editor published in the Washington Post: http://www.washingtonpost.com/opinions/common-stockholders-shut-out-with-governments-self-dealing/2014/10/10/65dab00c-4d8e-11e4-877c-335b53ffe736_story.html
“Common stockholders shut out with government’s self-dealing “
“Indeed, the hedge funds that bought Fannie Mae and Freddie Mac preferred stock on the cheap make unsympathetic plaintiffs in seeking to halt the government’s claim to 100 percent of those companies’ profits. But what of the thousands of common stockholders, such as me, who also are taxpayers and who purchased their stakes years ago, when the stocks were far from cheap? Does the government’s 79.9 percent stake in Fannie and Freddie’s common stock really entitle it to 100 percent of the companies’ profits in perpetuity? If so, why did the government allow the stocks to continue trading? And though Congress granted the Treasury Department power to “salvage” the mortgage finance giants however it could, without judicial oversight, did it really mean to allow the government to change the rules once the companies reached profitability and turn a 10 percent dividend into a 100 percent profit grab? “
We must continue writing letter’s like this holding our government accountable.
In closing, I want to note that I had a very productive discussion with Cliff Rossi last week. His paper outlining a clear/rational path out of conservatorship for Fannie and Freddie was an excellent step in providing a respected rational voice to the debate. I am sure some of his ideas will be utilized and look forward to working with him further.
Keep The Faith!
http://timhoward717.com/
Is that just a guess?
So Ackman bought 20% more shares and now owns 12% of outstanding commons. Is that correct? He does not own 20% of commons.
No way this president will tarnish his legacy further. That is a political statement but also key information to the outcome.
No you are not dumb just lazy, just like me and most of the human race. Path of least resistance. Easiest means to the end. I can't help it if I/we collectively evolved that way. lol
Bill Maloni's GSE Blog Fannie and Freddie as Utilities
Some “F&F resurrection” suggestions emerged from the “inside the Beltway” ideas cauldron this past week, not surprising in their concept but for their sources.
I’ve written before that I have a lot of respect for Karen Shaw Petrou, who along with husband Basil, runs DC’s Financial Analytics Company and long has represented bank clients.
Over the years, I’ve disagreed with some of her/their positions, but last week Karen Petrou penned a piece which I think is the kind of pragmatic, clear headed approach to Fannie-Freddie mortgage finance issues that seldom surfaces, at least from those not labeled “F/F fans.”
Petrou endorsed converting Fannie and Freddie into government sponsored “utilities,” although she’s not the first one to offer that thinking.
Here is a link to KSP’s report in which she writes about this possible approach.
http://www.fedfin.com/blog/1693-karen-petrou-on-what-to-do-now-with-fannie-and-freddie
Now the Devil always is in the details when these kinds of suggestions pop up. But when someone with Petrou’s congressional bank cred and gravitas advocates a solution, it could attract those who knee jerk oppose anything which keeps Fannie Mae and Freddie Mac alive (which is why some years ago, I suggested the GSEs be renamed Thing 1 and Thing 2).
Presumably, her new “F&F utilities” would have ties to the federal government, be regulated as to prices they charge and revenue they can generate, but still would be permitted to respond to market demand and provide affordable mortgage finance throughout the nation, utilizing common products and prices, facilitating standardization and securitization.
Again, KSP isn’t trailblazing here, but also she doesn’t start with “destroy the GSEs.”
What I like most about Karen Petrou’s approach is that implicitly she acknowledges the folly of disrupting the US mortgage finance system, with some questionable behemoth replacement substitute. Her inherent disdain reflects her veteran sense that whatever Congress views as the F&F successor will have significant negative financial and systemic costs, as well as jeopardizing the fixed rate mortgage which Americans desire and have come to expect.
Petrou is clear headed and non-emotional in discussing GSE alternatives.
Left unsaid—which is not really her job—is that traditional utilities have true private shareholders. This model must have that characteristic, too, if working capital is to come from outside the government. Petrou’s F&F should primarily securitize but might need to hold some loans in portfolio especially if the latter don’t lend themselves to easy securitization.
Constructively recreating F&F has virtues, unless the “Kongressional Keystone Kops” just opt to punish or be punitive. That approach would be as much a non-starter as the SBC favoring Senate CorkerWarnerJohnsonCrapo (CWJC) legislation.
As a knowledgeable friend described the virtue of the “utility” model-- with FF having access to capital, private shareholders, and utility regulation-- “The benefits of lower returns on capital (through regulated pricing), less required capital, less intrusive regulation and access to a federal backstop all would flow through to homebuyers. The trick will be getting the balance right. Too low a permitted return and investors won't put up the capital for these "utilities;" too little capital or regulation and the risk to the taxpayer goes up.”
Use F&F Earnings to Recapitalize
Last week's other positive suggestion came in an American Banker article from University of Maryland Business School professor, Clifford Rossi.
Rossi says forget legislation, the answer is for the Obama Admin to employ its existing regulatory authority to recapitalize F&F and stop taking all of their earnings. (Poor guy is being logical, but he is trumpeting what I said months ago.)
http://www.americanbanker.com/bankthink/if-congress-wont-end-gse-conservatorship-soon-fhfa-can-1070408-1.html?utm_medium=email&ET=americanbanker%3Ae97637%3Aa%3A&utm_campaign=-oct%209%202014&utm_source=newsletter&st=email
Rossi echoes the incompetence of the legislators and the breakdown of the legislative process in arguing that this major change should be done via regulation, since the Hill can’t agree on much and its paralysis has a cost.
When it comes to F&F, the difficulty is instituting any agreed upon changes—given how riven the Congress is—which is why Rossi calls for the WH to use its embedded authority to declare F&F have sufficiently repaid the Treasury and how best to get them back to work.
Beyond the “stop the sweep and use their earnings to recapitalize,” Terrapin prof Rossi doesn’t describe what F&F’s relationship to the government would be. That would be crucial especially when they enter the debt markets.
Tim Howard
Judge Margaret Sweeney has more on her mind, i.e. Lamberth decision and DOJ agitation for her to follow Lamberth’s lead, than Tim Howard (former Fannie CFO, not the blogger with that nom de plume), but she still hasn’t ruled on letting plaintiff Fairholme retain Tim as a consultant, an action to which the government objected.
The government argued that Howard might abuse the information he peruses via “discovery.” But Howard—if hired—would be bound by the same Sweeney “discovery” rules and sanctions as all other Fairholme employees and lawyers.
DOJ’s position really screams of discrimination because Howard toiled at Fannie and has spoken out that the former Fannie regulators erred (how about acted dastardly and with venom) in their Fannie treatment and their false claim that he and others violated securities laws, an allegation later thrown out by a federal court judge in 2012.
AIG and Fannie and Freddie
Even though the F&F and AIG cases have some duplication among counsel and common use of the phrase “takings,” they are different, since the institutions are different.
AIG’s lawyer, David Boies, certainly is eliciting some embarrassing (for them) responses from Hank Paulson and Tim Geithner over the government’s rationale in taking over the AIG insurance company, re impact on investors and possibly vindictive thinking which influenced their decisions.
Given an opportunity—c’mon Judge Sweeney, don’t stop now-- the public should expect to see more of that and more tortured government rationales when/if Ted Olson—Perry Capital’s lead attorney--gets to question Geithner, former FHFA Director Ed DeMarco, current Treasury Secretary Jack Lew and maybe Bernanke and/or Paulson.
If Hank Paulson’s book working notes—which surfaced during the AIG hearing and crowed over his “nationalization of Fannie and Freddie”-- indicate that he and other federal officials publicly said one thing, but behind the scenes acted with intent to do something harmful and destruction, those could be an ugly set of court deliberations. That especially would be the case when most in Congress thought they were voting to “conserve” F&F for future revival and operations.
With regard to the case before Sweeney, the F&F conservator, FHFA—which I described last week’s as “Tonto” to the Treasury’s Lone Ranger”-- reportedly has very few records of its deliberations, especially on the “third amendment,” which Treasury seemed to drive and control.
So, who in the Obama Administration was controlling what and what were their objectives when all of F&F’s earnings were aggrandized?
Lamberth and the Appeals Court
Below is my comment to a friend when he observed that Judge Lamberth’s decision was not supported by the underlying statute and that Lamberth ignored certain protocols.
“Unfortunately, this just causes me civic heartache, because if Lamberth can rule this way--given what we all perceive are his ‘mistakes’--why should we have faith that the appeals court will rule differently?”
(The lawyers among you will know that there are at least two more levels of appeal, if the Appeals Court doesn’t overturn Lamberth.)
Fiderer article
Below is a link to David Fiderer’s very thoughtful article on structural flaws in the private label mortgage backed securities market (PLS), which is what loan securitization is called when the guarantors are not Fannie and Freddie and also a scheme inherent in most of the anti-GSE legislation in Washington.
In 2005-2007, when the banks and the investment banks last tried this business venture in huge volume, they unleased on the world more than $2 Trillion in soon-to-fail, poorly underwritten and scandalously rated mortgage backed bonds (you know, all of the stuff the GOP seems to ignore), which failed in numbers and percentages far greater than anything, in the same era, which had F&F’s stamp on them.
The reason why the big banks and their allies were hot for the SBC CWJC bill was because it provided government insurance for those private label MBS losses.
Yet for policy makers, Fiderer’s well-argued column is what they need to understand when they attempt to throw sand in the gears of the US mortgage market, which heavily relies on loans being turned into bonds so that investors—not limited insured bank deposits—finance the bulk of America’s future homeowners.
http://www.nationalmortgagenews.com/news/origination/private-mortgage-securitizations-have-a-math-problem-1042801-1.html?zkPrintable=1&nopagination=1
Panetta on Obama
In his new book, the portrait former Secretary of Defense Leon Panetta (and also former CIA head) sketches of Obama sometimes makes the President look more like a college professor than a chief executive (sound familiar?).
“He relies on the logic of his presentation, with the hope that ultimately people will embrace that logic and then do what's right. You know what? In 50 years, my experience is logic doesn't work in Washington. You gotta basically go after people and make them understand what they have to do. And that means you create a war room. You go after votes. You push people."
http://malonigse.blogspot.com/2014/10/keep-fannie-and-freddie-new-vocies-and.html
You may miss the Big Bang!gltu
HAHA, I forgot about that old joke. I really thought it was curious that Blackstone is buying in to his new fund. Does anyone remember the leaked Blackstone documents?
does anyone have an opinion about the pershing square investors?
Ackman, 48, said in a speech at Euronext Amsterdam today that he’s targeting a “decent-sized stake” in a U.S. company, and will announce the investment in the next couple of months
"Rothschild Bank AG, Rothschild Wealth Management UK Ltd., Qatar Holding LLC, Swedish pension fund Forsta Ap-Fonden, Schroder & Co Bank AG and Blackstone Alternative Asset Management LP were among investors in the stock offering."
http://washpost.bloomberg.com/Story?docId=1376-ND8KU06TTDS301-7JS8MRVGRO47PMC8D9F9I3RMS3
Freddie Mac offers small apartment mortgages
by admin on Monday, October 13th, 2014 | No Comments
Government-sponsored enterprise Freddie Mac is venturing past its standard mortgage originations and building a business to originate small apartment loans, between $1 million and $5 million, as part of its mandate to support affordable housing. Per Bloomberg:
The average loan will be about $2.5 million, the McLean, Virginia-based company said today in a statement. The mortgage giant plans to originate as much as $1 billion of such debt in 2015, according to David Brickman, the head of multifamily operations at Freddie Mac.
“It is critical to provide financing for smaller loans and properties, especially since this market segment disproportionately serves lower-income renters,” Brickman said in the statement.
This falls right in line with Freddie’s September Economic and Housing Market Outlook report, which said that the multifamily sector is witnessing a strong rebound as the single-family sector struggles to move at all.
“The apartment market has been vibrant, reflecting the desire of many millennials to live in an urban setting and retain locational flexibility,” Frank Nothaft, Freddie Mac vice president and chief economist, said.
In September the construction of buildings with at least five apartments hit the highest monthly construction pace since the beginning of 2006
http://originatortimes.com/freddie-mac/freddie-mac-offers-small-apartment-mortgages/
That is correct sir. If me or you tried to dress like Barry Manilow in public we would get bitch slapped!