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It was published by the Wall Street Journal. How is that considered "hearsay"? Isn't it then part of the public record? Can you explain more fully?
Thanks.
You said there was a $50 per share offer, that you revised to $47.27 per share. THERE IS NO SUCH OFFER.
Here is Berko's proposal... which virtually wipes out common equity in the rundown of the old mortgage contracts from purhased bank loans from mortgagees.. It is NOT an offer to buy out the GSEs or common stock.
http://online.wsj.com/public/resources/documents/FairholmeOffer.pdf
JMHO.
The Fed has delivered near zero interest rates for so many years that it is hard to recall the earlier, more "normal" years. Delinquency rates directly tie to interest rates in a binary ratio. A lot of that phenomenon ties to ARMs that comprise a big chunk of the FnF enterprise.
Don't confuse CRT's with something positive for shareholders. They fulfill the risk abatement mandate from FHFA by paying near junk bond rates to purchasers willing to take on the risk of non-guaranteed paper. That is more of a bad news than good news scenario for shareholders dwelling in "Sweep" purgatory. The prospects of escape grow dimmer by the day because the spreads compress as the returns from mortgagees are fixed at original rates but the cost of risk transfer degrades the ROI as reported in earlier periods on the same paper.
Dumbed down, it means that you make a lot less to shed some risk exposure going forward. So you moderate a default jeopardy, but generate less income to recapitalize (or pay UST). That, all up, is not helpful to market cap or S/P. It really best supports the wind down conclusion by demonstrating that the GSEs really are not all that profitable and need to be returned to private enterprise status.
JMHO.
The Perry Capital announcement has spooked the investor market, leaving little but day-traders, shorts and penny-flippers to play in this sandbox. There is no volume in any Fannie or Freddie preferred shares, either.
So... we wait for news, or watch a return to the range trading euphoria/despair of alternating days up and days down. And who can forget the usual emotional responses like "load up the truck" followed by dark depression and thoughts of desperation on the pull back days.
BORING. "en banc" is the equivalent of "in prison" for FnF investors wanting a verdict in the Perry Appeal. And everything else has gone quiet. Even Glen Badtard has apparently fled the scene of the accident.
JMHO.
Isn't Berkowitz largely in the same boat as Perry?
His St. Joe holdings have flattened and are weighed down by enviro concerns and a global recession in metal commodities.
Sears Holdings, and all its related components, are on the ropes, especially the Kmart and retail Sears stores, as well as Sears/Canada and Lands End spin-offs. Only the Seritage SHLD REIT has shown any increasing value in 2016 but is viewed as at extreme risk by analysts (I sold mine in August).
His debt/warrant holdings including Chesapeake and several others are delivering no return in 2016.
FAIRX is delivering approximately a <2% fund investor yield against a 1% load going for fund management. That nets <1% return for a high risk hedge fund investment... not much to write home about, even considering his past accomplishments. When I read Richard Perry's comments regarding his exit, the "mark to market" reality he mentioned made me immediately think about Berko's plight and pressures at Fairholme.
http://portfolios.morningstar.com/fund/holdings?t=FAIRX
These big fund managers can't string along the legal circus forever or the expense will strangle not only their core businesses but their reputations as savvy investment leaders. I am still hoping for a settlement on preferred shares, which is what all but Ackman/Pershing are concentrated in and continuing to hold. The big enchilada is, of course, the Perry Appeal because it is an omnibus of reasons to remand back to District Court, and it only takes one argument to gain traction among 2 of the 3 justices hearing the appeal to earn SOME victory. The question remains, however, will the ruling be to dismiss... or will the remand imperative be over some small reconsideration that would impose little-to-no penalty on government? Or will any ruling get pushed way out by either the en banc process debating the fossil fuel Obama initiative (all D.C. Appeal judges but Merrick Garner are immersed in the en banc). Or by further legal jousting over document privilege and, possibly, a mandamus filing?
The last point may gain some clarity whenever a redacted ruling is released with potentially some detail regarding the judge's order. At the moment all we have is the plaintiff's motion to compel from last December but no glimpse of how much the court agreed on within that kitchen sink document.
JMHO.
Baloney. Post it.
A $50/share offer would have rolled longs over faster than Bristol Palin dropped her pants.
JMHO.
There was NEVER an offer for $50 per share. NEVER.
NO! Simply having Fannie and Freddie around and 30 year mortgages available is WORTHLESS if there is no middle class that can afford to finance a home for that long. Interest rates are going to go up. It is going to get more and more expensive to own a home. And fewer and fewer people will qualify for mortgage loans. Many do not even express an interest in ever doing so. So saving FnF is NOT the pivot point.
Having a middle class or a lower class with at least a living wage is the only thing that really impacts the housing industry. If the 1% becomes the 1/2%. it is all over for housing. Don't blame government or TBTF banks for the global oligopoly momentum. Fannie & Freddie will collapse under the weight of an imbalanced economy if nothing changes to re-orient the economy to a more middle ground distribution of wealth. Look at the exit package for the discharged WFC loan scam executive. She might get a yacht out of it, but how many new home loans will be originated because she glommed all the $$$?
Saving Fannie is NOT a national imperative. That only serves the interests of some fat cat investors that bottom-fed shares at bargain basement prices, and a small # of private investors (like 14K of them, most like Judge Thapar, with under 2 dozen shares each). Saving the middle class is the only thing that makes saving the GSEs worthwhile.
JMHO.
The problem I have is the fight over the wrong cause. We have become so consumed with the polarity of TBTF banks vs. greedy government in some absurd contest that caused the financial crisis and now jeopardizes affordable mortgages. That's all well and good. But it ignores history.
Our country's economic demise of the middle class began with the business consolidation in the conglomerate era of the seventies. The "synergies syndrome" really meant what Mel Brooks later and most aptly dubbed "Engulf and Devour." Who can forget Bill Farley, Chainsaw Al Dunlop and all the Wall Street glitterati who created downsizing under the publicly more palatable "right sizing" strategy? And, of course, the Drexel-Burnham junk bond scams on the Millken adventure era. Then came investor activism, Carl Icahn with TWA, and the maquilladora imperatives that moved so many jobs into Mexico or to India or Third World/low labor markets including China.
When failed Reagan trickle down economics and jobs lost overseas started crushing the domestic economy, Clinton acted to save our last great, surviving financial driver in housing... with low cost initiatives to get more affordable homes available to a declining middle class population that was increasingly minority slanted. Had he not acted, the financial crisis would have started many, many years earlier. There wasn't that much left in America to work with except housing growth.
What blew up the housing market was not affordable housing initiatives. It was greed pushing mortgage financing to new heights of chicanery to pad banker bonuses to unprecedented levels, right alongside the bonus rewards of executives at both Fannie Mae and Freddie Mac. Regulation was way too lax across all parts of the mortgage landscape.
The discussion that NEEDS to take place is how to save good paying jobs and a thriving middle class. Saving the GSEs or the 30 year mortgage is just a microscopic part of a much larger problem that grew up decades before the easy-to-blame events that now preoccupy the narrative.
JMHO.
The Bloomberg report clearly stated that less liquid remaining shares in Fannie Mae and Freddie Mac would be sold off over the next year.
That IS what the article says.
That fact is not arguable. If you dislike it the point, please feel free to take up your displeasure with the writer for Bloomberg who stated it.
LOL.
It means, as Richard Perry stated, that the remaining preferred shares are illiquid.
Please stop disparaging any Fannie Mae opinions that don't support some different agenda. I clearly express my thoughts as OPINION. That is hardly "nonsense".
No, not wrong. Read Richard Perry's letter. It clearly states Perry Capital will not be selling its REMAINING preferred shares in Fannie Mae for up to a year, or similar verbiage. This to me implies recent selling, and someone has been dumping shares in the 10 days preceding this announcement from Perry. My FNMAS has taken a real "hit" during this period. This likely was Perry paring back, likely in anticipation that his announcement would trigger a further selldown and lower S/P.
My further view is that as lead plaintiff in the D.C. Court of Appeals case, Perry would have deferred any action to shutter his funds if some enormous payday was expected, anytime soon, from the court. He could have bought some more time, as did Berkowitz, by citing optimism to convince fund investors to stay any redemption requests awhile longer.
JMHO.
ZERO. Perry's position was amassed before the 2008 conservatorship, from my recollection.
JMHO.
Perry would not have sold if some positive verdict was imminent in the District of Columbia Court of Appeals. Right?
I think the Fairholme advisory to the 3-judge panel may have been what pushed Perry over the cliff.
Not a good day for many. Including me. Think I will open an old bottle of Chateau Lynch-Bages and watch the debate to take my mind off things. I think I still have 2 1985's left in the cellar.
JMHO.
Perry Capital shuttering main hedge funds is NOT a positive sign for preferred shares. That is mostly what they owned. My guess, only, is that they will continue to fund the legal expenses as recovery on FnF may be the best recourse for fund shareholders during wind down and redemption payoffs.
May actually lead to some form of settlement, just to get on with life.
That could be good. That could be bad.
Perry Capital had a strong reputation for commitment to taking care of its investment clients. They were the one FnF stockholder that legitimately owned shares at pre-conservatorship prices. They took some deep hits under the FHFA imposition. They were among the few fighting to get even, not some gargantuan payday gain from bottom feeding.
Sorry to hear today's news.
JMHO.
The discussion on this board is only on topic if it pertains to Fannie Mae, and the only pertinent "takings claim" that has been active on this board is Bruce Berkowitz's Fairholme case filed against the government. The full scope of Fairholme's description of the taking is more than adequately detailed in his 28 page docketed filing, link posted by me just minutes ago.
JMHO.
The actual text in the U.S. Constitution states "just compensation".
I never said "due process" was moot. I said it was a right of every American citizen.
You don't even understand what the takings claim is as put forth in the Fairholme complaint. Berkowitz is not alleging that his shares were taken. He is stating that the dividends were taken from junior preferred shareholders and given to government with its senior preferred shares.
http://gselinks.com/Court_Filings/Fairholme/13-465-0001.pdf
No, wrong again. Just like on the 150 day claim you made that was false and disproven. Fair value is often adjudicated in bankruptcy law and is a very specialized valuation system that, as suggested by others, considers tax carryovers, pending legal settlement recovery, intellectual property and many other enhancements to potentially affect share price.
Many on this board will recall precisely such valuation mechanics in the case of Exide Technologies which many Fannie/Freddie investors were actively involved in, just a few years back. The DTA discussion is valid here because if it were concealed... as come claimants have stated... the S/P valuation would have been deliberately manipulated lower, a clear violation of the doctrine of fairness.
JMHO.
I sensed that there was a real undercurrent to that outcome revealed in Friday's CNBC interview with Bruce Berkowitz. This has gone on,seemingly FOREVER with little-to-no progress. That futility shows in the S/P's.
It is time to cut through the crap, structure a deal that government can live with and then shake hands and leave the jurists to other matters.
The "all or nothing" adamancy is just simple greed and, if it persists, will just drag this out into the financial oblivion where the lawyers get all the gains and the shareholders get a letter advising them that their stock has been cancelled and has become worthless.
JMHO.
So you think that the takings claim is is valueless, like rekcusdoo, and believe that it will never be affirmed by Judge Sweeney? That almost must be so since the takings claim is the entire premise for the Fairholme suit filed in July, 2013... over three years ago. There really isn't anything more to the suit than "takings".
You must not think very highly of Bruce Berkowitz for spending so much time, energy, money and personal commitment to a losing cause. You must also think that Judge Margaret Sweeney is incompetent for failing to dismiss a case that has no merit. Is that about right?
Why does this board and every blog on the planet devote so much time to the Fairholme suit if it is doomed from some "due process" defense?
The takings claim is the best legal recourse for shareholders to attain any victory against the government among all the pending litigation. It just would deliver a smaller gain for shareholders than some other options, and might tend to serve preferred stockholders better than common stockholders. This is why it is so unpopular in some quarters, but not in mine.
For some time I believed the Jacobs, Hindes case offered the most promise for a shareholder-favorable verdict. Then MoeRon Steal got it all screwed up with gaffes, misfires and blown opportunities to win under Delaware state corporate dividend law. Now there is nothing left but Fairholme. Perry is headed for dismissal. Plus it is now likely on hold, anyway, waiting for "new" bombshells that may not ever be released or pan out as even being relevant.
JMHO.
Wrong, yambike. The 5th amendment says "without adequate compensation".
It is just like eminent domain claims. The government can appropriate property but must fairly pay for any taking required for the public good.
"Due process" IS a constitutional right of every citizen to have their day in court to seek fair and reasonable consideration of claims. The concept goes back as far as provisions in The Magna Carta on whose basis the framers extensively relied. Madison was a smart dude on this stuff. Read Richard Epstein's reknowned book on the subject if you want background.
The last time I looked, I seem to recall the JPD annualized number being around a combined $3.5 B for Fannie & Freddie. I bet Perry, Fairholme and Jacobs, Hindes would settle based on such any arrangement (if it included a stipulation for liquidation preference pro-ratedly similar to Senior preference held by government) while the rest of the legal morass slogs along in court for another 10 years.
JMHO.
Yes. Somebody gets it. For the last year I have stated that the real "game" is in the takings claim. Amendment 3 was a clear overreach by government. There are no documents necessary for a takings claim. It either occurred, or it didn't occur. Period.
By confusing and complicating everything with all the supplemental bullshit, and by layering one copycat suit on top of another in the grab bag for class action cash, the litigation plaintiffs et. al. have dragged matters out for years and have nothing to show for their efforts.
HERA trumps all the other claims, which judge after judge has ruled or confirmed. Why continue to chase your tail when the truth is so obvious and right before your eyes?
JMHO.
The Souter lead opinion ruling in the Cheyney matter is VERY clear in delineating the difference in standard between criminal (Nixon) and civil (Cheney) cases. Let's compare civil to civil, please. This is a purely civil proceeding.
I cannot say for sure how old the documents involved are, such as 8 years old, or more. It seems likely that many of them are more along the 2011/2012 timeline, but so much is redacted or under seal in these filings that I offer no insight as to age or current relevancy as I have not seen them. Have you?
If the government files no appeal, I will be proven wrong on the mandamus prediction. If they file, the chips will fall where they may.
JMHO.
Judge Sweeney may not care if released materials embarrass the government or key government officials or advisers, but the Supreme Court cares very much in the Cheyney decision. The Cheney ruling was cited by government attorneys in a motion docketed on February 19, 2016 so there is no question their legal team is familiar with the precedent.
https://www.law.cornell.edu/supct/html/03-475.ZS.html
A mandamus ruling under Appeal should eviscerate plaintiff's requested documents under discovery. It will just take time... a LOT of time... to adjudicate. Meanwhile, the $$$ runs out in right at 15 months. And by advising the DC Appeal panel about "incoming weaponry from discovery" (or however otherwise it might have been described in a sealed motion) the Fairholme team has now likely put any decision in that court on hold, pending appeal resolution. The discovery circus and pig-headed, irresolute insistence on a full-frontal document witch hunt is now going off the rails.
Who is advising Bruce Berkowitz? Glen Badtard?
Be on the lookout for the appeal filing. I would guess the odds of this happening at at least 90%+.
JMHO.
The government has been granted privilege to protect materials from interactions with outside contractors and contributors to policy decisions. Rulings also affirm the executive privilege rights afforded key leaders in matters of public importance. I expect a writ of mandamus appeal will be filed by government to limit damage from Judge Sweeney's order to release documents. There is similar precedent in a SCOTUS ruling involving former Vice President Dick Cheney that seems highly appropriate:
https://www.law.cornell.edu/supct/html/03-475.ZS.html
JMHO.
The GSEs $$$ runs out in December, 2017. A delay is as good as a win.
https://www.law.cornell.edu/supct/html/03-475.ZS.html
A writ of mandamus works both ways... for plaintiffs and defendants. It is an important vehicle because it does not require a case to be settled via verdict in order to be imposed on a lower court, as in an appeal of verdict, although that can be the remand directive in some cases. It seems apropos as an action to prevent the lower court from releasing protected discovery materials that should not be revealed under prior rulings of law including at the SCOTUS level.
JMHO.
Is a writ of mandamus in the offing for the Sweeney court? With a filing under seal regarding new documents and an amended complaint in the Perry Appeal, this could slow all verdicts down by 6 months or more, if so.
JMHO.
I am trying to honor the numerous requests for me to "take a hike" hereabouts, at least for some time, but I think there is a lot of wasted energy on the Sweeney court's recent ruling. The documents "in play" are surely those listed as Appendices 1 through 4 on the docketed filing from December 7, 2015... the initial Motion to Compel filed by plaintiffs. Those links remain up and active on gselinks.
What is NOT listed is any court order by Judge Sweeney affirming this Motion to Compel. Perhaps that is contained within the text of the recent order. That would be my assumption, but can only be verified whenever a redacted version for public scrutiny is filed.
My further assumption is that only Fairholme's legal team has seen any such order which makes published account's of any content as likely to be their handiwork and responsibility for complying with the terms and conditions imposed by the court in any such order. It is not unusual for attorneys to issue news updates on cases in which they are active. I do find it unusual for info to be selectively distributed to "special friends" and not more mainstream outlets or via their own website.
JMHO.
Yank out.
You keep bringing up the same stuff up on deferred tax assets and healthy income decrying the impetus for any bailout in the first place. Why don't you just go back and read the infamous Barron's article from March 10, 2008 that set the momentum in place for a public declaration of insolvency.
As for timelines, the facts I present are indisputable.
http://online.wsj.com/public/resources/documents/fannietimeline0506.pdf
Now, point by point.
1. Yes there is core net interest income in every year that Fannie has been in business. But there is also core net interest expense in satisfying MBS guarantees in each year, too. You can't just consider the intake and ignore the outflow.
2. "The value of risky loans and securities was swamping their reported capital. By the end of 2007, guaranteed and portfolio mortgages with FICO scores less than 600 exceeded reported capital at Fannie Mae by more than seven to one; Alt-A loans and securities, by more than six to one. Loans for which borrowers did not provide full documentation amounted to more than ten times reported capital." (source: FCIC)
3. Insurance only covers select mortgage assets, and many of the providers were TARP recipients on shaky ground, themselves. But the magnitude of risk exposure remained HUGE, even considering any eventual payments. "At the end of December 2007, Fannie reported that it had $44 billion of capital to absorb potential losses on $879 billion of assets and $2.2 trillion of guarantees on mortgage-backed securities; if losses exceeded 1.45%, it would be insolvent.Freddie would be insolvent if losses exceeded 1.7%. Moreover, there were serious questions about the validity of their 'reported' capital." (source: FCIC)
4. There was no such surplus. You overlooked MBS interest expense.
5. Unworthy of comment. I frankly expect better from you. That comment is said with a mix of respect and disappointment.
The comments in my post were direct quotes drawn from the Financial Crisis Inquiry Commission Report to Congress. They are also largely consistent with the facts presented by the St. Louis Fed Report and the later delivered New York Fed Report, both of which were extensively researched and totally footnoted. I have linked these, previously, on this board for review and discussion.
I am very tired of being insulted for presenting facts or thoroughly researched opinions with links explaining why that opinion has merit.
The Amendment 3 Sweep and the $186,000,000,000 Conundrum.
Some plaintiffs claim that the Sweep is illegal for taking 100% of GSE income in perpetuity that rightfully belongs to shareholders.
The government claims that it is wrong for shareholders to demand 100% of GSE income in perpetuity since, just a few years ago, they needed a $186,000,000,000 helping hand from taxpayers and the government.
Are they both right? Are they both wrong? Probably the answer is "yes" from both polarized perspectives.
Until this gap gets bridged, partisans from both sides of the spectrum are going to get NOTHING but further years of "NO DECISION" or "DISMISSED".
JMHO.
You can distrust anyone you want. Fine by me.
When it comes to open-minded evaluation of issues regarding Fannie Mae vs. government litigation specifics, I would be more inclined to discredit anyone affiliated with any organization called: "FHFA Accounting Fraud Special Investigations Team".
LOL.
JMHO.
The decisions that matter have been made in the courts.
Lamberth got it right. Three judges have affirmed his ruling to dismiss.
Trust me. THERE WILL BE MORE.
The only way this litigation goes forward to delivering any positive outcome for shareholders, common or preferred, is if the litigation is wound down to some realistic question of law. Either it is a takings claim, which requires no further documents in Fairholme. Or. It is a question of Delaware or Virginia law regarding dividend payment illegality under state law. Or, It is a self-dealing claim under Perry.
The breach of contract stuff is a non-starter. The new, unjust enrichment stuff is a new frappe version of old conspiracy theories. The self-dealing stuff is at variance with HERA. There are few positive prospects for a rapidly dwindling victory in any of these wild goose chases.
What all this needs is some simple jurisprudence measured against the rule of law, not influence from childish social media campaigns like "The Fannie Grabbers" and all the other circus side-show endeavors that have been popularized by "some" media types in the blogosphere. Own or disown whatever part of that statement that you wish. I, frankly, do not care one iota.
This has dragged on for SO long that the litigation circus has become more a contest of wills than a contest of right vs. wrong. The courts, from my perspective, have an uncanny way of dealing with such scenarios in an eventually conclusive manner.
JMHO.
So Glen Bradford is "Justice" and also "DC_Bob"?
That is very interesting, if true.
Nothing like hero adoration, hereabouts, for a prolific commentator on Fannie Mae and Freddie Mac, if proven? What a confidence builder in all that Seeking Alpha content from what could be a totally disreputable source if timhoward717 is right!
Hope that report is wrong. It would be both disillusioning and discrediting to a major percentage of Fanniegate content put out by that info source.
JMHO.
You just need to understand the FACTS better. Here are a few tidbits from the Financial Crisis Inquiry Commission Inquiry report to Congress and the American people, reported by a reputable non-profit opinion group:
- "The GSEs were highly leveraged--owning and guaranteeing $5.3 trillion of mortgages with capital of less than 2%.
- "The value of risky loans and securities was swamping their reported capital."
- "At the end of 2007, Fannie reported that it had $44 billion of capital to absorb potential losses on $879 billion of assets and $2.2 trillion of guarantees on mortgage backed securities..."
http://wallstreetonparade.com/2016/05/confidential-memo-in-the-hedge-fund-battle-for-freddie-and-fannie-comes-out-of-hiding/
I have posted the FCIC data NUMEROUS times, previously, and this report as well. I cannot alter the reality that many people want to ignore the content, or the facts. But the numbers are the numbers... and THE FACTS. They are borne out in FNMA's and FMCC's own audited 10-K's.
The conservatorship was warranted by the metrics of the day in 2008. Whether Amendment 3 was further warranted is now before the courts. I believe that it was an overreach and will be pared back, repealed or replaced by and Amendment 4. How, in any way, does that position equate to "talking negative/hypothetical"?
I own a LOT of preferred stock in this company. Many, many, many zeros. A company is NOT PROFITABLE when its sole source of income arises from DTAs and derivative hedging gimmickery. That is NOT a CORE business, nor does one dollar of that revenue come from having a workable, successful, profit-producing business plan that can sustain that business entity into the future. Fannie had inadequate reserves with which to weather the crisis in 2008. Fannie, today, has inadequate reserves to weather another crisis, even of lesser dimension than 2008. The taxpayer is not willing to be a Sugar Daddy to secure investment returns to GSE shareholders. The idea that all FnF income created via government largesse should be 100% swept to shareholders in perpetuity is just as offensive as the similar claims levied against government.
Period. End of story.
JMHO.
Car repos were EPIDEMIC during the crisis. Remember. Even GMAC crumbled into bits and became Ally bank. Ever see the Export/Import Bank losses on defaulted aircraft loans?
This is like the antithesis of Charlie Sheen's comment. It has become: "LOSING" except that there is no domestic goddess serving up slices of pro-Fannie celebration cake.
JMHO.
I am a Yankee fan. You have to trust me on this. Joe Girardi warms up his closing ACE during batting practice.
Back to Fannieland, defaults are always low during periods featuring declining interest rates and rising home prices and stable or improving unemployment rates. A Fed-manipulated recovery featuring near zero interest rates for the duration of the recovery is not normal or sustainable for the next 30 years of mortgage loan originations.
There are some thoroughly scary whispers floating around about how much of the housing "recovery" was either investors diving into the rental market, or, house flippers using HGTV magic math to stimulate activity in key markets with low on-the-market existing home inventory.
Bubble, maybe?
JMHO.