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Both Obama and McCain oppose golden parachutes for ex-execs of Freddie and Fanny. This article on Obamas letter however there is also such a report on the wire for McCains position:
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSWBT00966920080909
This news out a few hours ago:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32085429
This link out earlier this morning affirms in the last paragraph of the article US Govt. support for both Fred and Fan of $100billion each. I thought it was most welcome news
although I don't know what it will mean for the common:
http://www.businessweek.com/investor/content/sep2008/pi20080910_049754.htm?chan=investing_investing+index+page_top+stories
There is also this Motley Fool article to ponder. It makes some interesting points as I am just really begining to dig into this further now.
It raises the spectre of more than 80% dilution taking place which is scary to contemplate:
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Freddie and Fannie Shareholders: What This Means for You
By Morgan Housel
September 8, 2008 Comment (5) Recommend (28)
On Sept. 7, 2006, NYU economics professor Nouriel Roubini stood before a group of econ geeks and made some bold predictions about the future of credit markets. One of those predictions -- which was likely met with a few chuckles and sneers, and perhaps some sympathy applause -- was that Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) would eventually be crippled or destroyed by the fallout in the housing market.
Oh, how right he was.
Two years later to the day, Freddie and Fannie -- created by the government to provide liquidity to the mortgage market -- have been essentially taken over by the government to, well, provide liquidity to the mortgage market. The ironies abound.
What's all this mean for shareholders? I don't need to remind you that common shareholders drew the short straw of the deal -- shares of both companies are down around 80% as I write this. "But why?" I've heard many people ask. "The government didn't wipe out the shares, as many predicted, so we're out of the woods, right?"
Sadly, no.
The Treasury's deal didn't necessarily "wipe" shares out -- they're still trading -- but shareholders might have a tough time distinguishing between the two. Three terms of the deal leave common shareholders with little more than scraps of hope:
All dividends and voting rights have been stripped, for the time being.
The Treasury gets warrants to purchase 79.9% of the companies.
Common shares are now first in line for losses, last in line for profits.
These developments aren't bad. You'd have to cover them in sugar and wrap them in a bow to consider them "bad." They're downright terrible.
Most investors are focused on the second part -- the massive share dilution. Shareholders perked up yesterday when Reuters reported that "the government has no plans to exercise those warrants," but at the end of the day, it doesn't really matter. Warrants have to be carried on companies' books as fully diluting shares, so dilution essentially takes place regardless of the Treasury's desire to exercise them.
And if the Treasury didn't exercise them, what would that tell you? That common shares would be fundamentally worthless. The only situation where the Treasury would exercise the warrants is if shares held legitimate value. Hence, you get two outcomes: Either shares become worthless, or the Treasury actually exercises the warrants, and legitimate dilution takes place. Any way it gets spun, common shareholders are worse off than they were last week.
And keep in mind, this weekend's actions represent the first of what could be many moves. As time goes on and the housing market continues to wallow, it's entirely likely that Fred and Fan will require more capital injections, which would likely mean more dilution. Is it possible shares will be diluted to zero? Absolutely.
Going forward, many banks will benefit from this weekend's bailout. Annaly Capital (NYSE: NLY), Wachovia (NYSE: WB), and Bank of America (NYSE: BAC), among others, surged on the news. Although diehards remain loyal, Freddie and Fannie's common shares will likely live out their remaining days at or around penny-stock land. Good riddance.
For related Foolishness:
A Nation of Enrons
Freddie Shareholders: There's Nothing Left
Why Fannie and Freddie Were Doomed
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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Annaly Capital Management and Bank of America are Motley Fool Income Investor picks. The Fool has a disclosure policy.
Comment (5) Recommend (28)
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Comments from our Foolish Readers
Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.
On September 08, 2008, at 4:41 PM, cnegrinelli wrote: Report this Comment How will this affect the banks that hold perferreds, such as GBTS? Are they out like the common shareholders or is still a little hope?
On September 08, 2008, at 5:13 PM, BDunn19 wrote: Report this Comment Are the bonds affected? What pecking order do they fall in?
On September 08, 2008, at 9:04 PM, GoNuke wrote: Report this Comment It has been evident for many years that Americans have been living beyond their means and that China has been propping up the US dollar by buying US debt instruments, not for the return, but to keep Chinese goods cheap. The US maintained unrealistically low interest rates that were lowered to bail out the speculators in the dot com boom. This lead to the housing bubble. The buck has to stop somewhere. The US clings to the mantra that regulation is bad as if it was a message from God. The housing bubble has been a comedy of errors that has only been possible because of a lack of banking regulation and due diligence. At each turn the US has chosen de-regulation followed by "unorothodox" measures to soften the blow of the excesses caused by the lack of regulation.
Look at the Canadian model. We have big banks that have always been able to operate nationwide so money saved in one region could finance homebuilding in another. Our banks are regulated to the extent that they are not allowed to do some of the foolish things US banks did. Canadian banks continue to perform well, Canadian house prices are stable or rising, the Canadian economy is healthy, and it is very closely tied to the US economy.
From the day I first learned of the existence of sub-prime mortgages I saw visions of the Tokyo real estate meltdown. I would have sold any shares I had in US companies dealing in mortgages. This disaster was almost unavoidable given US policy. It appears that all the lessons of the S&L fiasco were forgotten long ago.
It is time for the USA to reconsider some of its economic dogma. The rigour of the SEC's regulations made the US a safe place for foreign capital. The same rigour needs to be applied to banking so that people will return to the notion that you get rich by working, saving, and investing; not by gambling as in betting on bubbles.
On September 08, 2008, at 9:41 PM, burneb43 wrote: Report this Comment "The US clings to the mantra that regulation is bad as if it was a message from God."
This isn't a mantra from God, but a mantra from the Republican Party, which many in the US take as the same thing. In every major deregulation I can recall, such as the trucking industy, airlines, savings & loans, etc., disasters in that segment have followed within 3 years or less, due to greed and fraud leading to corner-cutting and over reaching.
There are many to blame in the current mortgage crisis, but even The Economist ranks the current "regulation-adverse" US Administration about 40% responsible for dilution and lax enforcement of Federal regs.
There really is NO excuse for issuing a no-doc, lier's loan, or NINJA mortgage. Clearly any such lender intends to mislead or defraud another party about the value of such a receivable.
Not that most Fed regulations couldn't be judiciously trimmed or simplified, but industries never seem to have much collective judgement or restraint for long, and always lobby for the conditions of their own downfall.
On September 09, 2008, at 11:43 AM, cchin wrote: Report this Comment What also erks me is I hear the CEO's are going to be given a $14 million package upon their exit. For what? How many mortgages can be saved with $14 million? Greed. Greed is why we have these problems. These people who do a bad job that affects so many people, especially the middle and lower class that always seem to get the shaft, shouldn't get paid for that. What message are they sending? If you are a CEO and you don't do your job, hey at least you'll be set for life when you leave. So go, play golf, do as little as you can for the health of your company for which so many people depend on. People who don't see a dime if they are let go. They should be ashamed that they let so many people down, I guess here they get to be ashamed all the way to the bank. So sad.
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Where will the U.S. dollar go from here?
Up, up, up ... the latest rebound is long overdue and just getting started.
It'll keep rising for a while, but only if housing and the economy recover soon.
Expect to see ups and downs for the foreseeable future.
Prepare for new lows soon.
Forget the dollar; gold's the only real money out there.
.
I think the mortgage insurance premium that those borrowing more than 80% LTV on their Freddie and Fannie loans is something to take a look at carefully. If someone borrowed the maximum of 95% then 15% of that loan had MI and FNM and
FRE are maxed at 80% exposure. If a homeowner bails because his property value has gone down by 15% to say 80% then the
buck stops there.
A problem that these lenders like Freddie and Fannie have and anyone who bought their loan bundles is that deliquent homeowners can be a real pain. It can take as long as 1-2 years to obtain foreclosure and in the meantime often these loans go unpaid thus causing cash flow problems.
FRE and FNM had a policy that a 660 FICO credit score was also needed as one of the conditions of the loan. This was a minimum and generally represented pretty decent credit. They also looked at closely at factors such as the homeowner debt to
income levels and generally they should not exceed 35% of the
gross monthly income. So you had people who were doing fairly well in income and had good to excellent credit.
All these Fannie and Freddie guidelines were known cold by the
Wholesale Mortgage company underwriters who approved the loans.
Everyone even the banks wanted to package their loans and sell them for a premium to Freddie and Fannie. Then in turn they would package these loans according to terms and resell them to companies such as Analy Capital and others.
The really high risk loans like the 100% and even some 125% were not not Freddie and Fanny products.
It may not be as bad as many think. Freddie and Fanny both did loans for up to 90% in most cases of a homes appraised value. However they only were on the hook for the first 80% and the balance required mortgage insurance (those guys are going to get killed in all this). In some cases you could go as high as 95% with MI.
The problem of course is all these loans which FRE and FNM had which had artifically inflated home values. We see that nationally homes are down an average of 15% in 2008. That would still the majority of homes with perhaps some equity above the 80% threshold. Many people with good credit are
holding 60-80% (loan to value) equity in their homes.
95% of all the loans I have ever done were with LTV's of 80% or below as most people did not want to pay mortgage insurance.
So we have those who will bail on their mortages because they have no equity and are upside down and just walk. Then you have the people who have equity but have lost their jobs with
unemployment now reach over 6% in the USA. Ok, there are going to be more defaults than normal. The real estate speculators especially will bail.
CNBC reported that Stockton, Ca. is the king of foreclosures with an estimated 25% of the housing in that situation.
Most lenders who hold the paper will try and price a foreclosed home at close to what they have in it. The MI companies are stuck with the difference above 80%.
This article many of seen but not I. I suppose it is a good talking point to begin with:
http://www.fool.com/investing/dividends-income/2008/09/09/how-did-freddie-and-fannie-fall.aspx
What was your take on the 10K's for FRE and FNM if you read them both. I am not an accountant but had a legal backround
(JD). I need to do alot of catching up on these stocks as I
did leap in somewhat before looking carefully based on my experience with both FRE and FNM (especially) from being a mortgage broker for many years.
I am also familiar with companies such as Annaly Capital (NLY)
who buy the packaged mortgage backed securities (MBS) from Freddie and Fanny. At last count I believe NLY held about
12B in such loan packages.
Ok just got back from running an errand.
1. Was FRE making money up until this meltdown?
2. Did something drastically change with their MBS portfolio and are they stuck with a bunch of non-performing loans?
I am in the mortgage biz, retired, part time and am very familiar with both and their absolutely vital importance to homeowners. Besides FHA they are about the only game in town.
Thanks for getting back to me rawnoc on this. I have a parcity of real information to go on with my buys and my avg. is too high FRE .80 and FNM around .98. Why do you think it
will hit that target in say 5 mos?
I have read your posts. Would like to discuss the pro's and con's with you either on the board or in PM. The board is fine maybe it would be helpful.
What is your target for FRE and FNM say 3 months down the road from here? Any thoughts. TIA.
PS: I have both of them.
Heck no I wouldn't spend $40 on a backround check on Travis...I have nothing invested in and very likely never will again. This backround business was in response to someone who posted some weak links to Siron Investments and Travis. Then it occurred to me that perhaps the real estate records would reveal if Travis owned his office building or leased it to get an idea of his personal worth.
I do think he knows influental and wealthy people in Las Vegas and perhaps one or more of them is involved with this. I really don't know chuck. Good luck with it hope you make out OK.
My effort at tongue in cheek humor. Sorry if you took me seriously. I have no illusions. My stock is worth $25 for 250K shares which I took over from a family member much to my regret but it had to be done. Now it is worthless, well it was my recco in the first place and they lost a bundle. They must share some responsibility for not selling in May like I did when the PPS was still at .0070-.0080 range but dropping fast.
Gene has some ocean front property available in the Mohave Desert but he says that property value will change once the audit is completed and he "uplists" the property...LOL.
KD is right Gene Newton is toast and I intend to ride him into the dust for good and make sure he doesn't scam anyone else before he passes on to his greater reward. Are we enemies now?
I suppose so but usually you need to respect your advisary and I have absolutely no respect for him so I will term it as Pest
Removal service.
Yep. Talk is cheap. He also said these things in written form. Read the mans words carefully. I did not coach him on what to write in response it was pure Gene Newton at his finest. If you believe anything this man says you are playing right into the scam he has set up. However he does not want your words of support....HE WANTS YOUR MONEY. Be sure to help him out like gchnj apparently does. I know he would appreciate it:
To: Martingale
From: Gene Newton
"I have talked with who are knowledgeable about penny stocks. It bothers me as well. If you reduced it to 500M good things would happen. But as it is, it looks bad"
I deal with billion dollar companies. Do Joint Ventures and Partnerships that are over 39 billion in value. Sale restricted stock at 1.50 a share and it does not bother them. (They think there doing well)
So why should I care what a bunch of small time penny stock Monday morning quarterbacks have to say. With a drop of a dime (phone call) all penny stock shares could be bought and ergo
all the little pinky mentality with it. But I guess that why RCC is where it is for we look to the future not to a 100,000 dollar trade. Wake up and smell the roses. Your buying 3.50 stock below a penny. Be happy.
Or send me check for 24 million plus because that what I have invested in a stock that has a 2.5 billion dollar os that being used to buy companies and put it a world wide market. Your female whore moans are showing. I can show you this same statement from you more than three times.
We are a non reporting company.
When it is longer to our advantage to be in this position we will move on.
There now I got to BITCH
I can Bite
Todays not a good day. My family has been threaten and so have I.
This means to me we are making end roads and are staying the course.
Thanks again for your support and help. Also I know you mean well.
Just a bad day.
On Thu, Apr 10, 2008 at 9:48 AM, Gene Newton <newtonrccholdings@gmail.com> wrote:
I will
Thanks
On Thu, Apr 10, 2008 at 9:39 AM, <MARTINGALE wrote:
Hi gene. I did file a formal complaint with the SEC on Scottrade yesterday and copied the CEO of scottrade as well. I know they have had at least 4 complaints filed on them in the past few days. So, I have done what I can about it.
The A/S continues to hurt the stock from the comments of new potential investors I have talked with who are knowledgable about penny stocks. It bothers me as well. If you reduced it to 500M good things would happen. But as it is, it looks bad. Just so you know.
Nice to see you bump up the revenue projection for 2008 to $15M....that is good news! Excellent job.
No one can find out anything about CPIC and so that news was basically a non-event as you can see.
A website would be nice to have. They might get a few calls but they can always refer them back to you.
Just a suggestion.
All the best,
xxxx xxxxxxxx
--
Gene Newton
Chairman, CEO
RCC Holdings, Corp
MGR Towers
8599 Haven Avenue
Suite 306
Rancho Cucamonga, California 91730
--
Gene Newton
Chairman, CEO
RCC Holdings, Corp
MGR Towers
8599 Haven Avenue
Suite 306
Rancho Cucamonga, California 91730
(909) 483-6500
Thank you I will enjoy your abscence but will miss your humorous posts.
So, the whole boyaha about Scottrade being short, etc. is just more nonsense from a few trying to cloud the issues once again.
Thanks for the email response indurango. This rests squarely on Gene Newtons door step once again.
I would hate to give up my Great White Shark ride that durkk has provided with such humor but perhaps he could modify that pic to show more shareholders bailing off the RCCH/TITANIC and Gene Newton riding the shark. Much more appropriate....LOL.
In the past 40 days Newton has gagged the T/A. Dumped millions of el cheapo shares on the market and now prevented
Scottrade from offering RCCH securities for sale to their clients. Great job Gene. Whats next? Can hardly wait.
http://tv.wallst.net/3-min-press/3-min-press.php?episode=17&part=118
If ghcnj executes and comes up with 150M shares with his group then they would own approximately 30% of the O/S unless it has
changed drastically for just $15,000 if that is them camped out on the bid of .0001.
Rather pathetic from my point of view as I did pony up about the same amount of cash for just 1M shares just 6-7 mos. ago.
I listened to the wallstreet.net interview again just now.
Newton states that investors hold "tremendous assets" in his
company. He did not elaborate. He also got in his shots at the brokers. His tremendous assets are his ATM machine and little else. Even IWS is a broken business in a sector which
is having severe hardships if they are involved in with the home builders:
http://tv.wallst.net/3-min-press/3-min-press.php?episode=17&part=118
Yeah, and CSHD is currently at .0010 where it belongs. The days of people buying the pinky stories are just about over for good. If as Gene says, JV's bought into his company at
$1.50 then they have felt the pinch as well with a new zero value on their holdings.
For him to do any more JV deals is nearly impossible with the value the market has given him in exchange for his performance.
Any pending deals were probably cancelled IMO. And who knows, the sellers of late may have been the JV's with free trading shares like some on this board have speculated.
RCCH is Gene's personal ATM machine. I am surprised he has not come forward with a strongly worded PR to defend it with
some facts on what is going on. He has been attacked on this
board by myself and others and yet maintains his stoney silence.
I think the international exchange he was looking at probably will say thanks but no thanks. Why would say even the venture exchange in Vancouver take this on when most of their stocks are in the multiple pennies. Actually I have never seen one there that traded at a fraction of a penny....none at all. There might be some but I have never seen them. And of course ditto that by several factors on the Toronto exchange. As for London, I have no idea what goes on over there but I imagin it is not like our pink sheets in terms of dismal PPS values.
To get to a .02 value he would need to do a 100 for 1 reverse split. Will he do that? Who knows but it may be his only option. The Canadian exchange is rampid with shorters as well
as even their own citizens can short the venture exchange as I understand it. Perhaps some Canadians could chime in on these
thoughts.
More than likely I would say the uplisting will fade into a memory and RCCH will remain on the pinks where they truly belong. ALL JMO.
No this was way before I became disenchanted with Newton. I spent hours on the phone with the guy listening to his life story and how he made his money in construction. Anyone talking to him in the Feb-Mar-April time frame probably heard much of it as well. I know Stocrates did and one other who would call. We would compare notes on what he said via the phone and in emails and PM's. If we all hadn't lost our a$$
it would be funny now.
Hey TT you can buy me out for $1 per share and I will forever leave the board...LOL.
Why would Gene lie about that issue and bring it up out of the blue? I was not asking about his personal finances at all.
Gene told me once on the phone back in March that he was tired of living off his wife's income (Orange Co. public school system). I believe he was telling the truth and is tapped out.
It was another red flag back then and was duly reported to my associates to ponder.
BTW Stocrates and I discussed Newtons claims of having a law
degree back in March-April. He even had the school and the name of a federal judge Newton claimed to be clerking for.
We laughed about that...just another red flag back then.
LOL. I see there is alot of interest in people slapping the ask at 4. Wait and see mode I guess. Travis remains a man of profound "mystery". A better word is enigmatic:
http://dictionary.reference.com/browse/enigmatic
Thanks to Gene Newton...period. Get real.
Except "the float" is in all likelihood increasing weekly as Newton turns on his ATM machine. He has another 2 billion to sell to anyone who is interested.
Gene Newton can sit back and sell as many shares as he can and there is none to stop him. Thats my point. Who has their shares at the ask for .0002? Seems to be some there but not
much interest. Is it the flippers/traders who had the 1's yesterday courtesey of someone who desperately wanted them sold at the rock bottom.
Newton will sell you all you want to buy ghcnj. 150M is a drop in the bucket as to what he can do to the O/S. Are the JV partner disillusioned with their transactions with Newton given the PPS? No Way. Their shares are worth $3.50 just ask Newton.....they have over $1billion in assets ask one of our
posters here.
Stocrates paid $3,000 of his hard earned money for 200K shares just 6 months ago. He could now buy 15-30M shares for the same money. That says it all about the genius of Mr. Newton.
In a normal company he would have gotten the boot by now but hey this is just a stinky pinky with a nut case in control.
Gene is going to an "large international exchange" with a stock at .0002 in valuation and a market cap of $70,000. LMAO
KD13 has been spot on huh? Interesting hmmmmmm. What is your take on this.......
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32031794
Looks like some folks weren't snoozing about my heads up on Sunday. Goldman Sachs has a target of $4 per share out yesterday late. Unfortunately GS neglected to mention RCCH again even though it is worth $3.50 per share according to Newton:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32024893
You probably have the rest of the month....unless the speculators beat you to it.
250,000 still holding. Looking for .0004 again for an even
$100 bucks.
I use IMO (in my opinion) on most of my posts and when I forget to you can just automatically add it in there for me will ya. Then you will always know it is IMO unless it is an email from someone at RCCH or something like a filing from the SOS of Florida. Those selling the 5's could load up the 1's
today if they had listened to what I was saying at that point.
Some did and bit the bullet now they have other options IMO.
CJ I didn't get involved in RDWG until it was .0006. You had already basically lost all your money at that time. You could have maybe sold for .0007 when I started posting about RDWG and why I thought it was risky business. The PPS has held up
pretty well. I expect to see .0001 out of this stock before long but unlikely to buy any of it cause I don't think Travis
cares much what is happening from the looks of it. He has done little in the last 3 weeks except raise the A/S to 2.5B.
LOL.
No, you were one of the ones who bought into his story about
OneFi hook line and sinker and it cost you dearly. So what else is new with these pinky IPO's? This one lasted for less than 3 weeks before it hit the triple zeros. You really should have taken the step of sending an email to the CFO of One Fi like I did and it would have saved you alot of grief.
You bet something changed and radically too. That CPIC PM came from information supplied by the master liar Gene Newton.
At that point he hadn't hung himself yet like he did in May.
Since May to now I was fairly silent just watching and flipping from time to time on the dips. Trying to make back the big money I lost in April.
You got a decent chance to make 100%+ on your 1's today if you get the speculation crowd into the game.
Does anyone have time and sales for RCCH today my java is not working properly and want to see how many 1's went off.
334,200,000 7-29-08 up from 281,709,397 on 7-03-08.
Nope they are completely crispy critters....burnt toast. Will not trade for foreseeable future if ever. DVPC and GSII went down this road months ago leaving a bunch of stuck bagholders for the same reasons outlined by the SEC in this filing.
How about the flippers and traders instead? Guess what??
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32032187
500M @ $2. Koolaid anyone?