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More on the Jrs.
http://www.bloomberg.com/news/2013-04-08/hedge-funds-wagering-on-fannie-reincarnation-mortgages.html
About half of small and regional banks who held Fannie Mae and Freddie Mac preferred shares when they were taken into conservatorships still own them, said Paul Merski, chief economist at the Independent Community Bankers of America.
It could be that the holders of FNMAT are the ones who will sue first and hard, when it comes to that. They have been Paulson'ed bad.
I think the 3 billion networth cap will impede any cash outflows. And any excess to that 3 bill. flows straight to Tsy each Q, as you said. They have handcuffed them.
92 mill shares @ 25 = 2.3 billion.
How are they going to pay for this?
This is consistent with Millstein's plan.
In fact, on December's interview he specifically said that given the current trend of nationalizing FF the biggest selling point that could influence Congress to allow for a recap/AIGexit endgame was to show them how this scheme could help budget issues. So he assumed a recap/exit => budget aid would be "an offer they could not refuse".
As a side note.. he recently said that in this last scenario the fate of the Jrs. was more uncertain compared to a full blown liquidation of the GSEs by which -he believes- Jrs. will be made whole.
My comment was in reference to Millstein owning Jrs.
First time I read about this was from Skibrian post linked to the street article dated 04/05/13 - 04:09 PM EDT. Before yesterday I did not know Millstein owned preferred shares. Search for skibrian post.
Normally, I would also think this is a negative for us.
However, you have to wonder why this is being made public now after the public has been bombarded with news of FF resurrection. Forget about the run up in price since Millstein seems to have owned this for a while.
Since I have some free time I will venture a few speculative/fantasy thoughts a) there is already a deal with the Treasury for Millstein to take over and he was asked to disclose to the media his position way before any facts. Swagel -in turn- is in CYA mode, b) this has been made public to anticipate-prepare-test the public regarding both a coming restructuring of the companies and the fact that the chief *restructurer* is personally invested.
Think of the fiasco Buffett/Sokol. Had Sokol made public he was invested in Lubrizol -while touting the acquisition- way before the take over there would have been no conflict of interest neither accusations of insider trading :)
Therefore, this could be the *bullishest* of all news for us.
Today, I am practicing creative spelling like my 5 year old boy.
Only two trades
10:40:45 10.93M @3.68
10:51:27 10.93M @3.70
I am not one of the sad boys but I find articles like this too confrontational and am not sure whether they help or hinder. I would have preferred to stay under the radar.
When suing the government you are suing an entity with unlimited funds and resources.
A modification to the PSPA by mutual consent between Treasury and FHFA that allows Fannie and Freddie to recapitalize (retain some of the earnings) will give Jrs. a sustained jolt. Even if such recapitalization takes years.
I think politicians are followers, for the most part.
They follow crowd sentiment and flip-flop accordingly in pursuit of votes. Crowds are their reflection. If enough media momentum gathers -with news and editorials- regarding the useful role the GSEs can play in the market, specially when compared to greedy, private banks, politicos may join the party and become advocates as well.
It takes a bit of time.
Good one, skibrian. I guess fourcents was right... things have changed! Never thought I would be reading anything like this. Happy boy here.
Fourcents, don't dare believe his words. These are just distorted, inflated, juiced up, artificially propped-up apples.
I have been battling to get one for the last 2 months. A meager mortgage with 810 credit score and 50% downpayment. Insanity!
Agree. Alexander will prevail.
Are "residual profits" equivalent to crumbles? Even in that case Jrs. are first in line!
Exactly. That was my point. It doesn't matter who they took it from. It matters that they did take something from someone.
Thank you for the link Jemiller2
"We didn't take any of their property. They're buying up property that we've taken from other people. I don't know enough about takings law to tell you what the answer is on that. I would say this: I wouldn't take it before a jury if I were they."
Only as part of a greater scheme that involves a temporary receivership. Like bringing them in to later or quickly privatize them or restructure them into something else.
I want to be realistic, not sad.
The change you speak of pertains to the companies, only. Not the shares. Shares of a company is not the same as the company. The only firm, long term, sustainable indication I can have that the shares we own have or will have real value in the market is if they get relisted. I think this will eventually happen. But until then I will continue to be uneasy.
Perhaps I have missed something but why is everyone so cheerful? I still live with the daily risk of a potential 8/17 bust that will fry my nuts. I believe the overhaul is still on and that anything can affect the preferreds in a number of ways. "Lets we forget" our fate rests on the hands of some very irrational people. Too soon to claim V, in my view.
What I don't hear outside of these message board is any support for the shareholders rights.
Ski, do you know the name of the Prem?
http://www.cornerofberkshireandfairfax.ca/forum/
I also believe that commons will survive but at a fraction of the equivalent value from the old days. Fraction meaning low single digits -not considering reverse splits-. If there is a sale of assets, say platform IPO or secondaries to raise funds, then the Jrs. may get anything raised above 188 billion. And if anything over $225 bill is ever raised, Jrs. will become whole (188 Srs + 37 Jrs). Sale of Srs. will not affect us as they may remain in existence above us, both with a liquidation preference and a dividend preference.
Sallie Mae was a fortunate case where the common not only survived but got stronger right after the 90s restructuring. I do not think shareholders will be as fortunate in any GSEs resolution.
Damn it. Sorry about my typos. I need glasses!
Blast from past...
Speaking of Paulson hearings.
http://www.c-spanvideo.org/program/Takeover
Worth watching all 30'. Jrs. mentioned several times.
This sounds excellent! And in my view, feasible.
WB may be salivating to get a piece of the Srs. but if convertible to commons he would want a guarantee that commons will get a dividend.
All of the Paulson hearings.
http://www.c-spanvideo.org/henrypaulson
Not to put words in his mouth but I think what Joe Stocks is trying to say is that *normally* the GSEs problem would have deserved receivership. But since that could have created additional problems the government decided to go with c-ship as the least worst option, the minimum they could do to produce maximum possible damage to the companies without creating a hecatomb.
Therefore, Tsy should not feel they owe shareholders anything nor feel they have to compensate them for having "saved" us from falling into the precipice. From this perspective, the 10% punitive dividends are deserved.
I may not agree with this or may not like it. But I think we should all make an effort to remain open-minded.
And yes, the shareholders helped prevent this. And got a "punitive" interest rate for doing the government a favor.
*hopefully* the TSY will cancel the seniors
I think it is a mistake to underestimate this point of view. It resonates with the public. And politicians stand ready to exploit it.
Here is your urban myth explained, Bingo!
The Dark side of the Looking Glass (Part 1 and Part 2)
Plus it is important to be realistic. These lawsuits are never fair and a lot of number manipulation goes on so that commoners get toast. Although that is more prevalent in bankruptcy procedures. I would not know what a 5th amendment violation lawsuit looks like.
If there is a lawsuit with a positive outcome that involves a payout Jrs are first in line to get paid, above commons. Sometimes payouts never reach the common, aren't enough. So if you are buying a lawsuit like Letgo, the Jrs. are the play.
Here is a link to that report by the FHFA
http://origin.www.fhfaoig.gov/Content/Files/WPR-2013-002_2.pdf
There no new terms. It refers to the sweep that is taking place since 1/1/13 plus possibly to the DTAs.
Fourcents, it's true. Here is the link to the report by FHFA. Dated March 20th.
http://origin.www.fhfaoig.gov/Content/Files/WPR-2013-002_2.pdf
Page 2 - Conclusions
The change in the dividend structure also will affect quarterly payments to Treasury, potentially resulting in the Enterprises returning more money to federal taxpayers sooner. Indeed, because of accounting treatment, sustained profitability of the Enterprises could result in a one-time large dividend payment from each Enterprise to Treasury.
Congratulations to the commoners on this board.
I am happy to see you have made money these past few days. I have never owned any and most likely will never do. But if you do well, so will we.
Someone has been making a killing...
...the holder of the 79.9% warrants.
taint, did you miss the 2 5m buys yesterday? That is usd 30+ mill in 2 trades!
Here is the official report :) from FHFA / OIG
http://origin.www.fhfaoig.gov/Content/Files/WPR-2013-002.pdf
From the OFFICE OF INSPECTOR GENERAL dated March 20th, 2013.
Indeed, because of accounting treatment, sustained profitability of the Enterprises could result in a one-time large dividend payment from each Enterprise to Treasury.
3. Blocking DTAs. Again, it appears he is a one man road block. Employees at Fannie are screaming out "We're a viable company" but DeMarco is there to stomp out any hope.
4. Giving away FnF's world class proprietary software for free to build his little "platform". How did he dream up this little plan? Is this part of his purview to "conserve and perserve"?