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It’s was about Wall Street eyeing Land Mark Capital raise for Fannie & Freddie
Good job
It’s was about Wall Street eyeing Landmark Capital raise for Fannie & Freddie !
On Bloomberg
Holding strong and added this morning to my beautiful position!! Life is good !!
10years holding strong amigo ! Life is good !!
The Trump administration wants to put Fannie Mae FNMA -6.77% and Freddie Mac FMCC -6.86% back into private hands after more than a decade in government control. The path to doing so will likely lead through Wall Street.
Before the two mortgage giants can be privatized, they will potentially have to raise billions of dollars from investors, a move that will require big banks to move further into a sticky political issue. Financial firms are already laying the early groundwork.
Executives at Bank of America Corp. BAC +0.34% , Citigroup Inc., Goldman Sachs Group Inc., GS +0.60% JPMorgan Chase JPM -0.08% & Co. and Morgan Stanley in recent months have talked with the Treasury Department and Fannie and Freddie’s regulator about how a capital raise could work, said people familiar with the matter.
There are no indications the government has begun a formal process for hiring banks on a capital raise, and it could be a hard sell to investors. Still, several, including Bank of America, Citigroup and Goldman, have begun preparing internally to win a role in what could be a landmark event, these people said.
What to do with the mortgage giants has divided lawmakers for years. The two firms were bailed out with taxpayer money in the financial crisis. If they are privatized, shareholders and bankers could reap big financial rewards—without eliminating the risk that taxpayers could end up footing the bill for another downturn, skeptics say.
Fannie Mae and Freddie Mac back about half of new mortgages in the U.S. Now, talks are heating up about reshaping or shrinking the two companies, a move that could impact millions of Americans. Photo: Heather Seidel/The Wall Street Journal
The Trump administration still needs to answer important questions to clear the way for a capital raise.
For example, the government still has a large ownership interest in the two firms from bailing them out, which could make potential investors reluctant to get involved.
The government must also decide how much capital Fannie and Freddie need to stand on their own. The Federal Housing Finance Agency, which regulates the companies, said last year they would need to have as much as roughly $180 billion combined, but the regulator is currently deciding whether to propose new capital rules.
The FHFA and Treasury in September began allowing Fannie and Freddie to retain as much as $45 billion of their earnings combined. Fannie currently holds $6.4 billion in capital and Freddie holds $4.8 billion, according to FHFA. Still, they would need substantially more capital, and would likely need to turn to the public markets for it, to stand on their own.
The IPO market has also slowed recently even on more typical companies, which could make it harder to raise money. It is not clear what forms a capital raise for Fannie and Freddie would take. The biggest IPO in the U.S. so far this year was Uber Technologies Inc., which raised $8.1 billion, according to Dealogic. U.S.-listed IPOs raised less than $332 million each on average so far this year.
Treasury Secretary Steven Mnuchin, who once ran Goldman’s mortgage trading desk, has long said privatizing Fannie and Freddie is a priority.
The FHFA put out a notice this month that it is hiring a contractor to advise it on capital markets. That role could potentially include helping select underwriters and advising on what capital structures could look like.
During a Congressional hearing Tuesday, FHFA head Mark Calabria was asked about the potential for hedge funds and other money managers that hold shares currently to reap a windfall from these efforts. Mr. Calabria said: “If... we have to wipe out the shareholders, we will.” Shares of both Fannie and Freddie, which have risen sharply this year, fell Tuesday and were down again as of mid-morning on Wednesday.
The preliminary discussions between the banks and the government also covered topics such as how the mortgage market would be affected by releasing Fannie and Freddie from government control, the people said. Some of the meetings took place as the Treasury prepared to release a September report about its support for privatizing the two companies.
The biggest U.S. banks already have a large presence in the mortgage market, potentially complicating any capital raise. Many banks not only make mortgages to consumers, they also sell those loans to Fannie and Freddie. Some banks package and trade mortgage bonds, a business that would be upended if Fannie and Freddie return to private hands.
Fannie and Freddie are essentially the plumbing behind the U.S. mortgage market, buying home loans from lenders and packaging them into securities that are sold to investors. The government effectively nationalized them in 2008 as defaults mounted. They have remained in conservatorship ever since as lawmakers have tried and failed to overhaul them. Some pushed to privatize them and others tried to do away with them altogether.
The government injected about $190 billion into the companies in the crisis bailout. Since 2012, the companies have been required to return profits to the government. They have now returned more than $300 billion.
Banks including James Dimon’s JPMorgan Chase have talked with the Treasury Department about how a capital raise for Fannie Mae and Freddie Mac could work. PHOTO: KENA BETANCUR/AGENCE FRANCE-PRESSE/GETTY IMAGES
James Dimon, the chief executive of JPMorgan, has said in private meetings in recent months that housing finance regulators in the Trump administration have been more effective than in the Obama administration, according to people familiar with the matter.
Mr. Dimon has long criticized the government’s oversight of housing finance after the financial crisis. But recently he has taken a more conciliatory tone, lauding the latest efforts to overhaul Fannie and Freddie.
“I think they’re kind of going in the right direction,” Mr. Dimon said at a conference last month.
Write to Juliet Chung at juliet.chung@wsj.com and Ben Eisen at ben.eisen@wsj.com
my average is 1.45 amigo lol
Well if you have a lot of shares 1cents is very good !!!
Up up up ! I told u guys buy buy buy !
Boooooooommmm buy buy buy guys !!
https://twitter.com/os4___/status/1187033219390214144?s=21
Buy buy buy
Booooommmmm
This is a big case. Brett Kavanaugh already ruled CFPB unconstitutional in a separate case. His colleagues should agree with him. The CFPB as presently constituted is an affront to the Constitution. https://t.co/YSeIH4GJOB
— Varad Mehta (@varadmehta) October 18, 2019
Boooooommmmm
Note: A Supreme Court ruling on the @CFPB's structure would inevitably have implications for the @FHFA. #CFPBconstitutionality
— Dodd Frank Update (@DoddFrankUpdate) October 18, 2019
He was taking to banker ! Lol today
Calabria said today to expect an announcement about whether or not @FHFA is going to re-propose the capital rule or just go with finalizing the exiting capital proposal. This thing continues to pick up the pace. #FANNIEGATE millions
— Fanniegate Hero (@DoNotLose) October 16, 2019
#fanniegate $fnma ... they're just going to copy paste the moelis plan basically pic.twitter.com/UlTzhjCeSr
— Fanniegate Hero (@DoNotLose) October 16, 2019
"should be able to announce in the next couple weeks whether they will re-propose the capital rule or not".
Shorties tic-tac time is running w!!
Booooooooooooooooommmmmmm
Calabria: "I should be able to announce within the next couple weeks whether we are going to re-propose" the capital rule.
— Katy O'Donnell (@KatyODonnell_) October 16, 2019
Lol this investment will change ur life amigo ! With the moneys you can buy a New liver!! Lol
Get ready amigos
$FNMA $FMCC Bhatti v. FHFAhttps://t.co/fHirp4YcLs
— InvestIt (@FNMA_RRR) October 15, 2019
Relax amigo go have a drink lol
Moneys is coming! Life is good
Old old old news amigo !!
At 65% shorts it’s a certainly!! Lol
Booooommmmm
GSEs Might Need as Long as 18 Months to Build Capital: Calabria
By Elizabeth Dexheimer
Federal Housing Finance Agency Director Mark Calabria says he expects Fannie Mae and Freddie
Mac to spend nine to 18 months retaining earnings to build up a sufficient capital cushion.
Calabria, speaking Thursday at George Mason University’s law school in Virginia, says it would be very
hard for GSEs to to raise capital in a down housing market or a down equity market
Calabria says finishing an FHFA capital rule for Fannie and Freddie is a prerequisite for the companies
to be able to sell shares
Calabria says FHFA is currently determining whether to re-propose a capital rule or to make changes to
a proposal issued by his predecessor
Fannie and Freddie don’t have to exit conservatorship at the same time, Calabria says
He says companies may have to operate under consent decrees with the government because they
might reach a point where they have sufficient capital to exit conservatorships, but not enough to
adhere to the FHFA’s requirements
FHFA is reviewing a host of options to make Fannie and Freddie more profitable because the
companies have to be attractive to potential investors in order to have successful share offerings,
Calabria says
FHFA hopes to have hired a financial adviser to offer expertise on Fannie and Freddie by the end of
November, if not sooner, he says
Calabria says he expects the Consumer Financial Protection Bureau to revise its so-called qualified
mortgage rule before a carve-out from the regulation for Fannie and Freddie expires in January 2021
FHFA is evaluating Fannie and Freddie’s underwriting standards, Calabria says
Booooooommmm
Calabria says he sees 9-18 months of retained earnings, expects Fannie and Freddie to be looking at public offerings in 2021
— Katy O'Donnell (@KatyODonnell_) October 10, 2019
Boooooommmmmm
In discussion at @MasonLEC, @FHFA Director @MarkCalabria publicly indicated #GSEs could leave conservatorship before hitting top capital threshold and operate under consent decree. pic.twitter.com/N5a4IvYdLs
— ACG Analytics (@ACGAnalytics) October 10, 2019
I agree but it’s never to late the more they talk about our companies the better! Life is good !
Next Tuesday we will be attending the @US8thCircuitCt hearing of Bhatti v. FHFA. A right leaning court that may echo @US5thCircuitCt 's decision in #Collins. #GSEshttps://t.co/h78vJgXChw
— ACG Analytics (@ACGAnalytics) October 8, 2019
It’s coming !!!
A handful of current owners in Fannie/Freddie common and junior preferred, as well as consultants and analysts, increasingly believe Berkshire Hathaway will be part of an investor consortium that buys upwards of $100 billion worth of stock in the GSEs https://t.co/PlCTqLM3Z4
— InMortgageFinance (@IMFpubs) October 7, 2019
Hf waiting for a settlement! Bad boys! Let it fly Mr HF !!