Any posts are my opinion, and should not be relied on for your investment decisions.
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Interesting report:
SPECIAL REPORT: Is Congress Creating Another Lehman Brothers in the U.S. Housing Market?
10 Things Every Investor Needs To Know
http://www.lawrencegmcdonald.com/housing-market-fannie-mae/
I do not like these lawsuits either and the timing of them. Would have been better to wait until zero owed by at least one GSE.
I always thought Congress would sit on their hands and that FHFA & TSY would need a 4th PSPA amendment at the zero mark. If a 4th amendment to the PSPAs were to be written (allowing shareholders to participate in the recovery/profits) would likely remove a great deal to litigate over.
Now these lawsuits may spur congress to do something...
Holding for now
http://blogs.marketwatch.com/election/2013/06/11/fannie-freddie-shareholders-sue-u-s-with-novel-twist/
Interesting that KBW mentions possibility of pref divi after taxpayer is paid back.
After reading over the lawsuit, mixed feelings if this helps or hurts us. Would love to know if these plaintiffs still hold their shares. FHFA and Treasury could make this go away by honoring the original role of conservator (eventually allowing value to return to shareholders). Eliminates many of the legal tangles.
Again, I'm on the fence. Does this help us by enforcing the role of conservator or add fuel to congressional fire to dismantle and then litigate this class action?
More propaganda pandering from Bloomberg...
http://www.bloomberg.com/news/2013-06-06/fannie-mae-and-the-hedge-fund-bet.html?cmpid=yhoo
At least this time they put it in the opinion section.
I like reading about the history of GSE prefs...
http://thedealsleuth.wordpress.com/2008/08/27/why-regulators-let-banks-invest-in-fannie-and-freddie-preferred-stock/
Did the GSEs own prefs of each other (ex- fannie owned freddie and vice versa)? I thought it had been confirmed a while ago...anyone recall?
Sharing, GSE article on zerohedge...
http://www.zerohedge.com/news/2013-06-03/gse-privatization-or-fed-magic-here-are-alternatives
Thx. Yeah see that now...read too quickly. Who is "Real Estate Private Equity Inc.???
Found this on
http://www.insidermonkey.com/insider-trading/filing/4098698
Jupiter Enterprise LP is the direct owner of the common shares of beneficial interest of the Issuer reported herein (the "Shares"). Jupiter Enterprise LP is managed by its general partner, Jupiter Enterprise GP LLC. Jupiter Enterprise GP LLC is managed by its managing member, Jupiter Multifamily JV LP. Jupiter Multifamily JV LP is managed by its general partner, Jupiter Multifamily (GP) LLC, which is managed by its general partner, Jupiter Multifamily (Governance) LLC. REPE Jupiter GP Holdings LLC, ACQ SPV II Paper LLC and ACQ SPV I Holdings LLC are the sole members of Jupiter Multifamily (Governance) LLC. REPE Jupiter GP Holdings LLC is managed by its sole member, Real Estate Private Equity Inc., which is a wholly-owned subsidiary of the Reporting Person. ACQ SPV II Paper LLC is managed by Lehman Commercial Paper Inc. Lehman Commercial Paper Inc. is a wholly-owned subsidiary of Lehman ALI Inc., which is a wholly owned subsidiary of the Reporting Person.
(continuation of Footnote 1) ACQ SPV I Holdings LLC is managed by its sole member, the Reporting Person. The sole share of stock of the Reporting Person is owned by Lehman Brothers Holdings Inc. Plan Trust. Despite this ownership, the Lehman Brothers Holdings Inc. Plan Trust does not have any voting or investment discretion with respect to the Shares reported herein. The Reporting Person disclaims beneficial ownership of the securities reported herein, except to the extent of its pecuniary interest therein
Are you thinking LAMCO is now Jupiter?
Lehman also owns this 248 acres Oceanfront in Orange County CA also. Mall, Hotel, Homes planned for the site. I saw the site gates open for the first time since 2008 a few days ago.
This article is older, but gives an idea of whats planned:
http://www.ocregister.com/articles/suncal-328712-marblehead-site.html
Agreed Beta, hedgies are not the true enemy. They objectively see value...as we see it. Truly hope congress remains unwilling to do anything and they TSY makes the smart financial decision for the USA taxpayer and future potential homeowners.
This was posted on the Fannie and Freddie shareholder site by Europe
http://thehill.com/blogs/on-the-money/banking-financial-institutions/300531-senators-want-to-move-forward-with-fannie-freddie-reform
When will they release them from Conservatorship?
I'm thinking they (FHFA & TSY) want the Bank lawsuits and put-backs completed before any big move is made. The two GSEs can continue their reform, single-platform securtization, and portfolio wind down outside of conservatorship, while not being utilized for other policy (ex: paying for a payroll tax cut).
FYI...I just wrote my congressional reps (via thier website)
Can find yours at: http://www.contactingthecongress.org/
Letter was brief
"Dear Congressman/Senator (add name)
As partial owners and with the GSEs recovery we are urging thier release them from conservatorship. These companies have done a great job with the raising of fees and raising the criteria of the loans. As real estate owners we feel this release would further bolster the market and that the two GSEs have served the US quite well in good and bad economic times. The two GSEs can continue their reform, single-platform securtization, and portfolio wind down outside of conservatorship, while not being utilized for other policy (ex: paying for a payroll tax cut)."
We truly appreciate your consideration
Sincerely,
JW
Sharing article that I believe was not posted.
http://www.mortgagenewsdaily.com/03202013_gse_conservatorship.asp
Waiting on 1Q earnings and TSY payment.
Best JW
How much was TSY offering Demarco to conduct these write downs? I remember the initial analysis included TSY steering $$$ to ea GSE for performing the write downs. I thought Demarco said it was a net positive ($1.7B better for GSEs). Then Ed D raised the parade of horribles...moral hazard, protecting taxpayers, etc...
In this article it was "Treasury is offering to use billions of dollars of unused HAMP funds to cover 16% to 63% of the cost of a principal reduction on GSE and other loans."
http://www.nationalmortgagenews.com/dailybriefing/2010_525/treasury-incentives-principal-writedowns-1028564-1.html?site=default_msn
If TSY is still offering the unspent HAMP cash to the GSEs, then I see it as a positive for a quicker workout of the remaining underwater borrows and quicker recovery for the GSEs.
Agree, probably better to split up half or thirds. I don't know what cost the GSEs are issuing this longer term debt at. Would have loved to been a fly on the wall during the discussion between the accountants, regulators, IRS re: DTAs and best outcomes.
Looks like the GSEs are positioning for the large payments to TSY, just when TSY needs it most. I really like that they are not selling assets to make the payment, instead using debt issuance!!!
http://www.bloomberg.com/news/2013-04-08/fannie-mae-profit-may-swell-treasury-coffers-as-debt-limit-looms.html?cmpid=yhoo
The government-controlled mortgage financiers, under revisions last year to their bailout agreements, turn almost all of their profits over to the Treasury. They each say they have considered reversing about $90 billion of writedowns of tax credits, which would boost the remittances
Fannie Mae signaled in its April 2 annual report it will realize $58.9 billion of the unusual gains in its first-quarter results, enough to fund Social Security payments for a month, according to Stone & McCarthy Research Associates’ Nancy Vanden Houten. After including Freddie Mac (FMCC)’s potential windfall and the $5 billion to $10 billion of regular income the analyst said they may post, their June payments could about equal the $100 billion by which former Treasury Secretary Timothy F. Geithner told Congress in December the U.S. debt grows on average each month.
“It could mean a pretty big chunk of cash for the Treasury at a time they need it,” said Vanden Houten, a senior government policy analyst at Princeton, New Jersey-based Stone & McCarthy. “I don’t have a strong feeling yet if we’re going to have a real nail-bitter of a debt-ceiling showdown, since I think there’s less appetite for it, but you can’t rule it out.”
Asset Sales
While Vanden Houten said the firms may use asset sales to come up with the money for any unusually large payments tied to the non-cash accounting gains, analysts at Deutsche Bank AG and FTN Financial say they probably will turn to the debt market, creating additions to their interest costs.
In January, Fannie Mae’s portfolio of liquid investments jumped by almost $28 billion, a sign it “may already have taken the first step toward raising longer debt for a Treasury payment,” Steven Abrahams, a New York-based Deutsche Bank analyst, wrote in an April 3 report.
Politicians may be in the middle of another debt ceiling fight when the money is sent over.
“Any time I’ve gotten too optimistic about these things being dealt with maturely, I end up having it blown back in my face,” Vanden Houten said.
Balance Sheets as of December 31, 2012, Management's Discussion and Analysis and Accompanying Schedules. Posted 3/27/13
http://dm.epiq11.com/LBH/Document/GetDocument/2284740
Sorry, fail to see any LEH business here besides one of thier ex-employees moving onto Boston Properties (BXP).
Interesting in this 3rd distro notice appendix A shows cuml. % totals. 1st notice had %, 2nd did not show cuml. %.
http://dm.epiq11.com/LBH/document/GetDocument.aspx?DocumentId=2284736
Got it 4cent...so are you of the opinion as they pay back they are essentially retiring sr prefs?
Looks that way according to S&P (see below, their numbers)
2012 2011 2010 2009 2008 2007 2006 2005
Equity -77,618 -86,426 -78,710 -61,531 -59,640 12,615 22,192 22,582
2004 2003
26,807 26,878
Found it -
Also each GSE contracted to issue common stock warrants representing an ownership stake of 79.9%, at an exercise price of one-thousandth of a U.S. cent ($ 0.00001) per share, and with a warrant duration of twenty years.[29]
Appears TSY can buy GSE commons at .00001/shr for ~15 more years. I'd keep them alive to make a profit
Statement: Treasury received the following for up to 200B in funding commitments.
** $1 billion of senior preferred stock in each GSE
** Warrants for the purchase of common stock of each GSE representing 79.9% of the common stock of each GSE on a fully-diluted basis at a nominal price
The senior preferred stock shall accrue dividends at 10% per year (now changed to whatever you can pay GSE).
http://www.reuters.com/article/2008/09/07/us-freddie-fannie-preferredstock-idUKN0736935720080907
Questions: Why are some posting higher amounts owed in sr. prefs? Anyone know what the nominal price was set at on the TSY warrants? (would love to know this).
After hours...even FNMFO vol way up.
http://www.nasdaq.com/symbol/fnmfo/after-hours#.UUJXIhesiSo
Federal National Mortgage Association After Hours Trading
FNMFO $7,250 vol 2000 up 38.1%
Iron and Camaro, I added the CT/Pref/Comm. hierarchy chart in for reference purposes. It is also on the old LEHJQ board (that board is not active). I can remove it if anyone really feels strongly it does not belong.
Best JW
Looks like last year it was 2/29.
http://phx.corporate-ir.net/phoenix.zhtml?c=108360&p=irol-secAnnual&control_SelectGroup=Annual%20Filings
Based on the past 10-Ks it could be late Feb to early Apr.
Look who wants to buy some of the mortgages FMCC & FNMA are being required to sell...AIG (LOL!).
http://finance.yahoo.com/news/aig-launches-unit-invest-home-173521695.html
Watch we'll be bailing AIG out again in several years. The TBTF model just worked too well.
GLTA
RE: DeMarco and FHFA-
The FHFA answered questions regarding its conservator role:
http://www.fhfa.gov/webfiles/35/FHFACONSERVQA.pdf
Q: Can the Conservator determine to liquidate the Company?
A: The Conservator cannot make a determination to liquidate the Company, although, short of that, the Conservator has the authority to run the company in whatever way will best achieve the Conservator’s goals (discussed above). However, assuming a statutory
ground exists and the Director of FHFA determines that the financial condition of the company requires it, the Director does have the discretion to place any regulated entity, including the Company, into receivership. Receivership is a statutory process for the
liquidation of a regulated entity. There are no plans to liquidate the Company.
Q: Can the Company be dissolved?
A: Although the company can be liquidated as explained above, by statute the charter of the Company must be transferred to a new entity and can only be dissolved by an Act of Congress.
Link to DeMarco's speech from yesterday-
http://www.fhfa.gov/webfiles/25024/EJDNABESpeech.pdf
Reading between the lines and press releases...appears FHFA and TSY will wait for any additional major moves until they see the new platform up and running in addition to some private capital returning.
I think that is years away from showing a trend.
Holding all. GLTA
JW
I hope so too 4c. Otherwise, I'll be the definition of a bag holder (my picture next to description). LOL
Really hoping housing heats up further. GLTA JW
SB,
This is the good part of the prospectus:
Status of the Guarantees
The guarantee will constitute an unsecured obligation of Lehman Brothers Holdings and will rank:
•subordinate and junior in right of payment to all other liabilities of Lehman Brothers Holdings,
•on a parity with the most senior preferred or preference stock now or hereafter issued by Lehman Brothers Holdings and with any guarantee now or hereafter entered into by Lehman Brothers Holdings in respect of any preferred securities of any affiliate of Lehman Brothers Holdings, and
•senior to Lehman Brothers Holding's common stock.
The guarantee will not place a limitation on the amount of additional senior debt that may be incurred by Lehman Brothers Holdings.
The guarantee will constitute a guarantee of payment and not of collection (that is, the guaranteed party may institute a legal proceeding directly against Lehman Brothers Holdings to enforce its rights under the guarantee without first instituting a legal proceeding against any other person or entity). The guarantee will not be discharged except by payment of the guarantee payments in full to the extent not paid by the trust or upon distribution of the junior subordinated debt securities to the holders of the preferred securities in exchange for all such preferred securities.[color=red][/color]
The guarantee, when taken together with Lehman Brothers Holdings' obligations under the junior subordinated debt securities, the indenture and the declaration, including its obligations to pay costs, expenses, debts and liabilities of the trust, other than those relating to trust securities, will provide a full and unconditional guarantee on a subordinated basis by Lehman Brothers Holdings of payments due on the preferred securities.[color=red][/color] See "Effect of Obligations Under the Junior Subordinated Debt Securities and the Guarantee."
Any thoughts on why TSY is allowing them 3B in retained earnings...why not sweep it all?
JW
Yes, 2T ends up on Fed. Bal sheet.
I agree and welcome fact based debate (pro or con). Even welcome opinions based on interpretation of found F&F information.
Like to see any character attacks cease. All of us researching and collaborating can be smarter investors than one of us alone.
Best to all here...
JW
I want more, but alas out of dry powder.
GL sidedraft
JW
GSEs make most of thier money from G-fees. Some from MBS and hedging activity. See slide 17 in the attached. TSY is only making Freddie sell off non-critical assets and will allow them to participate in the market at a later date and somewhat smaller size.
http://www.freddiemac.com/investors/pdffiles/investor-presentation.pdf
TSY is doing this for two reasons:
1. To open private competition (a secondary mortgage mkt), by making the GSEs sell off some patents and a great deal of proprietary info
2. Selling off the Assets will bring more $$ to TSY.
I think its good to review the 3rd amended Sr Pref agreement
See pg 6 specifically. TSY draws the line at no point will they require FMCC to hold less than 250B in Mort. Assets. Also they suspended the periodic commit fee (both good news to me)
http://www.treasury.gov/press-center/press-releases/Documents/Freddie.Mac.Amendment.pdf
Also, at this point they are going to allow FMCC little capital reserve
http://www.freddiemac.com/investors/er/pdf/2012er-3q12_release.pdf
On August 17, 2012, Freddie Mac, acting through FHFA, as Conservator, and Treasury entered into a third
amendment to the Purchase Agreement. This amendment, among other items, replaced the fixed 10 percent dividend rate with a net worth sweep dividend and suspended the periodic commitment fees (both beginning in 2013). Under this amendment, Freddie Mac will be required to pay dividends to the extent that its net worth exceeds the permitted capital reserve. The amount of the permitted capital reserve will be $3 billion in 2013 and will be reduced by $600 million each year thereafter until it reaches zero in 2018. The amendment effectively ends the circular practice of taking draws from Treasury to pay dividends to Treasury
I believe at the ~250B Mort Asset mark a much smaller FMCC is to be re-capitalized w/private capital with Congress charter removed as well and TSY holding warrants for 79.9% to continue to sell off over time.
This is the remainder of the brokerage "customer" claims.
The distinction between a "customer" claim versus a "general" claim is crucial in a situation like the Lehman case, in which Mr. Giddens is winding down the brokerage in accordance with the Securities Investor Protection Act. "Customer" claims are paid 100 cents on the dollar from Mr. Giddens' coffers
We CTs are in the "General" claims
This could move us closer-
Under the deal, Lehman Brothers' holding company will cut its "customer" claim against the brokerage to just $2.3 billion from $19.9 billion and reduce its "general" claim to $14 billion from $22 billion.
We won't know until after 4/16 (later this year):
Although the brokerage business isn't technically part of Lehman's Chapter 11 case, U.S. Bankruptcy Judge James Peck must approve the settlements. A hearing on the settlement with the holding company is set for April 16, while one on the U.K. settlement still isn't set.
New FAQs posted on LBHI EPIQ site http://dm.epiq11.com/LBH/Project
Link to doc (pg 11 has stockholder FAQs)
http://dm.epiq11.com/LBH/document/GetDocument.aspx?DocumentId=2267685