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Been awhile since I've visited the board. Hope everyone is well. Not sure what's all been talked about since I've been gone. Just wanted to touch on one thing quickly that some may already know. The NWS. I have my personal belief in regards to whether it will be stopped or allowed to continue. However, that's pure speculation. I want to address what isn't speculation: If the NWS isn't stopped and what it's impact could possibly be.
Currently, deferred tax assets account for $33.5b on the books. They are accounted for using the effective tax rate of the company. In Fannie Mae's case, that amount is 32.8%. Currently, Trump is pushing for a 15% corporate tax while Paul Ryan is pushing for it to be 20%. Taking the higher figure we can account for the effect it would have against current DTA value.
The math is quite simple. Dividing the current DTA book value by the effective tax rate produces the timing difference between book value and IRS cash taxes. That amount is $102.13b. Then, readjusting the amount for the new tax rate of 20% produces the new DTA carrying value of $20.43b. The difference between the new book and the old becomes $13.07b. That is the amount that must be written down "in the quarter the new legislation is passed" (not when it takes effect).
For a company that produces between $10b-$12b per year, you can see that a $13.07b impairment of deferred taxes could be devastating; although temporarily. On the balance sheet, equity is also discounted by the same amount. The difference between current equity and a DTA impairment could push the entity into requiring additional funding from the Treasury.
Because 90% of wallstreet value earnings rather than businesses, this could produce a short term deficiency in the trading shares of the GSE's.
Discuss.
No better source than math.
$68.34b in NWS + $9.62b in TCCA Fee's.
$77.96b is the correct amount that FnF have overpaid to the Treasury.
Incorrect.
He's searching for information. He's not even on step #1. Let him go.
It's funny that you proclaim Buffett is someone you look up to but have no idea what cigar butt investing is all about. I don't intend to teach you, I assure you of that.
Maybe start studying Buffett's Owner Earnings calculation, then advance on from there. Goodluck.
I'm certain.
They didn't ask for a bailout. You must be on day one of discovery.
True. Also similar to calling this a $295 per share stock.
He never said it was a "low priority". You're embellishing.
In your dreams.
Yes, as most daily fluctuations of the market are. It only becomes relevant until price equals value. The stock price just dive-bombed 30%. Picking up a few pennies is extremely irrelevant.
Always amused by comments such as this. It's impossible to buy without a seller.
He's a lot smarter than you apparently give him credit for.
They probably tried to securitize it as an investment product to sell to the public (a derivative). DTA's can't be sold. They are tied to the taxpaying entity. I can't sell you my personal income tax responsibility. Neither can any corporation. That'd be tax fraud.
I preach that often. It's the first thing I do with any article I read.
Thank you, sir. Exciting times right now.
Huh?! A deferred tax asset is the non-cash recognition today for the possibility of a cash recognition in the future. You don't sell them. Nobody purchases them. You just wait until they pay off, such as it did in 2010 for the company.
No. Just been focusing on accounting.
Congratulations to Steven Mnuchin. The end of the NWS is near.
He didn't disagree at all. You simply didn't watch his following interpretation which gave thorough explanation. He said he wasn't going to simply recap and release, which was the question asked of him. Did you even watch the hearing?
It's nearly impossible for you to come to a conclusion without making an assumption. That's unfortunate for your pocket book.
Learn to comprehend the Queen's English.
You'll see shortly. In the meantime, grow a brain and learn the Queen's English.
You both argue like Democrats. I lack the interest. That's the last answer from me you'll receive on the issue.
He doesn't have to do any such thing. He isn't even the Treasury Secretary yet.
Not going to argue semantics with you today. Haven't the time or interest. The companies will be recapped and released. Time will prove that.
Mnuchin was specifically asked whether he said "recap & release" and he answered the question appropriately and correctly, especially to a committee of senators who don't even know what that means.
What he said and what he meant are two separate issues. He addressed one and not the other.
He said "we will make sure that when they are restructured, they are absolutely safe and don't get taken over again. But we've got to get them out of government control".
At no point did he ever say "recap and release".
Shoddy investors came up with their own interpretations.
Nothing he said today changes his initial comments.
It's clear you didn't listen to anything he said. At no point did Mnuchin ever state "recap and release". He explained that today. Comprehension plays a big part in this game. He's said all along that the entities should be restructured and released from conservatorship. Nothing has changed about that.
Absolutely .
Exactly. Lol.
I agree. But, I believe mnuchin was describing a recapitalized company.
I'm in agreement with that.
No I didn't. Recapitalizing is restructuring. Recapitalizing means changing the capital structure of a business. The exact same thing restructuring does.