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A ray of hope! New head of Fannie/Freddie is @MarkCalabria, who wrote about their "dangerous habits"! https://t.co/wNKrYeWvXr
— John Stossel (@JohnStossel) April 6, 2019
Moody's - Mixed Credit Implications For Us Housing And Mortgage Markets If Fannie Or Freddie Mandate Changed
BY DOW JONES & COMPANY, INC. — 5 MINUTES AGO
The following is a press release from Moody's:
Moody's - Mixed Credit Implications For Us Housing And Mortgage Markets If Fannie Or Freddie Mandate Changed
http://www.moodys.com/page/viewresearchdoc.aspx?docid=PBC_1169295&WT.mc_id=
AMRG93Sm9uZXNOZXdzcm9vbV9TQl9OUl9DVl9SYXRpbmdfTmV3c19BbGxfRW5n20190403_PBC_1169295
(END) Dow Jones Newswires
04-03-19 1321ET
This Time Probably Isn't Different for Fannie, Freddie
BY MARKETWATCH — 52 MINUTES AGO
Shares of housing-finance giants Fannie Mae (FNMA) and Freddie Mac (FMCC) have rallied this year on expectations they could soon be released from government control. The exuberance is premature.
Nearly everyone agrees that the current system needs reform so that the two companies, which promote housing-market liquidity by purchasing and securitizing mortgages, don't remain wards of the state indefinitely. But there are essentially two schools of thought on how to do this. Shareholders want to see them recapitalized and released from government control as soon as possible--something that could be accomplished by the Trump administration alone without congressional legislation. Advocates say the companies could be set up with enough capital and strictly regulated so that they never again pose a threat to the nation's financial stability.
Currently, the shares are essentially worthless. They could become worth a lot, though, if the government were to end the current arrangement of directing virtually all of the companies' profits to the Treasury, restructuring them into private, profit-seeking enterprises. Hence the shares trade as highly volatile bets on this eventual outcome.
Critics of such an approach, including many market-oriented conservatives, say it risks leaving an implicit taxpayer backstop in place for the companies should they run into trouble again. They favor a more comprehensive solution that would require new laws. Most "comprehensive" proposals envision an explicit federal guarantee on some mortgage securities and new private competitors to Fannie and Freddie.
The wrangling continued last week. Idaho Republican Senator Mike Crapo released the outline of a legislative proposal that coheres with the "comprehensive" approach and held hearings with sympathetic experts. Several similar proposals have gone nowhere in Congress, though, and it is unclear why this one should fare any better--especially with a divided Congress and a contentious election coming in 2020.
President Trump, meanwhile, signed a directive (https://www.wsj.com/articles/trump-to-seek-overhaul-of-housing- finance-system-11553716477)last week instructing the Treasury and Housing and Urban Development departments to come up with a plan to release the companies. The White House memo included laudable goals such as preserving the 30-year fixed- rate mortgage and making sure taxpayers are compensated for any explicit or implicit bailout guarantees, but it was vague about how these ends would be achieved.
Crucially, the memo said the administration will differentiate between reforms that require legislation and those that don't, setting a timetable for "administrative" reforms. This could be read as a signal that the White House is ready to proceed in a piecemeal fashion, going ahead alone where it can. But it is unclear how this would work.
Congress still has cards to play as Mark Calabria, President Trump's nominee to head the Federal Housing Finance Agency, awaits Senate confirmation. At a private meeting in January, acting FHFA head Joseph Otting strongly suggested the administration was ready to go it alone on reform. The White House walked back his comments (https://www.wsj.com/ articles/trump-administration-to-work-with-congress-on-fannie-freddie-overhaul-11548785269)after a backlash from angry lawmakers.
Moreover, it is doubtful that the administration has enough time to formulate a plan and put it in place before election season kicks into high gear, making it risky to touch an issue as sensitive as housing. Most likely, they could only set the stage to take decisive action in 2021 should Trump be re-elected.
Should a Democrat prevail in 2020, it would be back to square one. Indeed, one substantial downside of a White House- only reform effort is that it would be more easily reversed by future presidents.
Shares of Fannie and Freddie have more than doubled since the start of the year on speculation that a resolution could be at hand. But zooming out, they have essentially been stuck in a range for more than five years, fluctuating up and down with the debate in Washington. This will likely remain the case for a while yet.
Write to Aaron Back at aaron.back@wsj.com (mailto:aaron.back@wsj.com)
-Aaron Back; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
04-01-19 0742ET
Copyright (c) 2019 Dow Jones & Company, Inc.
Copyright © 2019 Dow Jones & Company, Inc. All Rights Reserved
White House keeps option of going alone on Fannie Mae, Freddie Mac privatization
BY MARKETWATCH — 7 MINUTES AGO
Warner: 'The notion that this may be taken away from Congress is I think a concern.'
It wasn't quite an affirmation of mom, baseball and apple pie, but it was close.
As President Trump signed a memo on initiating reform of the housing finance system, the White House said the aim was to "preserve the 30-year fixed-rate mortgage" and enable "Americans to access federal housing programs that help finance the purchase of their first home."
That's not exactly going out on a limb, though the nominee to lead the Federal Housing Finance Agency, Mark Calabria, once wrote the "housing market will be fine without 30-year fixed loans (https://www.cato.org/publications/commentary/ housing-market-will-be-fine-without-30year-fixed-loans)." (He walked that libertarian outburst back at his confirmation hearing.)
But to the extent there was news, it was the undercurrent that the White House was willing to go it alone on taking Fannie Mae (FNMA) and Freddie Mac (FMCC) out of government conservatorship.
"The President is directing the Secretary of the Treasury and the Secretary of Housing and Urban Development to craft administrative and legislative options for housing finance reform," the White House says. "Critically, the Administration wants to work with Congress to achieve comprehensive reform that improves our housing finance system."
The phrasing is significant. The White House wants to work with Congress. The White House didn't say it needed to work with Congress.
In the actual memo Trump signed, it even calls for Treasury to identify which proposed reforms can be done without Congress and include a timeline for implementation.
Up on Capitol Hill, the distinction wasn't lost.
"Yesterday I spent a lot of time emphasizing we're not doing this in a vacuum. The new FHFA director has enormous, broad powers," said Sen. Mark Warner, a Virginia Democrat. "The notion that this may be taken away from Congress is I think a concern."
Warner was speaking at the second day of a two-day hearing on housing finance reform, working around an outline put forward by Sen. Mike Crapo, the chairman of the Senate Banking Committee and Idaho Republican.
Warner said he had heard agreement from the 12 witnesses over two days around a government guarantee and additional support for low- and moderate-income as concern remained over access for smaller and rural lenders.
There are huge issues that neither Congress nor the White House has tackled, such as how on earth to capitalize the Fannie and Freddie in a way that could remove them from government support. The memo merely states the obvious, that the giants will be subject to "increased capital requirements."
The next step will be for the Senate to confirm Calabria, which is expected to come next month, putting the new FHFA director in a position to lead the way on Fannie and Freddie reform -- with or without Congress's help.
-Steve Goldstein; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
03-27-19 1602ET
Copyright (c) 2019 Dow Jones & Company, Inc.
Copyright © 2019 Dow Jones & Company, Inc. All Rights
It's clear Jesse @bpolitics didn't talk w anyone on Main St. He wrote a TBTF mouthpiece story w/o any insight. Nearly all consumer, civil rights & small lending groups see consensus on GSEs. All Sen. Sen. Banking members know Crapo bill won't get to floor.https://t.co/kIICaM4jSG
— joshua rosner (@JoshRosner) March 25, 2019
https://www.reuters.com/article/us-housing-fanniefreddie-delisting/fannie-mae-freddie-mac-to-delist-shares-on-nyse-idUSTRE65F3GR20100616
According to this article it was FHFA that determined this.
“FHFA’s determination to direct each company to delist does not constitute any reflection on either Enterprise’s current performance or future direction, nor does delisting imply any other findings or determination on the part of FHFA as regulator or conservator,” FHFA Acting Director Edward DeMarco said in a statement.
Did they have a Annual meeting to de-list back in 2010? I guess they can have it both ways. No BOD vote to delist but needed to relist. Sound about right.
I’m just an I.T. guy who fell into this by accident. Read a few articles and 7 years later I’m still holding. Still reading articles. I call them
K.I.As (know it alls) they are very prevalent in the IT world. They are usually arrogant and petty and don’t have many friends. Think they have all the answers sewn up. Until they call me a week later asking me for my help, the help that they refused the first go around. I still appreciate them.
But I understand no one knows what’s going to happen to our investment. As my momma would say.
“There’s more than 1 way to skin a cat”.
FHFA (demarco) was in control and made the decision to delist.
Same FHFA (Otting) could re-list.
https://www.reuters.com/article/us-housing-fanniefreddie-delisting/fannie-mae-freddie-mac-to-delist-shares-on-nyse-idUSTRE65F3GR20100616
“The regulator, the Federal Housing Finance Agency, directed the companies to delist common and preferred stock from the NYSE and any other national securities exchange.”
Here’s to Otting first RE-LISTING us on the big boards. Then Calabria RECAPS & RELEASES. IMO. It would be the sneaky thing to do. It is the easiest thing they could do. Been saying this forever. I say re-list first.
Just a contrarian point of few. NO one knows how this will go down. GLTA!!!
https://www.marketwatch.com/story/home-builder-confidence-jumps-in-february-to-four-month-high-2019-02-19
ECONOMIC REPORT
Home builder confidence jumps in February to four-month high
By Andrea Riquier
Published: Feb 19, 2019 12:41 pm ET
Reminiscent of the early days of the recovery: low rates, strong economy
Construction workers use a power saw to cut large board at a job site, an unfinished home.
Construction workers use a power saw to cut large board at a job site, an unfinished home.
The numbers: The National Association of Home Builders’ monthly confidence index jumped 4 points to a seasonally adjusted reading of 62 in February, the trade group said Tuesday.
What happened: The February gain was the second in a row and put the sentiment index, which some economists view as an early read on the pace of residential construction, back to its mid-autumn level. It easily beat the Econoday consensus forecast of a one-point increase.
In February, the index component that tracks views of current sales conditions rose three points to a reading of 67, and the tracker of expectations for the next six months jumped five points to 68. The measure of buyer traffic rose four points to 48.
Any reading over 50 signals improvement, but the buyer traffic component is rarely above 50, even in the go-go days of the housing bubble a decade ago.
Big picture: Builders are in a sweet spot: economic conditions like a strong job market are helping them sell more homes, and falling mortgage rates are making that job even easier. But NAHB continued to note that “affordability remains a critical issue.” Builders say regulations are still “excessive,” and the Trump administration’s tariffs have made raw materials much more expensive.
Related: The lumber trade war’s winners and losers
What they’re saying: The housing market slowdown of 2018 is starting to look like a pause, rather than the beginning of the end for the cycle. In January, mortgage purchase applications for new homes jumped 43% compared to December, slightly edging last January’s tally to touch the highest level since 2013, the Mortgage Bankers Association said last week.
Market reaction: Investors have boosted the stock prices of large publicly-traded builders this year. Shares of Meritage Homes Corporation MTH are up 21% in the year to date, with shares of KB Home KBH right behind.
The S&P 500 SPX has gained about 11% this year.
See also: New-home sales soar 17% in November, hit an 8-month high
See original version of this story
“Let the people know the facts . . . and the country will be safe.” - A. Lincoln HINDESightTM February19,2019
Fannie Mae and Freddie Mac:
IN DEFENSE OF THE HEDGE FUNDS
Their crime? They bet on America.
For every dollar they make, the taxpayer makes four.
They’re at it again. Apparently alarmed by reports the Trump Administration might finally end the decade-long conservatorship of Fannie Mae and Freddie Mac (the “GSEs”), their staunchest opponents have taken to the blogs to recycle their shopworn lies: the two mortgage insurance companies caused the 2008 financial crisis; they operated with “flawed charters” allowing “private gains and public losses”; returning the companies to their rightful owners would be nothing more than a “payday for greedy hedge funds”.
Time – and the release of documents which the Obama Administration kept secret for years – has now thoroughly debunked these falsehoods, but the GSE-haters just can’t resist replaying their golden oldies. Indeed, assertions recently made by David H. Stevens, former head of the Mortgage Bankers Association, are typical (and typically untrue). Let’s unpack them one-by-one:
“These companies are in conservatorship because they failed . . .”
As is clearly spelled out in various lawsuits (which Mr. Stevens apparently hasn’t read or has chosen to ignore) Fannie and Freddie never “failed”. True, they had been booking losses. But when the
government took them over on September 6, 2008, they were in full compliance with all regulatory capital requirements, had the highest capital ratios in their histories, and were flush with cash. If they truly were on death’s door, as Mr. Stevens would have you believe, how does he explain that just three days prior to their being placed into conservatorship, they’d successfully raised $6 billion in unsecured debt in an over-subscribed offering underwritten by the cre`me de la cre`me of Wall Street investment banks? (The bond issues were rated AA+ and AAA-). As I have previously written, “it wasn’t a bailout; it was a stick- up.”
“They made bad decisions that helped spiral the economy near the brink.”
The oft-repeated accusation that Fannie and Freddie were the culprits behind the financial crisis is nonsense. From the official report of the Financial Crisis Inquiry Commission: “We conclude that these two entities contributed to the crisis but were not a primary cause. Importantly, GSE mortgage securities essentially maintained their value throughout the crisis and did not contribute to the significant financial firm (i.e., commercial bank) losses that were central to the financial crisis.” (Emphasis added.)
“Only help(s) billionaire hedge funds.”
Really? Tell that to the tens of thousands of Fannie Mae and Freddie Mac shareholders who are not “billionaire hedge funds” – such as Nicholas Isbell of Chevy Chase, MD, who invested his daughter’s college tuition fund in what were, until up to the moment the government seized them, blue-chip, dividend-paying stocks. Tell that to the thousands of Fannie and Freddie employees who watched, horrified, when the value of their 401(k) plans suddenly plummeted. Tell that to the thousands of middle-class workers; policemen, firemen, carpenters, electricians, truck drivers, whose pension funds had invested in the two companies. And how about the hundreds of community banks – which saw the value of their Fannie and Freddie preferred share holdings virtually evaporate between when they left work on Friday afternoon and when they returned on Monday morning – such as John F. Herbin, president of the Jamestown State Bank in Jamestown (pop. 286), Kansas. Then there are the mutual funds, the insurance companies, and even the Knights of Columbus and the Catholic Order of Foresters. Are they all just ‘collateral damage’ to Mr. Stevens and his fellow GSE-bashers? Instead of railing against “greedy hedge funds”, perhaps they could do a little homework and make at least a perfunctory effort to learn who the rest of the owners of Fannie Mae and Freddie Mac are.
It’s true that subsequent to the seizures, several large hedge funds were able to acquire blocks of Fannie and Freddie stock and are now significant shareholders. But who sold them the stock? Mom- and-pop investors? Of course not. Ironically, it appears the seller was the government itself. When regulators ordered the banks to write-off their Fannie and Freddie shares, over a dozen suddenly found themselves underwater in terms of meeting minimum regulatory capital requirements. They were seized by the FDIC (with their wiped-out shareholders becoming just more ‘collateral
1 I am told that many of the banks, after being ordered to write off their Fannie and Freddie holdings, never actually disposed of the shares. As a result, were Fannie and Freddie to be
The Delaware Bay Company, LLC
damage’.) In 2011, the FDIC, as receiver, aggregated their holdings and dumped over 30 million shares on the market. As those of us who lived through those dark days will recall (the Dow had bottomed at 6,443), there weren’t many people with the courage to buy pretty much anything at the time – let alone shares of two companies which had been placed into government conservatorship. There were, however, ‘contrarian’ investors who believed things would get better; markets would stabilize; housing values would rebound. They were willing to step in and buy when most people (including the FDIC) were selling. It was a gutsy call. (And, in retrospect, quite prescient.) But whether the investor pulling the trigger was a hedge fund manager; a mutual fund manager; a pension fund manager – or simply a retail investor trading from a computer in his basement – all had one thing in common: they were betting on America.1
Over 10 years have now passed since those frightening days. In the interim, the Dow Jones Industrial Average has increased just under 20,000 points and Uncle Sam has earned a whopping $100 billion on his Fannie and Freddie ‘investment’. As if that weren’t enough, it’s estimated that were the Treasury to exercise penny warrants on 80 percent of their common shares, it could reap yet another $150 billion windfall. That would allow President Trump to claim credit for making the best deal for the American taxpayer since the Louisiana Purchase. Nonetheless, the anti-GSE crowd seems to think Fannie and Freddie shareholders deserve no compensation for the nationalization of their companies.
That may work in banana republics and Communist countries, but not in the United States of America.
Gary E. Hindes February 19, 2019 646-467-5242 gary.hindes@delawarebayllc.com
recapitalized (with the shares returning to their par values), the resultant write-ups would substantially increase their regulatory capital which, in turn, would significantly boost their ability to make loans in their communities.
-2-
Additional resources:
HINDESightTM Nov. 26, 2018: Release the Hostages
HINDESightTM Sept. 4, 2018: Ten Years After Henry Paulson’s Colossal Blunder HINDESightTM Sept. 6, 2017: “The Case of the Concrete Life Preserver” HINDESightTM Aug. 25, 2017: Fanniegate: The Cover-up Unravels HINDESightTM Sept. 6, 2016: The Myth of Private Gains and Public Losses
The author is an owner of Fannie Mae and Freddie Mac securities. The views and opinions expressed herein are solely his, and not necessarily those of The Delaware Bay Company, LLC, Arcadia Securities, LLC and/or their principals and/or affiliates, which may, from time to time, have long or short positions in the securities of companies mentioned herein. We make no representations or warranties as to the accuracy of any of the facts contained herein and investors are warned that past performance is no guarantee of future results. Investors are also urged to consult their own legal, accounting, and other financial professionals before acting upon any of the recommendations made herein. Invest at your own risk.
The Delaware Bay Company, LLC
-3-
Will our hearts break in Sadness or explode in Joy .... Stay Tuned
Fannie Mae Announces Scheduled Release of Fourth Quarter and Full Year 2018 Financial Results
BY PR NEWSWIRE — 2 MINUTES AGO
WASHINGTON, Feb. 11, 2019 /PRNewswire/ -- Fannie Mae (FNMA) today announced plans to report its fourth quarter and full year 2018 financial results on Thursday morning, February 14, 2019, before the opening of U.S. financial markets.
Fannie Mae (FNMA) will host a conference call for the media to discuss the company's results at 8:00 a.m., ET, on February 14, 2019. Other participants may join the conference call in listen-only mode.
The company's fourth quarter and full year 2019 earnings news release, annual report on Form 10-K, and other supplemental information will be available on the company's Quarterly & Annual Results webpage at fanniemae.com/financialresults. A transcript of the call also will be made available on the page.
CONFERENCE CALL PARTICIPATION DETAILS – Fannie Mae Fourth Quarter and Full Year 2018 Financial Results
Thursday, February 14, 2019
8:00 AM (ET)
Listen-Only Dial-In Instructions:
Participants must register for the conference at http://ems8.intellor.com/?do=register&t=1&p=812488 to receive an email containing instructions for listening by phone.
Fannie Mae (FNMA) helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/fanniemae.
Cision View original content:http://www.prnewswire.com/news-releases/fannie-mae-announces-scheduled-release-of-fourth-quarter-and-full-year-2018-financial-results-300793358.html
SOURCE Fannie Mae (FNMA)
THE STATE OF THE GSES.....Freddie President David Brickman Fannie interim CEO Hugh Frater and FHFA Sandra Thompson to speak at 2:30.
https://twitter.com/fanniemae/status/1095035060422668290?s=21
This is just another “PLAN”. It isn’t endorsed by anyone of importance ... that I know of.
I’m afraid your incorrect. In the working paper on page 30 it references LLREs. Footnote “The mechanics of a receivership for Fannie Mae and Freddie Mac.
BRIEF-Mnuchin eyes bipartisan reforms for Fannie Mae, Freddie Mac -CNBC
BY REUTERS — 16 MINUTES AGO
Feb 6 (Reuters) - U.S. Treasury Secretary Steven Mnuchin in an interview with CNBC on Wednesday:
* U.S. TREASURY SECRETARY MNUCHIN SAYS CONFIDENT U.S. CONGRESS WILL PASS NEW TRADE PACT WITH CANADA, MEXICO -CNBC
* U.S. TREASURY SECRETARY MNUCHIN SAYS DINNER WITH TRUMP, U.S. FEDERAL RESERVE CHAIRMAN POWELL WAS A PRODUCTIVE MEETING -CNBC
* MNUCHIN SAYS WILL CONTEMPLATE FUTURE MEETINGS WITH FED'S POWELL AND TRUMP -CNBC
* MNUCHIN SAYS U.S. NEEDS TO RAISE ITS DEBT LIMIT -CNBC INTERVIEW
* MNUCHIN SAYS LOOKING AT ALL OPTIONS REGARDING FANNIE MAE, FREDDIE MAC REFORM -CNBC
* MNUCHIN SAYS WOULD PREFER TO WORK WITH CONGRESS ON FANNIE MAE AND FREDDIE MAC TO FIND BIPARTISAN REFORM -CNBC Further company coverage: (Reporting By Susan Heavey)
(c) Reuters 2019. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
Senate Panel to Consider Nomination of Fannie, Freddie Overseer Next Week -- Sources
BY DOW JONES & COMPANY, INC. — 9 MINUTES AGO
WASHINGTON -- Senate lawmakers are expected as early as next week to consider the nomination of Mark Calabria, a critic of Fannie Mae (FNMA) and Freddie Mac (FMCC), to the post responsible for overseeing the housing-finance companies, according to people familiar with the matter.
The hearing is a crucial step as the Senate weighs confirming Mr. Calabria to become the director of the obscure but powerful Federal Housing Finance Agency, the regulator of the two companies. The Senate Banking Committee is expected to hear testimony from Mr. Calabria and nominees for at least two more financial posts at a hearing tentatively set for Feb. 14, the people said.
A spokeswoman for the committee declined to comment.
If confirmed, Mr. Calabria would play a key role in shaping the Trump administration's efforts to end the decadelong conservatorship of Fannie and Freddie, which the government took over at the height of the financial crisis in 2008. Ending government control of Fannie and Freddie, which back roughly half of the $10 trillion mortgage market, is Congress's last major to-do item in the wake of the crisis.
Write to Andrew Ackerman at andrew.ackerman@wsj.com
(END) Dow Jones Newswires
02-05-19 1242ET
Copyright (c) 2019 Dow Jones & Company, Inc.
Sounds like it. Why not just give out the details from this contemporary? So shady. As for the details .... JPS MIGHT do well. The commons not so much. How is this journalism ? I’m in the camp that ALL should do well.
Is RuudG Paul Muolo or an IMF plant. You have access to the IMF publication before the general public ? Interesting.
So why not give the rest of the details as to what happens to commons or preferred. Terrible journalism. It actually seems criminal at this point.
Trump Administration to Work With Congress on Fannie, Freddie Overhaul
BY DOW JONES & COMPANY, INC. — 15 MINUTES AGO
Breaking News...
WASHINGTON--The Trump administration plans to work with Congress to overhaul mortgage-finance giants Fannie Mae (FNMA) and Freddie Mac (FMCC), a White House spokeswoman said Tuesday -- playing down the idea the administration will seek to unilaterally release the firms from government control.
The White House also expects to announce a framework for comprehensive housing-finance changes "shortly," White House spokeswoman Lindsay Walters said in a prepared statement.
(More to Come)
By Andrew Ackerman
Breaking News...
WASHINGTON--The Trump administration plans to work with Congress to overhaul mortgage-finance giants Fannie Mae (FNMA) and Freddie Mac (FMCC), a White House spokeswoman said Tuesday -- playing down the idea the administration will seek to unilaterally release the firms from government control.
The White House also expects to announce a framework for comprehensive housing-finance changes "shortly," White House spokeswoman Lindsay Walters said in a statement.
The statement said no final decisions have been made on what will be contained in the proposal.
For more than a decade, lawmakers have tried without success to overhaul Fannie and Freddie, which were placed in conservatorship during the 2008 financial crisis. Recent statements by administration officials indicated the government was reviewing plans to soon take the firms out of government control, sending shares surging.
Some hedge-fund investors have bet for years that the government would eventually recapitalize and release the firms from government control, in lieu of a technically complicated and politically contentious battle to overhaul the mortgage-finance system. Tuesday's statement suggests that the administration wants to work with Congress, at least for now.
(More to Come)
(END) Dow Jones Newswires
01-29-19 1305ET
Copyright (c) 2019 Dow Jones & Company, Inc.
As Fannie-Freddie reform gets underway, here are the three big questions for the housing market
BY MARKETWATCH — 3 MINUTES AGO
Mark Zandi says the White House plan for the GSEs may go beyond 'recap and release'
It's been over a decade in the making, but an overhaul of Fannie Mae (FNMA) and Freddie Mac (FMCC) is finally in the cards.
The acting head of Fannie's and Freddie's regulator, the Federal Housing Finance Agency, told employees that he was working with Treasury Secretary Steven Mnuchin to get the two mortgage companies, currently under government control, to "operate independently," as first reported by MarketWatch (http://www.marketwatch.com/story/fhfa-acting-director- discussing-plan-to-take-fannie-and-freddie-out-of-conservatorship-2019-01-18) earlier in January.
Anything is possible now, from the contours of the future state of housing finance to how quickly it all gets done. So MarketWatch has decided to skip the usual "experts predict" story and instead outline the big questions facing the housing market and Washington now.
Will Fannie and Freddie stick around?
Sort of.
The 2008 law (https://www.congress.gov/bill/110th-congress/house-bill/3221) that put Fannie and Freddie into conservatorship in the first place specifies that the two companies must technically be liquidated if they are to exit government control. But as to what happens next, and whether the housing finance system is still underpinned by the powerful twins, is the biggest question facing the market right now.
"Is the plan simply to rebuild capital from the earnings they're generating and at some point they'd be re-privatized? That's 'back to the future' as fundamentally the same duopoly they were before the crisis. We'd be setting ourselves up for the same kind of crisis we had ten years ago," said Mark Zandi, chief economist for Moody's Analytics and an author of a 2016 proposal to overhaul housing (http://www.marketwatch.com/story/this-plan-to-overhaul-fannie-mae-and-freddie- mac-just-might-pass-congress-2016-03-24)finance.
Over the years that the two companies have been wards of the state, they've come to resemble utilities more than the freewheeling private enterprises of the bubble years. Some efforts are underway that take that transition even further. In his meeting with FHFA staffers, Joseph Otting, the acting agency head, referred to the "Common Securitization Platform," an initiative that merges together Fannie and Freddie's bond issuance, as something that gives comfort to the housing finance market.
Read also:Congress wouldn't do it, so Fannie and Freddie reformed themselves (http://www.marketwatch.com/story/ congress-wouldnt-do-it-so-fannie-and-freddie-reformed-themselves-2017-08-03)
But some housing watchers think a pro-business, pro-small government administration and regulator could take the process in a different direction, not "recapping and releasing" the GSEs, as Zandi suggested, but neutering them.
"If the administration comes in with a sledgehammer to eliminate the aspects of the system that provide broader access, whether eliminating low-down mortgages or reducing cross-subsidization even more than it's already been reduced, that will results in mortgage credit deserts," said Julia Gordon, executive vice president of the National Community Stabilization Trust, and a long-time advocate for fair consumer treatment in mortgage lending.
"Cross-subsidization" sounds convoluted, but it simply means that at their best, Fannie and Freddie operate like insurance companies, spreading risk broadly. They do that by charging higher fees to borrowers with better credit scores, trying to level the playing field for those whose credit isn't as high.
Fans of limited government usually prefer what's sometimes called "risk-based pricing," which sounds efficient and logical, but could mean that higher-risk borrowers are locked out of ownership entirely. That isn't helpful for either a robust housing market or for equal access to the American Dream.
The worst-case scenario, in a true limited-government approach, is that Fannie and Freddie wind up putting themselves out of business. In such a situation, the riskiest borrowers would only be able to access mortgages backed by the Federal Housing Administration, and the most pristine would get loans that banks keep on their balance sheets.
Such a move could hasten the ongoing hollowing-out of the middle class that concerns many advocates. "The GSEs have been a tremendous advantage for the way they combine risk on private capital with risk backed by the government," Gordon said. "The last thing the middle class needs is another blow to their ability to have access to stable housing and wealth-building possibilities."
Zandi believes that there could be immediate, tangible market reactions to a plan that scales back the government presence in the mortgage market.
"Right now the market is of the strong view that when it's all said and done, the government will provide a guarantee for securities issued by Fannie and Freddie, but as soon as it starts pricing in the possibility that the government would not provide the same liquidity, that could be reflected in mortgage rates overnight," he said.
Mortgage rates had been churning higher ever since the 2017 tax overhaul, but they plateaued late last year (http:// www.marketwatch.com/story/mortgage-rates-arent-moving-how-will-the-housing-market-respond-2019-01-24). The 30-year fixed-rate mortgage averaged 4.45% in the January 24 week, according to Freddie Mac (FMCC).
How quickly will things move?
That's not just an academic question.
"The speed of the entire process is important is because, as the administration knows, the economy isn't getting any better," said Karen Shaw Petrou, who runs financial services advisory Federal Financial Analytics.
"Housing defaults and delinquencies are not going to stay where they are," Petrou said. "They've been in conservatorship for a decade because we've been in a benign environment. The sooner they act, the more decisively they act, the more certainty the market has, and then the less systemic risk."
Otting told employees that he expects it will take about six to 18 months to determine how much capital and liquidity the enterprises need.
Fannie and Freddie's unique strength is that they make mortgages in good times and bad, whereas big banks tend clamp down on lending the minute things get bad, noted Rob Zimmer, head of external affairs for The Community Mortgage Lenders of America. Eliminating that buffer and relying only on the private sector would be very dangerous to the housing market. Still, he cautioned, it's important not to let the GSEs go back to the Wild West days before the crisis, when they mimicked the private sector in a race to the bottom.
How much money do Fannie and Freddie need?
As a reminder, unlike most corporations, the two enterprises have almost no retained capital. That's because of a 2012 law that amended the 2008 rescue plan to direct them to sweep capital to the Treasury Department. Under a deal between Treasury and Otting's predecessor (http://www.marketwatch.com/story/fannie-freddie-will-now-keep-some-capital-reserves- 2017-12-21), late in 2017, they now hold the slimmest of capital - just $3 billion each.
As for the correct amount of retained capital in the future, "by a lot of analysis, it's probably somewhere $150 billion to $200 billion," Otting told FHFA staffers.
That's an "actuarially correct amount of capital to hold," especially given how pristine the GSEs' lending patterns have been over the past decade, Zimmer said.
Zandi agrees. Under various stress test scenarios, he said, 3% to 4% of the enterprises' assets would enable them to " easily digest what happened in the housing crisis."
But for many housing-watchers, like Petrou, that's, in her words, "way too low."
Fannie (http://www.fanniemae.com/resources/file/ir/pdf/quarterly-annual-results/2018/q32018_release.pdf) and Freddie (http://www.freddiemac.com/investors/financials/pdf/2018er-3q18_release.pdf) together have $5.4 trillion of assets, also known as their "book of business." As Petrou points out, "the least the largest banks may hold is 5%." Given their immense size, Petrou thinks regulators would do well to consider Fannie and Freddie in the same light as what are often called the "globally systemic important banks."
The right amount is important because too little would put taxpayers at risk once again; too much would mean " unnecessarily denying good credit-risk families the chance to participate in the economy," in Zimmer's words.
There's also a very important wildcard to whatever the White House is considering.
After a decade of dithering, it seems unlikely - and perhaps even a little cheeky - for legislators to finally wave a hand and try to block any administrative actions (http://www.marketwatch.com/story/to-free-fannie-and-freddie-their- regulator-may-bypass-do-nothing-congress-2018-06-21) on reform.
But that's what they seem to be doing. House Financial Services Chairwoman Maxine Waters, and Sen. Sherrod Brown, the ranking member of the Senate Banking Committee, jointly asked Otting what exactly the conservatorship is that they're considering.
Read:Maxine Waters calls into question FHFA independence after MarketWatch report (http://www.marketwatch.com/story/ maxine-waters-calls-into-question-fhfa-independence-after-marketwatch-reports-fannie-freddie-conservatorship-plan-2019- 01-25)
In a speech outlining her priorities, Waters notably did not rule out taking Fannie and Freddie out of conservatorship. She did say the "core principles" she advocates including maintaining access to the 30-year mortgage, ensuring sufficient private capital is in place to protect taxpayers and maintaining access for all qualified borrowers.
-Andrea Riquier; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
01-29-19 1044ET
Copyright (c) 2019 Dow Jones & Company, Inc.
Copyright © 2019 Dow Jones & Company, Inc. All Rights Reserved
https://www.americanbanker.com/news/latest-gse-reform-offers-blueprint-without-congress
Anyone have a subscription ?
Better move quick on relist recap and release....
https://www.cnbc.com/amp/2019/01/11/ocasio-cortez-in-line-for-banking-post-and-that-could-be-bad-news-for-wall-street.html?__twitter_impression=true
Ocasio-Cortez reportedly in line for banking post, and that could be bad news for Wall Street
Jeff Cox | @JeffCoxCNBCcom
Published 3 Hours Ago Updated 24 Mins Ago
CNBC.com
Freshman Rep. Alexandria Ocasio-Cortez is in line to be appointed to the House Financial Services Committee, according to a Politico report.
The New York democratic socialist would be a thorn in the side of Wall Street, which has seen its regulatory burden lowered since Donald Trump became president.
Ocasio-Cortez also could be an important ally for committee Chairwoman Maxine Waters.
Democratic Representative-elect Alexandria Ocasio-Cortez of New York talks to reporters as she arrives for a class photo with incoming newly elected members of the U.S. House of Representatives on Capitol Hill in Washington, U.S., November 14, 2018.
Carlos Barria | Reuters
Democratic Representative-elect Alexandria Ocasio-Cortez of New York talks to reporters as she arrives for a class photo with incoming newly elected members of the U.S. House of Representatives on Capitol Hill in Washington, U.S., November 14, 2018.
Big banks could be about to get a high-profile enemy in a very powerful place.
Freshman Rep. Alexandria Ocasio-Cortez, who is a registered Democrat but identifies as a democratic socialist, is in line to be appointed to the House Financial Services Committee, according to a Politico report.
The New York legislator has vowed to take on the industry that makes up the corporate backbone for much of her constituency. She said during her successful campaign in 2018, in which she refused corporate donors and upset entrenched incumbent Democrat Joe Crowley, that she was hoping for an assignment that would allow her to take on big finance.
"I think with our district, we can be ambitious, so we're kind of swinging for the fences on committees," Ocasio-Cortez told Hill.tv in an interview after her win. "We might as well ask for something big."
With prominent Democrats looking to unwind two years of deregulation under President Donald Trump, the seat will put her in a position to exert substantial influence.
Her appointment also will give new committee Chairwoman Maxine Waters, D-Calif., an important ally.
During a hearing in November, shortly after the Democrats recaptured the House in the midterm elections, Waters promised that the days of Wall Street deregulation were over.
""Make no mistake, come January, in this committee the days of this committee weakening regulations and putting our economy once again at risk of another financial crisis will come to an end," she said in remarks that briefly roiled markets.
CNBC has reached out to Ocasio-Cortez for comment.
Trump targeted post-financial crisis finance reforms during his own campaign, saying they were overreach that had kept banks from lending and wrongly penalized institutions that had little or nothing to do with the crisis.
Just a few days ago, the Federal Reserve proposed tailoring capital and liquidity rules for banks with $100 billion to $250 billion in assets. That move dovetails with the Economic Growth, Regulatory Relief, and Consumer Protection Act that Congress passed last year. Part of the legislation raised the benchmark for banks getting more intense regulatory scrutiny from $50 billion to $100 billion; the baseline will move to $250 billion in December.
The Politico report characterized Ocasio-Cortez's chance of the committee appointment as "strong" and said other more senior legislators have sought to ingratiate themselves with the youngest woman ever to serve in Congress.
Where is a statement by Calabria on being nominated? .... maybe after hours today ?
Let me put an end to this silliness. If you use receivership both the Sr. prefs & warrants are wiped out. Sr. prefs are negative to book value & have to be written down to get to zero book value & to support raising new capital. #CorporateFinance101
— joshua rosner (@JoshRosner) December 14, 2018
I haven’t seen any statements from Calabria acknowledging the regulator position. I expect his statement at End of Business today or better yet End of Business Friday. Let everyone parse his political speak over the weekend. Anyone know of a good sale on Crystal Balls for the Christmas season anywhere. Or better yet what company makes the best crystal balls maybe I’ll pour my Fannie gains into them.
Statement of MBA CEO Bob Broeksmit on the announcement that President Donald Trump intends to nominate @MarkCalabria to be the next Director of FHFA pic.twitter.com/AQq4wLGib9
— Mortgage Bankers Association (@MBAMortgage) December 12, 2018
Corsi in deep.... https://apnews.com/83a7e797f6eb48399bbe9530e4bce9a3
With each sweep a shareholder at that time has a new claim IMO. How could a shareholder reasonably believe that profits would be taken in perpetuity? I still don’t believe it ... still it continues. A takings is still occurring. Courts haven’t seen it that way ... yet. My shares are post conservatorship and post NWS. Been holding for 5 years. Didn’t Ackman, Berkowitz, Icahn, Paulson and the majority of current share holders purchase after the initial screw jobs of conservatorship and NWS. ALL C & P holders believed and still believe that both would end.
Part of the average joe plan maybe. Lol
https://www.facebook.com/notes/axjfund/axj-the-new-global-currency/182709519337735/
AXJ.Fund
AXJ, THE NEW GLOBAL CURRENCY?
10 HOURS AGO · PUBLIC
The independent international civil and political rights Organization known as Actions for Justice ( AXJ ), and its AXJ GLOBAL NEWS NETWORK, explain the AXJ as follows:
1.) FNMA was once owned by the American People but will now be owned by AXJ.
2.) American Homeowners can now purchase their notes on their homes back from AXJ directly.
3.) All you must do is purchase $100.00 USD in Shares in FNMA and vote to make AXJ the majority shareholder and controller of FNMA. Shares are presently at $1.00 usd each.
4.) This can all take place in 24 hours so hurry up and get your shares at $1.00 each you have nothing to lose except that fake mortgage on your home.
5.) FNMA could not and can not sell the note on your home legally pursuant to the UCC since it is a non negotiable instrument.
6.) FNMA and the “debt collectors” have been committing fraud on American Homeowners by alleging it has sold your note, when all it has sold in reality are servicing rights to another debt collector pursuant to: FDCPA, 15 U.S.C.'1692a(4). The transaction, as defined by the FDCPA, 15 U.S.C. §1692a(5) is a "debt" and hereinafter referred to as a "debt" or "debt obligation".
7.) All Judges on the State and Federal level know this but have only been able to act in “Judicial States” by negating foreclosing parties “Standing”, since they are not the “real party in interest”.
8.) Thousands, and hundreds of thousands of homeowners have now realized what has happened, and are trusting in AXJ to carry out the hostile takeover of FNMA and return their homes to them asap. Over 20MM homes have been lost in unlawful foreclosures since 2008.
9.) AXJ Members will have a priority in receiving their notes back during the coming year.
10.) AXJ NEWS will be publishing the results in real time 24/7/365:
https://twitter.com/axjus/status/1063121143391956992?s=21
No clue what this is or means. Came up on a Fannie Mae search. Probably not what I think.
Thanks. I agree very vague. What case are they referring to ?
This article came up in my fidelity app. I can’t find a corresponding link on the internet.
U.S. court rejects challenge over Fannie Mae, Freddie Mac profits
BY REUTERS — 1 MINUTES AGO
WASHINGTON, Nov 14 (Reuters) - A U.S. federal court on Wednesday rejected a challenge to Treasury Department requirements that government-sponsored mortgage-finance giants Fannie Mae (FNMA) and Freddie Mac (FMCC) return net profits to the federal government.
"The challengers are in an unfortunate spot. They invested in Fannie and Freddie, expecting regular dividend payments in return," the U.S. Court of Appeals for the Third Circuit opinion said. But granting them any "relief would effectively unwind" and undermine the Federal Housing Finance Agency's authority. (Writing by Susan Heavey; Editing by Doina Chiacu)
U.S. court rejects challenge over Fannie Mae, Freddie Mac profits
BY REUTERS — 1 MINUTES AGO
WASHINGTON, Nov 14 (Reuters) - A U.S. federal court on Wednesday rejected a challenge to Treasury Department requirements that government-sponsored mortgage-finance giants Fannie Mae (FNMA) and Freddie Mac (FMCC) return net profits to the federal government.
"The challengers are in an unfortunate spot. They invested in Fannie and Freddie, expecting regular dividend payments in return," the U.S. Court of Appeals for the Third Circuit opinion said. But granting them any "relief would effectively unwind" and undermine the Federal Housing Finance Agency's authority. (Writing by Susan Heavey; Editing by Doina Chiacu)