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Tuesday October 17th 2017
New filing in the Perry case.
Peter Chapman writes, "Perry Capital and Arrowood delivered their petition for a writ of certiorari to the United States Supreme Court yesterday. Perry and Arrowood look to the High Court to answer one question:
-- Whether 12 U.S.C. sec. 4617(f), which prohibits courts from issuing injunctions that "restrain or affect the exercise of powers or functions of" the Federal Housing Finance Agency ("FHFA") "as a conservator," bars judicial review of an action by FHFA and the Department of Treasury to seize for Treasury the net worth of Fannie Mae and Freddie Mac in perpetuity.
Perry and Arrowood tell the nine justices the answer is no. The GSE shareholders go on to conclude, at p. 33:
"The D.C. Circuit's decision dangerously misconstrues FHFA's conservatorship powers. FHFA's conservatorship provisions are neither new nor alien -- Congress took them verbatim from FIRREA, importing the FDIC's decades of sound experience in resolving troubled financial institutions, and the centuries of common-law conservatorships on which the FDIC relied. Nothing in the text or purpose of HERA, decades of FDIC practice, or centuries of common law even remotely condones the Net Worth Sweep's massive expropriation -- a confiscation that leaves the Companies functionally insolvent, saddled with Treasury's $189 billion liquidation claim, and with no ability to escape a vampiric relationship with the government. Yet the decision below permits any governmental conservator -- including the FDIC -- to confiscate funds under its supervision without judicial review simply because the conservator did so in the course of operating the ward. That's not a conservatorship; that's embezzlement."
Perry and Arrowood urge the Court to grant its petition and review the D.C. Circuit's decision."
Investors Unite
The Jig is Up: Shareholder Lawyers Close to Getting a Look at All Documents in Sweep Litigation
Thursday, October 5, 2017
Once again, a federal judge has sent government lawyers a clear message: Stop trying to hide the truth about the Net Worth Sweep. This time, they appear to be out of options.
On October 4, U.S. Court of Federal Claims Judge Margaret Sweeney granted a motion to compel the disclosure of documents filed over the summer by attorneys for Fairholme Fund’s shareholders in Fannie and Freddie. In August, they asked Sweeney to order the use of the “quick peek” procedure for about 1,500 documents related to the Sweep, many of them emails and other communications between government officials going back five years ago or more. Consistent with several previous rulings, Sweeney’s granting the motion rebuked government lawyers who have for years invoked various forms of privileged treatment to keep the public from knowing the full story about the Sweep – and to deny shareholders their rights.
With the latest ruling, lawyers for shareholders will finally be able to review nearly all of the documents the government has been so determined to hide about the deliberations, calculations and machinations of senior officials in the Obama Treasury Department, the Federal Housing Finance Agency (FHFA) and other governmental offices. While this is a clear victory for transparency in government, Sweeney’s ruling provides Fairholme’s attorneys only the opportunity to scan the trove of documents that have been part of the largest privileged log in U.S. history. In essence, at this point a “quick peek” is getting close to the “full monty.”
When the Net Worth Sweep was announced in August 2012, Fannie Mae and Freddie Mac were already four years into what was supposed to be a temporary conservatorship and back on their feet financially. The GSEs were also about to enter a period of great profitability, just as government officials predicted when conceiving the idea of the Net Worth Sweep. The decision to suddenly divert the GSEs’ earnings away from replenishing capital reserves and into government coffers seemed amiss and prompted a series of lawsuits by investors and shareholders in Fannie and Freddie.
To demonstrate this action exceeded the legal authority provided to government agencies under the Housing and Economic Recovery Act (HERA), shareholders sought documents that should have been open to the public. But the government raised the dubious claim executive privilege, normally invoked for national security reasons, to keep the records sealed. In a discovery process involving about 12,000 documents the government at first made 3,500 documents available. But that was just the beginning of a battle over documents.
In early 2017, a Federal Circuit Court turned down the government’s attempt to end the discovery process altogether but allowed that documents could be made available to plaintiff attorneys on a case-by-case basis. On August 1, the government agreed to release 17 more documents but these items only fueled suspicion about what the government continued to hide. For example, an email discussion about “re-recording certain deferred tax assets that had been written-off” directly contradicted a statement by Mario Ugoletti, a senior Federal Housing Finance Agency (FHFA). Another document concerned an email summarizing a June 2012 meeting between FHFA officials and Fannie’s CFO Susan McFarland that affirmed yet again that officials knew the GSEs were about to become quite profitable even though the Sweep was later justified, in part, as a way to protect taxpayers from possible losses at Fannie and Freddie.
Instead of battling over one five-year-old email after another, in August Fairholme attorneys asked Sweeney to use the “quick peek” procedure for about 1,500 documents from May 2012 onward. By saying yes this week, Sweeney not only helped expedite a protracted battle over evidence critical to the pursuit of justice for shareholders but also affirmed the principle of transparency in government.
Mel Watt: Housing Finance Reform Needs to Happen Soon - mortgageorb.com
Posted by Patrick Barnard -October 4, 2017
Mel Watt, director of the Federal Housing Finance Agency (FHFA), made one thing abundantly clear in his speech before Congress on Tuesday: Housing finance reform needs to happen soon.“While many reforms of the enterprises’ business models and their operations have been accomplished through conservatorship, FHFA knows probably better than anyone that these conservatorships are not sustainable,” Watt said in his prepared remarks. “We also know that housing finance reform will involve many tough decisions and steps that go well beyond the reforms made in conservatorship.”
Watt emphasized, as he has many times previously, that “it is the role of Congress, not FHFA, to make these tough decisions that chart the path out of conservatorship and to the future housing finance system.”
Among the major decisions Congress will need to make is how much backing, if any, the federal government should provide, and in what form, and what the process should be for transitioning Fannie and Freddie back to the private sector.
Congress will also need to consider what roles, if any, the enterprises should play in the reformed housing finance system, as well as how they will be structured, organizationally.
Yet another major decision Congress will need to make is how the enterprises will be regulated after they are transitioned back to the private sector.
Watt pointed out that with all of the administrative changes and reforms the GSEs have seen during the past nine years, they barely resemble the companies that they once were.
Although they are on much more sound footing, financially, the incremental drawdown of their taxpayer
buffer – which is to be reduced to zero by Jan. 1, 2018 – means there is greater risk of the need for a taxpayer bailout.
“The challenge is that additional draws of taxpayer support would reduce the amount of taxpayer backing available to the enterprises under the PSPAs and the foreseeable risk that the uncertainty associated with such draws or from the reduction in committed taxpayer backing could adversely impact the housing finance market,” Watt said in his speech. “This challenge is significantly greater today than it was last year and will continue to increase unless it is addressed.”
Watt pointed out that as of last year each enterprise had a $1.2 billion buffer under the terms of the PSPAs. But once that is drawn down to zero, “neither enterprise will have the ability to weather any loss it experiences in any quarter without drawing further on taxpayer support.”
In addition, the GSEs have had to weather some fluctuations in their portfolios that they don’t normally see. Although loan performance is at an all time high, factors such as interest rate volatility, the accounting treatment of derivatives used to hedge risks, reduced income from declining retained portfolios, reduced revenue from the increasing volume of credit risk transfers, and regulatory changes have combined to drive down revenues and drive up operating costs.
“We also know that a short-term consequence of corporate tax reform would be a reduction in the value of the enterprises’ deferred tax assets, which would result in short-term, non-credit related losses to the enterprises,” Watt said. “The greater the reduction in the corporate tax rate, the greater the short-term losses to the enterprises would be.”
“In addition to the regular and on-going prospect of non-credit related losses, even minor housing market disruptions, natural disasters like hurricanes, or short periods of distress in the economy could also cause credit-related losses to the Enterprises in a given quarter,” he added.
Watt said the GSEs, like any other business, “need some kind of buffer to shield against short-term operating losses.”
“In fact, it is especially irresponsible for the enterprises not to have such a limited buffer because a loss in any quarter would result in an additional draw of taxpayer support and reduce the fixed dollar commitment the Treasury Department has made to support the enterprises,” he said. “We reasonably foresee that this could erode investor confidence. This could stifle liquidity in the mortgage-backed securities market and could increase the cost of mortgage credit for borrowers.
“As I mentioned at the outset, FHFA has explicit statutory obligations to ensure that each Enterprise ‘operates in a safe and sound manner’ and fosters ‘liquid, efficient, competitive, and resilient national housing finance markets.’ To ensure that we meet these obligations, we cannot risk the loss of investor confidence. It would, therefore, be a serious misconception for members of this committee, or for anyone else, to consider any actions FHFA may take as conservator to avoid additional draws of taxpayer support either as interference with the prerogatives of Congress, as an effort to influence the outcome of housing finance reform, or as a step toward recap and release. FHFA’s actions would be taken solely to avoid a draw during conservatorship.”
Lorraine Woellert - POLITICO Pro
https://www.politicopro.com/staff/lorraine-woellert
Lorraine Woellert is part of POLITICO Pro's financial services team, where her beat includes housing policy, Fannie Mae and Freddie Mac and the Consumer ..
New filing in the Robinson case, click here to view.http://www.gselinks.com/
Peter Chapman writes, "The Sixth Circuit rejected the government's request for additional time to entertain oral argument at the hearing in Cincinnati on Thurs., July 27. FHFA will have 7-1/2 minutes to argue its case and Treasury will have 7-1/2 minutes, or FHFA and Treasury can decide between themselves how to divide those 15 minutes in a different way."
Principles of Housing Finance Reform
June 29, 2017 10:00 AM
538 Dirksen Senate Office Building
THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS will meet in OPEN SESSION to conduct a hearing entitled, “Principles of Housing Finance Reform”. The witnesses will be The Honorable David H. Stevens, President and Chief Executive Officer, Mortgage Bankers Association; Mr. Edward J. DeMarco, President, Housing Policy Council of the Financial Services Roundtable; and Mr. Michael D. Calhoun, President, Center for Responsible Lending.
All hearings are webcasted live and will not be available until the hearing starts. Individuals with disabilities who require an auxiliary aid or service, including closed captioning service for webcast hearings, should contact the committee clerk at 202-224-7391 at least three business days in advance of the hearing date.
Witness Panel 1
The Honorable David H. Stevens
President and Chief Executive Officer
Mortgage Bankers Association
Mr. Edward J. DeMarco
President
Housing Policy Council of the Financial Services Roundtable
Mr. Michael D. Calhoun
President
Center for Responsible Lending
Permalink: https://www.banking.senate.gov/public/index.cfm/2017/6/principles-of-housing-finance-reform
House passes sweeping bill to strip back financial rules
BY SYLVAN LANE - 06/08/17 04:45 PM EDT
thehill.com/policy/finance/...
The House of Representatives on Thursday passed sweeping legislation to strip and replace much of the financial regulations passed under President Obama after the 2008 financial crisis.
The House passed the Financial CHOICE Act 233-186, along party lines. The bill is not expected to pass the Senate.
Sponsored by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), the CHOICE Act is the most ambitious Republican effort to roll back the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in 2010. Republicans have long targeted Dodd-Frank, saying it has created a crushing regulatory burden that suffocates small businesses and banks while empowering unaccountable bureaucrats.
“Dodd-Frank represents the greatest imposition on our business enterprises than all Obama era regulations combined,” Hensarling said Thursday morning in a briefing with reporters. “In many respects, it was not a response to the financial crisis, but a grab bag of leftist ideas that were waiting on the shelf for quite some time.”
Democrats have fiercely defended Dodd-Frank. They say the bill has held Wall Street accountable for the risky investment practices that caused the crisis and protected Americans from predatory lending and abusive financial firms.
"It's shameful that Republicans have voted to do the bidding of Wall Street at the expense of Main Street and our economy,” said Rep. Maxine Waters (D-Calif.), ranking Democrat on the Financial Services Committee. “They are setting the stage for Wall Street to run amok and cause another financial crisis. I urge my colleagues in the Senate not to move on this deeply harmful bill."
The CHOICE Act would roll back much of the Dodd-Frank regulations long targeted by Republicans. It would allow banks that reach certain cash thresholds an off-ramp from Dodd-Frank, reduce the frequency of federal stress tests and restrain oversight powers of several federal agencies that the 2010 law expanded.
Hensarling’s bill would also eliminate orderly liquidation authority — the process through which the federal government takes over and dismantles a major bank before it collapses — and place strict limits on the Consumer Financial Protection Bureau (CFPB).
The CHOICE Act would turn the CFPB, which Republicans consider abusive and unaccountable, into the Consumer Law Enforcement Agency. It would no longer control its own budget, its director would be appointed by the president, and it would lose its authority to crack down on “unfair, abusive and deceptive practices.”
Speaker Paul Ryan (R-Wis.) and GOP leaders touted the bill in the weeks before Thursday’s vote. Ryan, a long-time Hensarling ally who served with him on the House Budget Committee, on Wednesday called the CHOICE Act “the crown jewel” of the GOP deregulatory agenda.
“This legislation comes to the rescue of Main Street America,” Ryan said Wednesday. “The Financial CHOICE Act makes it possible for small businesses across this country to stop struggling and to start hiring.”
Democrats have universally opposed the CHOICE Act, claiming it's a boon for Wall Street that puts American consumers at risk. House Minority Leader Nancy Pelosi (D-Calif.) called it “a dangerous Wall Street first bill that would drag us back to the days of the Great Recession.”
The CHOICE Act is unlikely to pass the Senate, where the Republican majority is too slim to overcome a Democratic filibuster. Lawmakers on the Senate Banking Committee have floated a bipartisan measure to relieve regulations on smaller banks, which has received measured interest from House members.
Trump administration officials have called on the House to pass the CHOICE Act, while urging the Senate to work on changes that could clear the chamber.
Hensarling said he’s also looking to pass some aspects of the bill through budget reconciliation, the maneuver Democrats used to pass ObamaCare and Republicans are using to repeal it.
While Hensarling said he’s discussed the bill with his Senate counterpart, Banking Committee Chairman Mike Crapo (R-Idaho), he declined to say what the upper chamber should do.
“I’m certainly not going to advise Chairman Crapo on how to proceed from here,” Hensarling said. “The Senate is a very different animal than the house.”
How GOP bill would dismantle many Dodd-Frank restrictions
By Marcy Gordon?|?AP June 8, 2017 at 1:13 PM
WASHINGTON — Emboldened by a business-friendly president, Republicans in Congress have set a goal that is nothing if not ambitious: To undo the stricter banking rules that took effect after the devastating 2008 financial crisis.
A vote Thursday to approve the bill in the House is essentially assured. The landscape is far different in the Senate, where Democrats have the votes to block it.
The 2010 Dodd-Frank law imposed the stiffest restrictions on big financial companies since the Great Depression. It curbed many banking practices and expanded consumer protections to restrain reckless practices and prevent a repeat of the 2008 meltdown.
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The House bill, pushed by Rep. Jeb Hensarling, the Texas Republican who leads the Financial Services Committee, would repeal about 40 of Dodd-Frank’s provisions. Notably, it would sharply diminish the authority of the Consumer Financial Protection Bureau, which oversees the practices of companies that provide products and services from credit cards and payday loans to mortgages and debt collection.
President Donald Trump launched his attack on Dodd-Frank after taking office, ordering a Treasury Department review of the complex rules that have put the legislation into practice. Trump called the law a “disaster” whose restrictions have crimped lending, hiring and the overall economy.
One part of Treasury’s review is expected to be released soon. It could provide a blueprint for regulators to rewrite the rules. But Congress’ legislation would be needed to actually revamp the law.
Unwinding a complex law that clocks in at 2,300 pages takes its own hefty bill: The Republicans’ Financial Choice Act, as it’s called, runs 580 pages. Here’s a look at key changes it would make:
___
BANK REGULATION
Under the House bill, banks could qualify for regulatory relief if they held enough capital to cover potential big losses — a 10-1 ratio of capital over borrowed money. In exchange, such banks would gain exemptions or eased requirements for “stress tests” to assess their ability to withstand a downturn and for their plans to reshape themselves if they failed.
During the crisis, the government intervened to rescue the largest banks from collapse and saved some faltering institutions with bailouts and emergency loans or helped sell them to other banks. Trillions of taxpayer dollars were put at risk.
To avoid endangering taxpayers again, Dodd-Frank authorized regulators to dismantle a failing big firm, if they felt its collapse could endanger the entire system, and sell off the pieces. The Treasury would pay the firm’s obligations and be repaid with industry fees and money raised from shareholders, bondholders and asset sales.
Critics argue that that means taxpayers could still end up on the hook. The new legislation would eliminate the regulators’ power to dismantle firms.
___
VOLCKER RULE
This rule, which bars the biggest banks from trading for their own profit, would be repealed. The idea behind the rule was to prevent high-risk trading bets that could imperil federally insured deposits. Some banks argue that the Volcker Rule stifles legitimate trading on behalf of customers and the banks’ ability to hedge against risk.
Republicans have stressed the need for regulatory relief from Dodd-Frank for community banks. And in a fairly rare area of bipartisan agreement, some Democratic lawmakers have indicated support for this, at least in theory.
The legislation would exempt smaller banks from a number of Dodd-Frank requirements. Banks with under $10 billion in assets, for example, would have to run “stress tests”— gauging their ability to withstand a severe economic downturn — just once a year instead of twice.
FILE - In this May 21, 2010, file photo, then-Senate Banking Committee Chairman Sen. Christopher Dodd, D-Conn., right, and then- House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., speak to reporters outside the White House in Washington, after their meeting with President Barack Obama. House Republicans headed toward a vote June 8, 2017, on dismantling sweeping financial rules established under Obama that were designed to head off economic meltdowns. Republicans are arguing that the many requirements imposed under what is known as the Dodd-Frank Act have actually harmed economic growth by making it harder for consumers and businesses to get credit. (Susan Walsh, File/Associated Press)
___
How GOP bill would dismantle many Dodd-Frank restrictions - The ...
https://www.washingtonpost.com/...gop-bill-would-dismantle-many-dodd-frank-restricti...
3 hours ago
Finally, a Bold New Proposal to Break the Impasse on GSE Reform
June 5, 2017
Investors Unite
There has been no shortage of proposals to end the conservatorship of Fannie Mae and Freddie Mac and create a new mortgage finance system. Most have been misnamed “reform” proposals but a framework outlined last week could be a game changer.
Moelis and Company, a banking and financial analysis firm, laid out a common-sense way for the GSEs to exit their government-run confinement, feasibly build up and maintain appropriate levels of capital so taxpayers would never again be compelled to bail the companies out in the future. As laid out in “Restoring Safety and Soundness to the GSEs,” instead of scrapping Fannie and Freddie’s infrastructure and governing structure, the proposal would allow Administration officials to use their statutory power to create single purpose insurers with a narrow mission and free the GSEs of their once-highly leveraged investment portfolios. Thus, the American Dream of homeownership would remain within reach without disruption under this plan. And last but not least, current and future shareholders will become owners of well-run and profitable companies whose value will be set by market dynamics rather than bureaucratic fiat.
Not surprisingly, self-serving special interest groups are already trying to poke holes in this blueprint. The Mortgage Bankers Association, for example, warns it would serve shareholders rather than taxpayers. This is a baffling assertion. Taxpayers are the largest beneficiary in this blueprint, which provides for substantial gains of up to $75-$100 billion to the U.S. Treasury on top of the $266 billion that has already been paid back from the 2008-9 bailouts. In contrast, the MBA’s plan would keep the government’s (i.e. taxpayers’) guarantee behind the big banks’ mortgage backed securities.
As explained during a teleconference last week, the plan begins with some fact-based assumptions. From a shareholder perspective, among the most important of these is that the government has been paid back for the $187.5 billion taxpayers were compelled to provide to keep the GSEs from collapsing in 2008. Since Fannie and Freddie returned to profitability five years ago and were systematically plundered ever since with the implementation of the Net Worth Sweep, Treasury has taken in $266 billion. That alone is an $80 billion dollar windfall never expected under the Housing and Economic Recovery Act. The only reason the matter of the government being paid back has even been debated in recent years was the accounting distortion adopted by the Obama Administration. This new proposal puts an end to the myth that the taxpayers can be made whole only by keeping the GSEs in conservatorship and siphoning their capital.
Another key assumption is that the government can realize additional revenues of roughly $75-$100 billion by exercising warrants in shares of stock it holds. This is a fact, not a fanciful projection. In addition, under the proposal Moelis and Company has put together, up to $180 billion in additional core capital can be raised through retained earnings, existing shareholders and new investors. No other plan anticipates shareholders and investors underwriting a failsafe mechanism for protecting taxpayers. No other plan departs so completely from the unfair presumption that taxpayers are simply another source of capital. This blueprint will ensure Fannie and Freddie will be in safe and solvent condition, as required by HERA.
In addition, under the plan, Fannie and Freddie will be run differently in the years to come. If we learned anything from the financial crisis, it is that overleveraging and undercapitalization was a dangerous and preventable mix. This new proposal calls for the imposition of capital standards akin to those Congress has seen fit to impose on the nation’s largest banks. As we have noted, Fannie and Freddie back over $5 trillion in home loan debt so it makes no sense to let them operate with capital reserves well below what is required at too-big-to-fail banks. Taxpayers should never again be on the hook for covering possible losses at the companies.
Unlike so-called reform proposals that would simply dismantle Fannie and Freddie and divvy up their portfolios as well as their function to big banks and other private sector entities, this plan recognizes the indispensable role of Fannie and Freddie in sustaining a liquid and stable secondary mortgage marketplace. To date, no academic, politician, trade association or policy expert has come up with a way of making sure the 30-year, fixed-rate mortgage and other financing tools would exist without Fannie and Freddie or nearly identical entities. After four generations, the societal and economic benefits of home ownership are clear: stronger neighborhoods and communities, the opportunity for average Americans to create wealth that can be passed on, and economic activity generated by construction and finance.
At the same time, the proposal would enable Fannie and Freddie to build on reforms undertaken in recent years by their conservator, the Federal Housing Finance Agency, and stipulate that they be run as responsibly capitalized and regulated single-purpose insurers. Fannie and Freddie would continue to shed their investment portfolios and get back to their role as regulated, shareholder-owned mortgage guarantors, bearing mortgage credit risk in exchange for guarantee fees. They would retain no investment portfolios beyond securitization inventory.
Another highly desirable aspect of this proposal is that it can be implemented in four years without Congressional legislation. Despite the misapplication of HERA that started under the Obama Administration, the law is actually quite clear. FHFA was charged with returning the GSEs to a sound and solvent condition so they could resume operating as shareholder-owned entities supporting home financing. It is well past the time to revert to what the statute mandates.
As we have argued strenuously, proposals by Sens. Bob Corker (R-TN), Mark Warner (D-VA) and others over the years would have been averse to the interests of taxpayers, home buyers, and certainly shareholders. Most have relied on untried approaches and wishful thinking. During the Obama years, there was never sufficient consensus in Congress on a post-conservatorship model that the Administration would embrace or had much interest in even discussing.
Fortunately, Treasury Secretary Steve Mnuchin has expressed an earnest desire to get the government out of the home finance business. This proposal does that. It is time the Administration use its statutory authority to fulfill its responsibilities. As Mnuchin has said, Congress can and should be an active partner in refining housing policy. However, there is no need for the Administration to await legislation that will almost certainly be too flawed to clear the House and Senate. If President Trump is looking to make a tangible impact on the lives of average people, he should direct his Administration to take up this plan.
In essence, the blueprint Moelis and Company has put together would end the illegal practice of using taxpayers as a capital source. It would allow FHFA to stop making dividend payments to Treasury and protect taxpayers from a capital draw and future bailouts. It would finally bring an end to the Net Worth Sweep and restore shareholder rights. Rather than disrupting the economy by dismantling a time-tested home finance model, the proposal gets back to basics. Sufficiently capitalized GSEs would maintain stability and liquidity sufficient to sustain homeownership and access to affordable rental housing. However, the government’s role would be all but eliminated except for regulatory standards. All of this can be achieved by Administration officials who can build on reforms already implemented and it requires no legislation by Congress.
The proposal will surely undergo rigorous scrutiny as other plans have. It is especially important that fair, level-headed, and practical people who want to address this unfinished task of the 2008 crisis – free of ideology, partisanship, and self-interest – give it due consideration.
New filings in the Perry case.
14-5243-1678015
14-5243-1678095
Peter Chapman writes, "Copies of FHFA and Treasury's responses to the Class Plaintiffs' request that the panel D.C. panel reconsider the portion that would discriminate against GSE shareholders based on the date they purchased their shares are (linked above). FHFA believes that discrimination is appropriate because new contracts are formed in the secondary market every time a security is bought and sold. FHFA's position would seem to have the prospect of upending U.S. capital markets."
Jerome Corsi?
@jerome_corsi
3:03 PM - 3 Jun 2017
Key question is if share prices go up in Paulson plan to reward current shareholders. I'm working to publish analysis next wk #fanniegate
Will L.? @firewill65 8 hours ago
Replying to @jerome_corsi
Jerome, Do do you own commons, preferreds, or both? Just curious.
Fannie Mae: Why I Sold The Preferred And Own The Common ...
https://seekingalpha.com › Investing Ideas › Long Ideas › Financial
Dec.14.16 | About: Fannie Mae (FNMA)
Charlie Harrison
Long only, value, special situations
I remain 100% Fannie common.
Mike Allen Jun 1,2017
John Paulson's prescription for Fannie, Freddie
First look: John Paulson, a hedge-fund billionaire famous for his lucrative short of the U.S. subprime mortgage market ("The Greatest Trade Ever"), recently talked exclusively to me from New York as he promoted a blueprint published Thursday, providing a reform prescription for Fannie Mae and Freddie Mac.
Paulson is a big investor in the two mortgage finance giants — also called government-sponsored enterprises, or GSEs.
The paper, "Restoring Safety and Soundness to the GSEs," is available here. It was written by Moelis & Company, as financial adviser to some Fannie and Freddie stockholders, including Paulson & Co. and Blackstone GSO Capital Partners.
An announcement teleconference and webinar was scheduled for Thursday. A quick scan:
Among the key elements: "Protects Taxpayers from Future Bailouts ... Promotes Home Ownership and Preserves the 30-Year Mortgage ... Repays the Government in Full ... Produces ... Profits for Taxpayers."
Paulson, on the proposal: It "returns Fannie and Freddie to the private sector. ... [I]t's very important now for the government to exit its stake in Fannie and Freddie."
Paulson, on his role: "We've been involved in almost every major financial restructuring in the U.S. ... [W]hat was important is that once the financial institution was stabilized, there was an opportunity for the government to exit and to [be replaced] by private capital."
What critics say: The plan doesn't adequately grapple with a key issue in GSE reform: public risk but private gain. Backers responded that it "protects the taxpayer."
Paulson, who supported President Trump's campaign: "[H]e's doing well on a path to achieve [pro-growth and pro-business] objectives. But, obviously, the political environment is, you know, very — let's call it 'emotional.'"
His book recommendations: "Washington: A Life" and "Alexander Hamilton," both by Ron Chernow.
Fannie Shareholder's Records Request Blocked In Del. - Law360
https://www.law360.com/.../fannie-shareholder-s-records-request-blocked-in-del-
Law360, Wilmington (June 1, 2017, 1:55 PM EDT) -- A Delaware Chancery judge on Wednesday rejected a bid by an investor in Fannie Mae to get books and ...
Fannie Shareholder’s Records Request Blocked In Del.
By Evan Weinberger
Law360, Wilmington (June 1, 2017, 1:55 PM EDT) -- A Delaware Chancery judge on Wednesday rejected a bid by an investor in Fannie Mae to get books and records related to the Obama administration’s move to direct all profits from the mortgage backer into the U.S. Treasury Department.
Vice Chancellor Tamika R. Montgomery-Reeves said in her order dismissing the request for corporate documents brought by Fannie Mae investor Timothy J. Pagliara in March 2016 that his loss last year in a federal case seeking records from Freddie Mac, the other federal mortgage giant that is...
Trump allies push new Fannie and Freddie reform plan - Financial Times
https://www.ft.com/content/2b646fc2-4704-11e7-8519-9f94ee97d996
1 hour ago - Two powerful investment groups with ties to the White House are pitching a new plan that would free the mortgage giants Fannie Mae and ...
Paulson and Blackstone urge privatisation of US mortgage agencies
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https://www.ft.com/content/2b646fc2-4704-11e7-8519-9f94ee97d996
Two powerful investment groups with ties to the White House are pitching a new plan that would free the mortgage giants Fannie Mae and Freddie Mac from US government control — and restore value to their investment in the companies.
Blackstone, the world’s biggest private equity group, and the hedge fund Paulson & Co have hired the investment bank Moelis to develop proposals to overhaul the two agencies.
Together, Fannie and Freddie guarantee the bulk of US home loans and underpin the country’s unique system of 30-year fixed rate mortgages.
Moelis published what it described as a detailed blueprint for reform on Thursday, pitching itself into the heated debate over the future of the agencies. A leading banking lobby immediately attacked the proposals as “self-serving”, and it remained far from clear that the plans would gain traction in Washington, despite the political connections of its proponents.
Paulson, whose manager John Paulson was an economic policy adviser to Donald Trump’s election campaign, and Blackstone, whose chairman and chief executive Stephen Schwarzman heads the president’s strategic and policy forum, own preference shares in the two agencies.
Fannie and Freddie have been in a limbo state of “conservatorship” — meaning they are neither fully public nor private — since the government rescued them at the height of the 2008 financial crisis.
Under the present financial structure, they pay all of their profits to the Treasury in the form a dividend, to compensate taxpayers for the risk they bear in providing a financial backstop.
Investors who own the shares claim the post-crisis set-up is unfair and untenable. Several have taken legal action against the Treasury.
Moelis claimed its recapitalisation plan would allow the government to realise between $75bn and $100bn in cash by exercising warrants, a structure it likened to the post-crisis resolution of the bailed-out insurer AIG.
Private investors would plough additional funds into the two groups as part of the proposed recapitalisation. With up to $180bn of new capital, there “should not be a realistic scenario” in which the government would be on the hook for losses even in a future financial crisis, Moelis claims. The government would nonetheless be paid a fee for providing a backstop against losses beyond that figure.
Details of the plan appear to be at odds with comments that Steven Mnuchin, Treasury secretary, has made about Fannie and Freddie. Last month he said he expected the pair to continue paying dividends to the government.
Related article
Fannie and Freddie shares plunge after court blow for investors
Hedge funds have been fighting for a greater slice of mortgage giants’ profits
The document Moelis published on Thursday said the plan was “a clear and pragmatic path to achieve important public policy goals in a manner that will both protect taxpayers for years to come and respects the property rights of shareholders”.
However, David Stevens, president and chief executive of the Mortgage Bankers Association, said it was “designed to confuse unsuspecting, innocent taxpayers into supporting a plan that is intended to line the pockets of hedge funds”.
He added: “The self-interests of stock speculators and profit seekers are not in the best interests of either the taxpayer or the housing system.”
Shares in Fannie Mae rallied 172 per cent after the US election, from $1.65 to a peak of $4.49 on November 30, on the hope that the Trump administration would be more amendable to recapitalising and privatising the company. Since then the stock has sunk back to $2.57.
Freddie Mac similarly rose sharply after the election before tumbling back down. Both stocks dropped in February after a court ruled against hedge funds that challenged the government’s hold on the agencies’ profits.
Paulson declined to comment. Blackstone did not respond to a request for comment.
CNN Fnma: Earnings Growth (this year) +17,500.00%
$2.60: $455 (17500 .00%)
Growth & Valuation
Earnings growth (this year) +17,500.00%
Earnings growth (next 5 years) +6.00%
Revenue growth (last year) -3.26%
--
Tracking Carl Icahn's Portfolio - Q1 2017 Update
May.19.17 | About: Icahn Enterprises (IEP)
John Vincent
Note: Icahn also owns significant stakes in the following OTC stocks as per latest 10Q and regulatory filings: ~15% of Enzon Pharmaceuticals (NASDAQ:ENZN), ~75% of Viskase Companies (OTCPK:VKSC) and ~73% of Tropicana Entertainment (OTCQB:TPCA). He is also known to have a position in Fannie/Freddie (OTCQB:FNMA) (OTCQB:FMCC).
Tracking Carl Icahn's Portfolio - Q1 2017 Update
May. 19, 2017 at 2:42 a.m. ET on Seeking Alpha
Video for BREAKING Obamacare Insiders BUSTED Stealing Over $3 BILLION In Cash From Taxpayers - News? 3:33
What To Know About Carl Icahn, Trump's 'Special Adviser'
May 16, 20175:00 AM ET
PETER OVERBY
Donald Trump hadn't yet taken his oath as president when, last Dec. 21, he named Carl Icahn as "special adviser to the president on regulatory reform." He said Icahn would help him deal with "the strangling regulations that our country is faced with."
Icahn is an investor who made his first fortune as a "corporate raider," gaining control of companies through hostile takeovers and then selling assets. He ranks number 26 on the Forbes 400 list of wealthiest Americans, with $15.7 billion. (Forbes says Trump is worth $3.5 billion.).
Tracking Bill Ackman's Pershing Square Portfolio - Q1 2017 Update
May.16.17 | About: Pershing Square (PSHZF)
Ackman held just under 10% of the outstanding shares of both these businesses - 115.57M shares of FNMA at a cost basis of $2.29 and 63.5M shares of FMCC at a cost basis of $2.14. The combined investment outlay was ~$400M
Tracking Bill Ackman's Pershing Square Portfolio - Q1 2017 Update
May. 16, 2017 at 8:41 a.m. ET on Seeking Alpha
Tracking Carl Icahn's Portfolio - Q1 2017 Update
May.19.17 | About: Icahn Enterprises (IEP)
John Vincent
Note: Icahn also owns significant stakes in the following OTC stocks as per latest 10Q and regulatory filings: ~15% of Enzon Pharmaceuticals (NASDAQ:ENZN), ~75% of Viskase Companies (OTCPK:VKSC) and ~73% of Tropicana Entertainment (OTCQB:TPCA). He is also known to have a position in Fannie/Freddie (OTCQB:FNMA) (OTCQB:FMCC).
Tracking Carl Icahn's Portfolio - Q1 2017 Update
May. 19, 2017 at 2:42 a.m. ET on Seeking Alpha
It must be a joke??
I found this link: The Strange Story of what happened to Rick Nagra. It must be a joke.
The Strange Story of what happened to Rick Nagra - 99WallStreet
99wallstreet.com/discussion/posttitle/the-strange-story-of-what-happened-to-rick-nagra
The Strange Story of what happened to Rick Nagra
FNMA
well, to wrap it up, this new investigator recorded an incident that proved mr. nagra had NOT drowned at sea, and in fact was still very much alive and living on his own property right under the noses of authorities. The cameras caught the jamaican enter the house and in the presence of mrs. nagra, began tugging at his face in an effort to remove a tight-fitting rubber mask! Rick Nagra had the mask of a jamaican man on and tricked everyone into thinking he was the jamaican, and that Rick Nagra had drowned. Rick N. and his wife had planned most everything out to a T but justice won out in the end. His ploy was detected and he and mrs. nagra were arrested for insurance fraud, and are currently serving 5-10 years at Alcatraz. Another plot of a criminal mind FOILED!
Treasury Secretary Mnuchin to address Senate Banking Committee on GSE reform
May 17, 2017.
Kelsey Ramirez
Treasury Secretary Steven Mnuchin will serve as a witness before the Senate Committee on Banking, Housing and Urban Affairs.
The hearing, entitled Domestic International Policy Update, will take place Thursday at 9 a.m. EST and will cover questions related to GSE reform.
Last week, Melvin Watt, Federal Housing Finance Agency director, stood before the same committee and testified that now is the time for GSE reform, insisting that tax payers would soon carry the burden of conservatorship.
During Watt’s testimony, he mentioned wanting to suspend Fannie Mae and Freddie Mac dividend policy by mutual agreement with the Treasury.
Now, the market awaits the secretary’s response.
“Even if Secretary Mnuchin doesn’t appear warm to the idea but does have a statement ready, then it could indicate Treasury is open to considering new directions to jump start GSE reform,” stated Jim Vogel, Interest Rate Strategies Group executive president and manager.
“It seems too early to dismiss Watt’s idea this spring, so a firm ‘no’ presents a different story,” Vogel continued. “Our conclusion would be GSE reform ideas take a back seat to garnering the political support necessary to pursue meaningful tax reform.”
Mnuchin is on the record several times for saying GSE reform will come during the Trump administration.
And plans for GSE reform clearly have the support of the housing industry. Recently, the Mortgage Bankers Association wrote a 60-page white paper on how to tackle the transition process. Other industry leaders soon gave their support to the MBA’s plan, saying it’s a good start.
housingwire.com/articles/40...
Your link is better.
Thanks
#FannieGate (@Fanniegate101) · Twitter
https://twitter.com/Fanniegate101
Senior @USTreasury official: Trump Admin is committed to revamping @FannieMae & @FreddieMac, getting out of govt control. $FNMA #FannieGate pic.twitter.com/IRX5zOA…
2 hours ago · Twitter
twitter.com/fanniegate101/s...
Expose: Craig Phillips knows what the govt knew in 2008 before they were taken into conservatorship.
Timothy's post
Mnuchin has hired a guy who knows what the govt knew in 2008 before they were taken into conservatorship.
"His stint there may complicate his current work on the future of Fannie Mae and Freddie Mac because at that time, his BlackRock unit was acting as a consultant to F.H.F.A., analyzing Fannie and Freddie’s loss and capital projections. The companies were taken into conservatorship by the government over Labor Day weekend in 2008.
It is unclear what the BlackRock analyses showed. But it must be interesting reading given the great efforts the government has made to keep the documents from seeing the light of day in a lawsuit brought by shareholders of Fannie and Freddie.
The suit involves the government’s abrupt decision in 2012 to seize all the companies’ profits every quarter. The BlackRock Solutions analyses from 2008 are among thousands of documents the government has asserted are covered by privileges associated with the deliberative process and bank examinations."
The Man in Charge of Fixing Fannie and Freddie Knows Them All Too Well
Fair Game
By GRETCHEN MORGENSON APRIL 7, 2017
Timothy's post on the Yahoo Conversation Board.
Any reasonable connection of the dots would point to expose not continue.
https://www.nytimes.com/2017/04/07/business/fannie-mae-freddie-mac-craig-phillips.html?_r=0&referer=https://t.co/06ymQlsgfH
Timothy from the Yahoo Conversation Board
Said:
From the NYT piece that Matt Taibbi failed to pick up on.
"his BlackRock unit was acting as a consultant to F.H.F.A., analyzing Fannie and Freddie’s loss and capital projections. The companies were taken into conservatorship by the government over Labor Day weekend in 2008."
Do you think Craig Phillips knows something?
H. Rept. 115-93 - FANNIE AND FREDDIE OPEN RECORDS ACT OF 2017
115th Congress (2017-2018)
https://www.congress.gov/congressional-report/115th-congress/house-report/93/1
You're welcome.
Housing finance overhaul may be finally in the cards, Mnuchin says
April 26, 2017 (MarketWatch)
By Andrea Riquier
Is it time to get more private capital back into the system?
Treasury Secretary Steven Mnuchin on Wednesday said the Trump administration would tackle housing finance reform after it addresses tax reform, setting the stage for Washington to lay to rest the last unfinished business from the financial crisis.
Housing finance has been a prickly subject for Washington ever since the 2008 crisis, when the giant quasi-governmental agencies Fannie Mae(FNMA) and Freddie Mac(FMCC) , reeling from credit losses, were made wards of the state. Lawmakers -- and housing analysts -- have considered overhaul efforts since then, but they've gone nowhere (http://blogs.marketwatch.com/capitolreport/2014/03/31/chances-drop-even-further-for-fannie-freddie-reform-bill-to-pass-this-year/).
That seems likely to change. In 2012, an amendment to the original agreement that bailed out Fannie and Freddie directed the two enterprises to dwindle their capital buffers down to zero by 2018.
As that deadline draws closer, calls to revise the process have grown. If the companies have no capital and experience a quarterly loss, they'd have to ask Treasury for funds (http://www.marketwatch.com/story/freddie-mac-may-need-another-taxpayer-bailout-next-week-2016-04-29) just to keep doing business.
Some analysts believe Congress would have trouble with the political fall-out from having to make another "taxpayer bailout" to the two agencies whom many Americans believe caused the financial crisis that brought the economy to its knees.
Also read: Regulator warns of risk of keeping Fannie, Freddie under government control (http://www.marketwatch.com/story/regulator-warns-of-risk-of-keeping-fannie-freddie-under-government-control-2016-02-18)
Mark Zandi, chief economist for Moody's Analytics, is skeptical even such headline risk will light a fire -- and he thinks housing finance reform is such a heavy lift that even a White House with far less on its plate would have trouble pulling it off.
The administration's interest is promising, Zandi told MarketWatch, and it's a "good sign" that, according to various media reports, Sen. Mike Crapo is aiming to hold hearings on the subject as early as next month. There's less momentum on housing in the House, where House Financial Services Chair Jeb Hensarling is focused on repealing Dodd-Frank.
But industry groups are also weighing in. Last week the influential Mortgage Bankers Association (https://www.mba.org/issues/gse-reform) released a reform white paper, followed days later by a proposal from the Independent Community Bankers of America (http://www.icba.org/icba-forms/advocacy---request-icba-principles-for-gse-reform). Zandi was one of the authors of a proposal released last year (http://www.marketwatch.com/story/this-plan-to-overhaul-fannie-mae-and-freddie-mac-just-might-pass-congress-2016-03-24).
It's technically possible for the White House and the head of Fannie and Freddie's regulator, the Federal Housing Finance Agency, to make some small administrative reforms, Zandi noted, such as amending the 2012 agreement to allow the enterprises to retain capital. But that would get Congress "hopping mad," and may wind up being more trouble than it's worth, he said, and it's more likely that the various separate reform efforts proceed independently and eventually coalesce.
Equity shareholders, who were wiped out when the Treasury began sweeping capital in 2012, have fought the sweep in court. Shares of both Fannie and Freddie have rallied since the election, when it became more likely that the new administration would be amenable to shareholder-friendly policies.
Also read: Fannie, Freddie surge as Treasury-pick Mnuchin advocates their release from government control (http://www.marketwatch.com/story/fannie-freddie-surge-as-trump-taps-advisors-who-back-privatization-2016-11-10)
Zandi doesn't believe that the headline risk of a quarterly draw from Treasury is a big deal. "It's not an economic issue, it's an accounting issue," he said. But he believes a housing finance overhaul is critical nonetheless.
"The system is working," Zandi said. "But absolutely it could be working better, and over time it will work less and less well."
What's more, Zandi said, the overall housing finance system is far too reliant on the government backstop.
Fannie and Freddie guaranteed 31% of all first mortgages in 2016, according to data from the Urban Institute, and the Federal Housing Agency guaranteed another 23%. Private-sector bondholders securitized less than 1% -- down not only from the heady levels they enjoyed in the run-up to the crisis, but also from 10-11% in the early 2000s.
"There's a lot of private capital out there that would like to do it at a similar cost," Zandi said. "We should use the government balance sheet for other purposes, for things that the private sector isn't willing to do."
President Trump signs executive order on taxes, financial regulation
https://www.msn.com/.../president-trump-signs-executive-order-on-taxes-financial-reg...
1 hour ago - President Donald Trump speaks at the Treasury Department ahead of signing executive actions on financial regulations
Trump Schedule || Friday, April 21, 2017
Posted on April 20, 2017, 10:51 pm by Keith Koffler • 6 Comments
10:00 am || Receives his daily intelligence briefing
1:30 || Meets with Secretary of State Tillerson
2:00 pm || Meets with National Security Advisor H. R. McMaster
2:45 pm || Signs financial services executive orders
3:05 pm || Meets with Secretary of Treasury Mnuchin; Treasury Department
3:30 pm || Meets with OMB Director Mulvaney
All times Eastern
Today’s White House briefing is off-camera
Rafferty Capital's Bove Notes 'Potential Game Changer' for Fannie Mae (FNMA) April 21, 2017
While Rafferty Capital's Dick Bove is no longer recommending Fannie Mae (OTC: FNMA) stock, he highlighted a couple positive developments which could be a "potential game changer."
First, he notes that Jason Chaffetz (R.; UT) introduced a new bill H.R. 1694 which basically requires Fannie Mae to open its books to the public under the Freedom of Information Act. Bove notes while similar bill introduced before but they have died without a ripple in Congress. However, this bill comes from the Chairman of the House Oversight and Government Reform Committee. Chaffetz is a Republican in a Republican controlled House. (Bove doesn't mention that Chaffetz said he may resign in the coming months).
Bove believes if this bill becomes law it could be very damaging to the Democrats. "It could ascertain if the plaintiffs in the many Fannie Mae lawsuits are correct in claiming that the government has lied to the public from Day One when it took this company away from its shareholders without compensation," Bove commented. "It may also result in shining a spotlight on the many courts who have opined that the government has the right to do whatever it chooses and that holders of private property have no rights."
Unrelated to the bill, Bove also highlighted that Celeste Brown has left her position as Treasurer of Morgan Stanley to become Deputy CFO at Fannie Mae. Commenting on why a rising star at Morgan Stanley would leave to join a company on the verge of being eliminated, he said: "My belief is that she would not do this unless she were given assurances that there was a bright future for her at Fannie Mae. Ms. Brown is special. She is unlikely to sidetrack her career to become a government employee dead set in the middle of “the swamp.”
Rafferty Capital's Bove Notes 'Potential Game Changer' for Fannie Mae
https://www.streetinsider.com/.../Rafferty+Capitals+Bove+Notes+Potential+Game+Cha...
1 hour ago - While Rafferty Capital's Dick Bove is no longer recommending Fannie Mae (OTC: FNMA) stock, he highlighted a couple positive developments ...
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NEW: Trump to make first visit to Treasury Dept. tomorrow to sign two financial-related executive orders (via @kaylatausche & @EamonJavers)