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Interesting in the video... he was "investing tax payer money" in infrastructure for a 30 year tail... why wasn't he using profits? Most companies use profits to grow business.
So... the HERA law states..
Housing and
Econ
omic Recovery Act of 2008’s clear mandate
that “no court may take any action to restrain
or affect the exercise of powers or functions of [FHFA] as a conservator or a receiver.”
So, congress has written a law that states no court can over turn it.. So therefore, they win? How is that? How is that gonna fly?
Seeing that the risk they took was about $25 Billion worth - hedged against the "value of the united states" less the value of the "soon to be filed lawsuits" against the banks it propped up.... would be a real risk of very little.
Remember they invested money in a solvent business in Sept 2008.
And invested in the heart of America. As Rep Barny Franks said... nothing to see here... F and F are well capitalized.
So... according to THEIR logic they risked little if anything. So what Warner says is they are entitled to little if anything.
That was a "space shuttle"... up up and away!
The big difference between the two
- healthcare
and
- housing
is that in healthcare the fed governement is up front in the face of the customer in healthcare insurance... ie... h'care dot gove... as a market place
for
housing... fannie and freddie, if adequately capitalized which is easily fixed... hire me and i'll do it... would be operating in the "background" and most people won't really know that fannie and freddie has a "back stop" ...ie... a backstop way behind home plate... like where the A's play in Oakland. not like the cubbies in Wrigley.
Its not hard.
The company can get a shareholder list from the transfer agent.
Perhaps you signed a petition and they are calling you off of it?
If it were anyone else the DOJ would be investigating.
But, why aren't they?
You realize that if they aren't "pardoned' they all could be in 2017. Over what transpired to make of the 2012 amendment.
Haven't sold... but if someone would email me or text me beep me before they decide to put it on 20% sale... I sure would like to know... so I can add a few shares.
Not being a "wizard" like so many of you ... i would sell 20,000 shares at $5 only for it to go to $100.... and i'd be watching from the sidelines... :(
The head line was misleading... it implies a "deal" was reached and it would become law.
What it should have said is "potential" or "draft" or such.
Its sensationalism journalism... the kind they did with hit pieces many years ago... for example when there were like three afternoon papers...
Okay,
I read clearly that Richard Bove' states that the federal government has broken the law and essentially consipired to rob the shareholders of Fannie and Freddie.
So, the Federal Governement is worse than MADOFF.
Now, what is the appropriate punishment for this behavior?
a. just release fannie and freddie. as Bove writes and keep the 200B in Snr Preffereds and 80% of the common?
b. release fannie and freddie. Cancel the warrants, and offset the repayments -v the money extended and call it 0 or pay back to fannie and freddie the excess?
I guess my question is ... what is the penalty for acting in this manner. If it were you the reader or someone else; you'd be doing a "stretch". What is the punishment?
Settlement would be great... but we
would have to get a total win... less than that and congress would screw us in the end.
Bringing the sticks... okay
Good video. Glad he understands the basic premises and issues.
But, he is also so wrong on many of the details. I would think that if he were to learn the truth about what has occurred and who has played who here he would be more incensed.
This would be a gentleman that hopefully with better information could learn and become and advocate. To undue the wrong being perpetrated.
The documents could be sealed or redacted or ... only viewable by the attorneys. or of course only for the judge to decide what is or isn't "made available". I suspect there will be lots of games with discovery. It'll be long and drawn out process... could last 6-12 months.
That is a decision and a consequence the government is willing to take. In effect its gambling with taxpayer money committing this fraud. It really is not excusable.
The inverse of this is true...
That without Fannie and Freddie - the US GOVERN<ENT would not be receiving two plum nickels from Fannie and Freddie.
However, without the us government... the other is not true. I firmly believe that it was Fannie and Freddie that saved the economy - as they were used as tools by the occupiers.
Get your facts straight senator.
You are 1000% right... but it won't be relevant in the matter at hand.
Navy,
I couldn't agree more that F and F shareholders will prevail in the court cases, eventually.
Okay, so we win, what do we win?
What's the end game?
What I want is the release, pay off, disgorgement of collateral (warrants) and tweak of F and F; so that they can be the beast behind affordable long term housing for my kids generation.
How do we as shareowners get these knuckle heads to understand that F and F can be all they can be and be the solution? Until this "light" goes off in the dimwits cavernous minds of stupidity ... what do we win?
My problem and assertion regarding the original take over is that... while yes it was "a time of great constipation" and many issues... there are laws in my state that prevent "gouging". What occurred was exactly this. It was also, some incredible self-dealing.
Any rational judge should see through this and set it straight. This was simply a case of "profiteering" by those able to pick on the weak. It should not be allowed.
It was also a time where great people do great things. But also a time when thugs come out and rationalize looting. This happened in New Orleans after Hurricane Katrina, and eventually, sanity took hold and many people went to jail. Not amazingly, you can't just kill people on a bridge in New Orleans just because it was expedient. There is no difference. The US Government and its proxies were acting in a manner inconsistent with the principles of the United States and its citizens. My expectation is that the victims, (Fannie & Freddie) will have their day in court and the perpetrators will be punished.
This is my firm belief - justice will prevail. Heaven help the US if it does not.
Not to create too much of a tift with you 955... but I have years of experience "resolving" conflict. You make me laugh and sound silly with that nonsense of being a government "spy". Essentially, i've been a problem solver geared to contract, claims for damages, etc. etc. resolutions of disagreements - involving money and emotions.
A short story for you... had a neighbor who got a ticket for running a stop sign in a town known for picking on young drivers (this was back in the early 60's). He told his father. The father said, yep you can hire an attorney, you can line up your witnesses and you will probably win. But, its gonna cost you a day out of work, and about $450 for an attorney and of course your friends or whomever will have to take a vacation day to. So, in the end its gonna cost you $750 and you will likely win. Or you can pay the $35 ticket. But dad... its not fair; I stopped at the sign...
Yes, certainly, F and F were raped, robed and pillaged by the imperial federal government and the biggest, most effective mob, cartel, mafia types ever assembled. And, I would like nothing more than a total win. In fact pay every shareholder $1,000 a share and two gold bars to boot. But, that isn't realistic.
F and F; live at the discretion of the government; as entities with certain goals and unfortunately with a great deal amount of oversight (read that intervention) by the "Warlords". So, you'd have the shareholders get a 110% win, and tick off the government that regulates these entities only to come back and have congress write a law that puts f and f out of business; because they got taken to the wood shed? Yep... you win... but lose. It would be like Jefar in the movie Aladdin - yep... he won... all that power in a little itty bitty space... He won the battle - but lost the war. Oh and Aladdin got the babe!
What has to happen is for EVERY one to come out a winner. Or at least be able to claim it - even if its not true.
My "proposal" or suggestion of compromise would give share owners about 4x+ more value than what is currently likely to happen if all we do is roll back to undue the "swipe" amendment. It could also happen quicker and be more certain. Sorry, 955 - this capitulation or something similar is necessary for a Win. You might not like it; and its hard for me to accept considering how poorly the entities and I (as a share holder) have been treated (didn't even get kissed!); but I want a win. A compromise guarantees a victory and something similar to what I'd written could be worth up to $200 a common share. Which is very acceptable to me. And the government gets a few billion in share to go on about the 20% (around $60B) free money (they only got 23% return on goldman slacks and lost on Government Motors) plus another 150 Billion in income taxes... And while I'd like the moral victory of stomping the evil wicked people into the ground so they grovel at my feet; but alas, that has NO CASH value. Especially, If I win but lose.
I hope you can understand and will agree CASH money is better than a hollow victory. Well it is to me anyway.
Most people in the banking business know this... some don;t ... not meant to offend anyone. ...
The reason commercial banks, the largest ones ... do not originate and hold 30 year mortgages (on a large scale) is because....
The interest rate risk associated with fixed rate mortgages is too great.
What they'd rather do is offer "adjustable" rate loans.
Because... banks generally make money off of what is called interest rate "spreads". The spread is the difference between interest or income earning assets and interest bearing liabilities.
Since depositors... except for dda accounts (think checking accounts) require some "interest" to induce the deposit; there is a cost to the bank of the "money" This is the money they lend out. Most Commercial loans are adjustable ... they are tied to "libor" London inter bank offertory rate ... or "Prime". These rates adjust... as do Certificate of Deposit rates... which make up the lion share of a banks "deposits".
So in a period of "raising" interest rates the spreads would narrow, if the bank held too much fixed rate interest earning assets - versus.. adjusted interest "paying" liabilities.... Banks, study this intently;
Thus, from an interest rate scenario.. banks will not originate and hold fixed rate mortgage loans (on a large scale - they do some jumbo loans and such but the loans for the masses... they will not).... instead. they sell them into the market and create... mini-bonds out of them... MBS - which they go back and invest in... so they sell them into the secondary market. This allows them to trade with a YTM effect discount rate and price them appropriately.
Thus... no money center bank is going to do this type of lending... and holding the notes. This is why F and F make SO much sense.
Please keep in mind that part of the litigation being forwarded in the courts is the "self-dealing" with regard to the process by which these two were taken over.
For example, as to the warrants you speak, they were never negotiated by the company but by the FHFA which, its alleged acted outside its scope and not in the interest of the company in the role it was assigned.
While its been further argued and asserted elsewhere that the warrants are technically worthless by statute, and there is probably merit to it; regardless, the claims of self-dealing are pretty substantial. Consequently, I really think that at some point, folks are going to get in a room and workout a global compromise.
For example, the reforms congress needs to come up with can be accomplished whether or not; they are in "conservatorship". Further, the FHFA's inaction or inability to think on its own, is pretty telling that the treasury / administration / white house is actually incharge.
Compromise will be in order.
What will it look like? I believe something along the lines of a release of conservatorship, exercise of 10-20% of the warrants (cancellation of the remainder); Re-amortizaton of the "interest" net of effects of excess reserves and DTA's and some $$ to low income housing initiatives.
At this point, FHFA will continue to "oversee" f and f. There maybe some restrictions on distributions of retained earnings for dividends for a couple of years to build capital. And, a plan to raise capital in the open markets over the next 2 - 3 years.
This will help f and f become more adequately capitalized. With for example the "government" holding, in trust some of these excess reserves, for which they pay a fee for (interest) which is offset by a back-stop guarantee fee.
What this means... is something where Market Cap for Fannie gets to 250 Billion (common at around $175) and then an equity raise of $75-100 Billion over time. This plus earnings would put capital at $250 Billion.
Why would the government agree to take "less" than the 80% warrants they took? Why would a thief that was caught cop a plea? The government's position is very weak. Its just not going to be pretty for them; and the best way to make it go a way is to fix it fast and not let it fester. Time is said to heel all wounds... its time for the government to put this behind it and close that chapter. Does the government really want to be accused of "profiteering" which is exactly, what they are accusing those of us that invested in F and F - when they were on the ropes?
The other win here for the government... is that this will create 400-450 Billion of Shareholder Market Cap, that will put lots of money into the "money supply" and become an instant "stimulus". The off shoot of that is, the tax "revenue" that will come into the treasury because of this; which will be another $100B or so over time.
So, the government effectively would reap around $180 Billion Profit from F and F. Thir troubles... would go away....
So, the best way to resolve this ... is a compromise.
DT.. Nice list. I'd like to be on it. I've been on YMB and behind F and F since 2008. Go - Long.