Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Toomey FNMA Comments toward end of press conference after he mentions he wants to Chair Senate Banking Committee if Republicans keep Senate
https://www.c-span.org/video/?476614-1/senator-pat-toomey-announces-plans-retire-2022
Senator Pat Toomey wants Chair of Senate Banking Committee to Fix FNMA/FMCC in the next two years. He announced his retirement in 2022 yesterday and specifically mentioned the GSEs and Housing Reform.
He is against the sweep and was concerned about the fair treatment of GSE shareholders in the past.
https://www.valuewalk.com/2015/05/fannie-mae-senator-toomey-speaks-out-against-the-sweep/
Old News - New Spin Cycle - First came up 1 month after swearing in.
https://therealdeal.com/2017/02/17/fannie-and...
Also see May 23, 2019 Bloomberg Article where this news got its last spin.
At some point FNMA will have 30 to 60% institutional ownership since it will be a significant capitalization weighted component of the S&P 500. Index funds and major mutual funds will have to own the stock because they need to track the market indicies. They will probably want to own the stock because of a reasonably attractive dividend. FNMA should become one of the most widely held investments among institutional investors.
You obviously Do Not Understand. Liberty is for all - even JB if he wins and replaces Calabria. Future voters will decide if executive decisions are in the best interest of the Republic and will have the right to vote the despotic autocrat out of office within the context of the US Constitution.
My point is that if Humprey's is struck down as precedent then HERA and the NWS are also so it does not mater who is President. Before JB can appoint a new Director - the FHFA will have to be reauthorized by Congress once the Constitutional defect is remedied. In the mean time the GSE's can settle the cases and raise capital under a consent decree. The real issue is how to get the GSEs out of Conservatorship before HERA is ruled UnConstitutional.
My point is that this is a real possibility that only has become a materially more probable outcome in the last week due to the death of RBG. RBG was an exceptional patriot but she believed in the Administrative State.
Thanks FFF
I think there was some other references to this fact in other briefs where they cited the same cases. The UST could have just exercised there warrants and paid themselves 80 pct of the dividends in accordance with standard corporate law. The point is that UST wanted all of the profits not 80% and also wanted to screw the public shareholders while doing it.
Some would argue that they would then have to consolidate the GSE's but that is the point also - get the GSEs out of conservatorship and move on.
Hi Robert - thank you for all your time and thoughts.
Regarding the SCOTUS case - I am thinking the big Kahuna here is the opportunity to overturn Humprey's Executor like Justice Thomas wanted in Seila. For those who support liberty and see the wisdom on how the election of a reformed minded POTUS can conterbalance the potential oppression of the Administrative State - the overturning of Humprey's could have far reaching and lasting impact. You will notice most of the Amicus briefs advocate for this including Gorsuch's old clerk at the Pacific Legal Foundation.
Check out this article:
https://slate.com/news-and-politics/2020/04/supreme-court-seila-law-trump-bleach-personnel-power.html
Director Calabria would be wise to take the GSEs out of Conservatorship on Jan 1 and let them raise capital under a consent decrees. The NWS will fall by the wayside as will HERA until Congress remedies the Constitutional defects. Roberts may not join but Gorsuch, Kavanaugh ,Barrett and Alioto may join Thomas in overturning Humprey's. This could not have happened with RBG but now is a possibility.
Kthomp - You are wrong. Secretary McNuchin understands the sanctity of Capital Markets and POTUS understands the sanctity of contract law. Secretary Calabria understands that shareholders were screwed by the NWS and the hoax Conservatorship. Ackman, The Growth Fund of America are some of the smartest and sophisicated investors in the world and they expect to be treated fairly. Maybe in the next Administration but in this Administration we will be treated fairly.
Correct - this relates to a convertible preferred that was a mandatory conversion long time ago. I believe the document actually mentions the JPS series to be delisted. This is not relevant at all.
There is absolutely no possibility of a SCOTUS Leak. The case has not even been assigned an argument date yet. Even after oral argument there is absolutely no precedence for a SCOTUS leak ever. Will have to wait at least until December if the case is assigned for the December Sitting even to start speculating on which way the Justices may align themselves.
This is a stock that will frustrate and disappoint until the day it doesnt and then you may never want to sell it.
Thanks Brooge and Navy
Seems like really good news. The CBO controlled by Democrat controlled House has value of UST position between 0 and 245bn. Assuming only $ 10 bn in 2020 earnings due to COVID19 rather than $ 20 bn otherwise.
Basically rules out receivership since it would scuttle sale of shares. Bottom line value to UST of up to $ 245bn - should give a lot of room to rule out another theft and lots of room for settlement. Values UST warrants at $55 bn in best case scenario.
SCOTUS news seems very positive also - maybe December Oral Argument Date coming? Not on calendar yet.
Thanks Robert. The provision in the Proposed Rules is the flexibility to build Countercyclical Capital Buffers which are initially set at zero. In this case DJT could order McNuchin to work with Powell and use of the Fed CVD19 facilities and loan the GSE's the capital to absorb any CV19 losses plus an administration fee. This should not be a windfall for the GSEs but they should not be stuck with any CV19 losses.
The smart move would be an alternative initiative and fund a refinancing boom whereby UST paid all related refinancing costs to take advantage of the low interest rates. Maybe this fee was done in anticipation of such an announcement because otherwise the GSEs would be stuck with a massive amount of new exposure with a lot of CV19 exposure. This would be the big bang and be a massive win for homeowners and the economy.
Maybe nothing but idle speculation but we will see. On the surface the increased fee seems to be anti-stimulative which does not seem to make sense from a political point of view so that makes me think it is the thud before the big bang.
How about " We want your house" policy. From RealClearPolitics today.
https://hotair.com/archives/john-s-2/2020/08/13/seattle-gentrification-protesters-give-house-give-black-people-back-homes/
Great Post Robert - Zandi, Parott and Bernstein are predictable enough that it could be a perfect set up. Also - remember that under the proposed capital rules there is a provision which allows the Fed the flexibility to provide capital for systemic reasons. This would be a perfect opportunity to highlight the genius of the proposed capital rules. We will see but my guess is that Calabria is a couple steps ahead of the three stooges.
Right on Robert! FNMA is like the Bailey Savings and Loan for the good old USA!. The MBA and Washington DC crowd wants everyone to borrow form Potter like Banks. Bedford Falls home ownership or Pottersville rentals and slums - SCOTUS must choose to uphold the rule of law and prevent the back door nationalization of our housing lifeblood. Public/Private Partnerships for the good of all when property capitalized and privately managed.
Hi Donot,
Watt was appointed by BO and controlled the FHFA until the start of 2019. Calabria was appointed last Spring. Your scorecard should end with the BO/JB appointment term
Are you assuming the NWS overpayment is about $ 30 bn. How much of that was Watt and how much was paid in 2019? That should be the start of your scorecard. In fact you should add back in all the net worth accrued to the GSE's post 2019. So lets start with plus $ 25 billion going to plus $ 45 bn under Calabria. BO/JB $ 25 to $ 30 bn stolen from GSE's DJT - plus $ 20 to $25 bn retained by GSES and Counting upward. Dont see how your BO/JB combo can be anything but crooks?
Regarding the the Justice Department litigation - check out the background of all the Staff Attorneys on the SCOTUS briefs - they all worked for judges appointed by Democrats. Justice is just now becoming more balance in their staff positions.
Finally - how about which FHFA Director cost taxpayers money to settle sexual assault allegations by FHFA staff. BO/JB $ 1 million
DJT - $0
Remember the BO speech where he complained that Watt was not getting confirmed? How did that work out for the taxpayers and the FHFA staff?
Eight Year Anniversary of NWS and Third Amendment - August 17, 2012. FNMA Enterprise Value now worth $ 166 bn according to Wedbush. UST has been fully repaid and overpaid by $ 30bn. FMCC Enterprise Value - $120 bn?? 8 years - over $ 300 bn in value for US GOVT and Private Shareholders. Time for POTUS, UST and FHFA to go for the WIN/WIN/WIN/WIN and settle with common and JPS shareholders while making billions more for the US Taxpayer!!
Do you mean like the Minnesota Twins or the GSE Twins? Just kidding the Twinkies are 10-2 though. Wishing you and Lotto profits as great as your faith in the rule of law and fair dealing.
Thanks MannSinger. Are you sure Ackman reduced? Could it be that it has something to do with his total return swap holding structure? Regarding American Funds - the Institutions tab have them owning 22% of the float and adding 5 million plus as of 7/31?
http://finra-markets.morningstar.com/MarketData/CompanyInfo/detail.jsp?query=22%3A0P0000023H&sdkVersion=2.56.0
Not sure if this is right but wanted to follow up since it may be just the way the holdings are reported with Morningstar?
Talk about a disaster - what if he did wind down Fannie and Freddie - who would have been making 30 year loans now? This guy would have given away almost $ 300 bn in Enterprise Value at the same time. This is the guy who gave us Mel Watt for whom the FHFA settled a sexual assault suit for $ 1 million. Check out the video around the 21 minute mark:
Thank you 2Invest. I hope Vinson and Elkins gets to argue - there is only 1 hour allotted but time is usually efficiently allocated by the Chief Justice.
Talking about a bad investor! - this guy wanted to wind down two very profitable companies worth $250 to $300 bn today.
Agreed - plus even with a generous settlement with the common and JPS it would mean a multi-billion payday for the US Taxpayer.
He could also point out how BO/JB just wanted to wind down the GSEs and give the business to the MBA crowd for nothing. FNMA alone is worth $ 166 billion today according to Wedbush.
Hi 2Invest,
The Calabria paper is cited three times in the Amicus brief filed by Blackwells in Collins v McNuchin. On pages 10,12 and 16.
See: https://www.supremecourt.gov/DocketPDF/19/19-422/120707/20191030091202201_Final%20Blackwells%20amicus%20-%2019-422%20-%20PDFA.pdf
I am not sure if Vinson and Elkins will get a chance to participate in Oral Argument but the paper is definitely part of the Court Record. Personally I think it is a compelling rationale for a fair, equitable and rationale resolution of Common and JPS claims and to make the case that the NWS was ultravirus to its duties as Conservator.
Thanks Navy, The question should be why didnt BO/JB and Valerie Jarrett address the issues of equitable housing policy for people of color and the inner city in during the BO/JB administration? The answer is that they didnt care and let BO/JB turn the GSE's into a piggy bank to fund Obama Care.
Where was Chairwoman Watters then? Why didnt she push for a settlement in 2013 and work with the finance community to bring capital to disadvantaged communities and people of color? Nearly a decade later and now make the case?
The cap rule date seems consistent with what is out. Comment period ending on Aug 31 and final rule out within 60 days or so.
Regarding the SCOTUS argument date - Only the October sitting has been confirmed and Collins/McNuchin is not on the calendar yet according to SCOTUS blog. There will be a November and December sitting so perhaps another 15 or so cases argued before end of year.
This is the best of my understanding
Thanks again- final follow up
How can the GSEs raise money if there is no exit or independent BOD? Too much risk of govt intervention as you said - dont you think?
You probably dont agree but I would expect that the BODs become functional with separate legal representation before the end of the year. FNMA and FMCC counsel will be part of the settlement negotiations as they pertain to the capital structure of each institution. Thoughts?
Final thank you!
Thanks! As Follow ups
If we have a cap rule then do you think we can get a Consent Decree and exit before late Jan 2021?
If we have an exit - what is the political risk of a Dem Congress since the GSEs would be out of Conservatorship and under BOD control once again?
Thanks FFFacts
I think we need to be aware of the fact that Director Calabria has only been on the job since April 2019 and that the staff at the Justice Department handling the NWS litigation are BO/JB holdovers.
It is cleat that Parrot, Zandi and the gang do not want to let the GSEs' to be out of government control and want to perpetuate the bank door nationalization under the guise of Conservatorship.
Dont you think that it would be most likely that JP will appoint a new FHFA Director that would open the door for the Washington DC MBA establishment like Terry McCaulife and KBW network to make money on the further subjugation of the GSE's.
The potential delay in a final capital rule is concerning - we need final capital standards to enter into Consent Decrees and the exit from Conservatorship.
FNMA traded at $ 6 and if there is a PSPA cramdown - Wedbush says its worth zero.
UTS will receive $124 bn more in profit.
FNMA is worth $ 166 bn
This report just strengthens the hand of the JPS and Common Shareholders in settlement talks.
Got to go
It assumes JPS convert at 40% of Par. Clearly not going to happen. Remember worse case just wait for SCOTUS - got to be better odds and definitely a better case
Hi Louie,
Dont we have to ask ourselves why Wedbush would say that FNMA is worth $166 bn and the common shareholders will get zero? Probably to keep the stock price down going into the settlement.
Perhaps this is am unintended gift to give to David Thompson and Vinson and Elkins to be included in their briefs before oral argument to SCOTUS. It clearly is a takings because the stock price will go from as high as $ 6 to zero. It is not loss profits but the loss in the value of the stock price - I think this was the problem with AIG and Hank Greenberg won the case but no damages. Clearly it is an enterprise worth $ 160 bn or more and if UST goes forward with as SPS cramdown - the UST will have takings liability due to the SPSA and the ultra vires actions of the FHFA.
It would be good to get Ano to chime in.
Great Point Justice. Hi Ano - dont you think that David Thompson and Vinson and Elkins can use the Wedbush report in their brief to SCOTUS to show the potential damages from a constitutional taking by UST and the ultra virus actions of the FHFA in the 3rd Amendment. These seem like direct damages to Common Shareholders - $6 per share or about $9 billion to FNMA alone. For JPS it is 60% of Par or $ 18 bn. For FMCC isnt about $.5.5 bn. A good case for about $ 30 bn in direct damages for takings, bad faith and violation of the FHFA's role as Conservator under HERA.
Wedbush values FNMA at $ 166 bn based off a 10 multiple. Do we know what Nomura had for an enterprise value. Wedbush is another validation of the underlying value of the FNMA business model. It assumes that JPS convert for 40% and Ackman will take zero. What do think - are you going to take 40% for your JPS?
I will take the other side of that perspective.
Cap rules will be decided by year end.
Watt was appointed by BO/JB to perpetuate the theft from the GSE's. The NWS has been shut off under Calabria.
Watt sexually assaulted an FHFA employee. Perhaps shareholders weren't the only one he was fornicating. My bet is that Calabria will not do either - literally and figuratively.
Remember he was confirmed in April 2019 so he has only been on the job less than 16 months
Exactly!
Now the other lawyer who lied about his law school grades and commonly plagiarizes other peoples speeches and ideas is a different story. Talk about not having the mental capacity to do a job!
Agreed - Ginsburg already lost the Constitutional argument in Seila. Although I doubt it - she may actually think the NWS was grand theft. Her late husband was a big time tax lawyer and undoubtedly knows how important the sanctity of contract law is - especially in the proper functioning of our capital markets.
February 6th 2020 - start of latest bout of cancer.
Yes - I believe she is doing an extraordinary job. Look at her opinions and listed to her interviews and questions during oral arguments. She is extraordinary.