RestoreFannieMae.us
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By the way. Mad respect to all the OG longs on this board. I'm new to Mary Jane stocks but have spent the last month researching potential investments in this sector and have come to the conclusion that Derek Peterson is money good. I'm not a flipper and will continue to accumulate and hold as long as Derek continues to execute. Bravo....
$TRTC$
The state of Nevada won't be accepting applications until after April 1st.
See below:
"When will the applications for certification be available for Nevada medical marijuana dispensaries, testing laboratories, cultivation facilities and production facilities?
The details regarding applications will be determined no later than April 1, 2014. Prior to that time, public input will be sought.
Check www.health.nv.gov for updates and notifications.
According to Section 25 of Senate Bill 374, “On or before April 1, 2014, the [Division of Public and Behavioral Health]...shall adopt the regulations required pursuant to section 20 of this act.”
Section 20 of SB 374 authorizes the Division to adopt any regulations deemed necessary or advisable to carry out the program of dispensing marijuana and related products to persons authorized by law to engage in the medical use of marijuana."
http://health.nv.gov/PDFs/SB374_FAQs_Defs.pdf
No prob.
On June 12, 2013, Gov. Brian Sandoval signed S.B. 374 into law. This new law finally fulfills the state constitution’s mandate that the legislature provide for appropriate methods of supply for medical marijuana. The bill was sponsored by Senators Tick Segerblom (D-Las Vegas) and Mark Hutchison (R-Las Vegas).
Link to the bill below:
http://www.leg.state.nv.us/Session/77th2013/Bills/SB/SB374_EN.pdf
Blüm Oakland is not apart of Terra Tech, yet. My understanding is that all medical MaryJane dispensaries in the state of California have to be set up as non profit. However, in Nevada one can set up as a non profit or for profit.
http://www.mpp.org/states/nevada/SB374-Summary.pdf
Link to the City memorandum below and article from 2012 that talks about the dispensary.
City memorandum link, his dispensary is the 1st one on page two of the PDF: http://www2.oaklandnet.com/oakca1/groups/cityadministrator/documents/memorandum/oak034216.pdf
Article from 2012:
http://www.eastbayexpress.com/oakland/new-oakland-dispensary-in-full-blanduumlm/Content?oid=3400175
New Oakland Dispensary in Full Blüm
The legalization of recreational pot in two states this fall has left the feds dumbstruck, but the medical cannabis industry in the Bay Area is soldiering on, with the opening of several dispensaries in the face of a fourteen-month crackdown by US attorneys in California. Blüm Oakland opened on November 11 at 578 West Grand Avenue (near Telegraph Avenue) in Oakland, according to its operators. Arturo Sanchez, assistant to the Oakland city administrator, said Blüm Oakland is the business name of Oakland Community Collective, a group that took first place this year in a city competition for four new Oakland dispensary permits.
Oakland Community Collective is run by a number of people familiar with the Oakland scene, including owner and general manager Salwa Ibrahim, a former Oaksterdam executive. Former WeGrow partner Derek Peterson co-owns OCC, and is its chief financial officer. The first few weeks have seen a steady flow of customers. "Our main priority is just serving patients high-quality medicine," Ibrahim said.
The club is carrying four indicas, seven sativas, ten hybrids, more than two-dozen edibles, and about a dozen concentrates. The online menu updates in real-time, said Ibrahim. Specials go for as low as $60 for a quarter-ounce of Pineapple, Blue Dream, or outdoor Cookies. "We definitely want to make sure we can serve all patients regardless of their economic situation," she said.
Top-shelf Blue Hawaiian and Cadillac Purple run as high as $17 a gram. Hours are very convenient: 10 a.m. to 9 p.m. weekdays. The club accepts credit and debit cards and cash. The dispensary is also currently featuring artwork by Oakland's Oliver Black.
The City of Oakland has created a total of eight permits for medical cannabis dispensaries, and five businesses that hold such permits are currently operating. They include Harborside Health Center (which is fighting a federal-forfeiture threat), Purple Heart Patient Center, and Oakland Organics. Coffeeshop Blue Sky — an Oaksterdam-affiliated establishment that was raided and closed in April after it moved twice to avoid a federal forfeiture threat — is also operational, Sanchez stated. (Blue Sky's listed phone number remains disconnected, though.) Blüm Oakland is the fifth club to open. Abatin Wellness, a project of TV personality Montel Williams, is "close" to being ready, Sanchez wrote in an email.
The holders of the last two provisional permits, Magnolia Wellness Inc. and Tidewater Patients Group, continue to look for a location, Sanchez stated. Final operating permits are not issued until dispensary sites have completed construction, passed inspections, and received an occupancy permit from the fire department, he wrote.
Finding a suitable location has proven difficult for all Bay Area dispensary permit holders. In October 2011, four US attorneys declared a broad crackdown on the state's medical marijuana industry. Their chief weapon has been the federal threat of forfeiture, which has scared landlords into kicking out dispensary tenants. The crackdown has also spooked landlords from renting to potential clubs, commercial real estate agents say.
Twelve groups braved the crackdown and applied for four new Oakland dispensary permits last year. Ten finalists were announced in December 2011; four made it past hearings in January and were awarded permits contingent on finding suitable property. "The City of Oakland had a very lengthy, thorough process and we're very lucky to have gotten this far — all factors considered," Ibrahim said.
Elsewhere around the Bay, Berkeley Patients Group will return this December, according to an announcement from the huge Berkeley club, which was kicked out of its original location by a forfeiture threat. The dispensary will reopen at 2366 San Pablo Avenue in Berkeley.
And another one of US Attorney Melinda Haag's targets, Shambhala Healing Center, announced on November 14 that it has re-opened its location at 2441 Mission Street in San Francisco's Mission District. "We have been encouraged by the recent election and the initiatives passed in favor of cannabis. ... We look forward to seeing you again!" the club wrote to patients.
The City of San Francisco also continues to permit new clubs in the face of the crackdown, including the soon-to-open Morado Collective down the street from Shambhala. The apparent renaissance in Bay Area dispensaries led SF Weekly to ask in a web headline last Friday, "Is the Dispensary Crackdown Over?"
Haag's office generally refuses to comment on the crackdown. But Sacramento Bee reporter Peter Hecht got a hold of Benjamin Wagner, US attorney for the Eastern District of California, and Wagner told Hecht that "so long as conditions in California stay the same, our enforcement efforts are going to be pretty much the same."
Seeds & Stems
While we were scarfing turkey, stoners in Amsterdam awarded top honors to the best ganja in the world in the 25th annual High Times Cannabis Cup on November 22. It was a celebratory competition compared to last year, which saw the threat of a ban on foreigners in Amsterdam coffee shops, as well as the first-ever police raid of the Cannabis Cup expo. A more liberal government has since quashed the idea of keeping foreigners out of Amsterdam coffee shops, and this year's events were raid-free. Green House Coffeeshop took first place in the Cannabis Cup for its Flower Bomb Kush.
When will the applications for certification be available for Nevada medical marijuana dispensaries, testing laboratories, cultivation facilities and production facilities?
The details regarding applications will be determined no later than April 1, 2014. Prior to that time, public input will be sought. Check www.health.nv.gov for updates and notifications.
According to Section 25 of Senate Bill 374, “On or before April 1, 2014, the [Division of Public and Behavioral Health]...shall adopt the regulations required pursuant to section 20 of this act.”
Section 20 of SB 374 authorizes the Division to adopt any regulations deemed necessary or advisable to carry out the program of dispensing marijuana and related products to persons authorized by law to engage in the medical use of marijuana.
http://health.nv.gov/PDFs/SB374_FAQs_Defs.pdf
For more info see below.
My prayers are with you brother.
http://himes.house.gov/press-release/delaney-carney-and-himes-announce-housing-finance-reform-proposal-plan-introduce
Jan 16, 2014 Issues: Financial Reform, Financial Services, Housing
Washington, D.C.—Representatives John K. Delaney (MD-6), John Carney (DE-AL), and Jim Himes (CT-4) today outlined a housing finance reform proposal that uses private sector market forces to appropriately price risk while putting the scale and security of a government guarantee behind the program. They plan to introduce legislation this spring to create a housing finance system that is fair for borrowers, lenders, and taxpayers.
Key elements of Delaney-Carney-Himes Housing Finance Proposal
Housing reform legislation allows the government to expand the capacity of housing finance while allowing the private sector to price all of the risk
Creates incentives for private capital’s market share in housing to grow over time;
Creates a path for Fannie Mae and Freddie Mac to be sold as independent companies without any government support or monopoly status
Creates additional funds for low income housing
The Delaney-Carney-Himes housing finance proposal creates a structure that enables the government to significantly expand the availability of capital in the insurance market, while ensuring the mortgage market is open and efficient – with private capital participating in the market and pricing all of the risk. The plan adds discipline to the mortgage market, creates meaningful paths and incentives for private capital to flow into the mortgage market, and ensures that the mortgage market benefits from the liquidity provided by government participation.
This structure creates a unique public-private partnership mechanism whereby private “first loss” capital of up to 5% is required in all mortgage securitizations, and the government – acting through Ginne Mae – in partnership with private capital will provide reinsurance of up to 95% of any mortgage securitization. Specifically, Ginnie Mae will provide reinsurance and prospectively contract with private reinsurance companies to share in the government’s reinsurance policy. Both the private reinsurance carrier and the government will receive the exact same pricing and bear the exact same risk.
“We are excited to begin the roll out of this idea and believe this legislation will be an important addition to housing finance reform discussion,” said Congressman Delaney. “To ensure a stable housing finance system, we must move past the current state to a new system that engages more private sector capital and private sector pricing of risk in partnership with an explicit government role in the provision of stabilizing liquidity to the market – this bill does that. Chairman Hensarling has shined an important spotlight on housing reform and understands, deeply, how important this debate is to the economy and our fiscal future. For decades, Ranking Member Waters has led on affordable housing issues and I look forward to her forthcoming legislation as well. Senators Warner and Corker have shown similar leadership with their proposed legislation and we look forward to deep collaboration with these truly outstanding Senators as well. We hope our legislation will complement these efforts.”
“I’m looking forward to working with Mr. Himes and Mr. Delaney to advance our ideas around housing finance reform,” said Congressman Carney. “My priority in developing this proposal is to preserve the thirty-year fixed rate mortgage while protecting taxpayer dollars. Getting this effort right is critical to the success of our economy. Absent a smart, sensible solution, affording a home will become more expensive for families across the country, and taxpayers will remain on the hook in the event of another downturn in the housing market. There are a lot of good ideas out there -- I think this one strikes the right balance between public and private sector involvement in the housing market.”
“I’m excited to join this effort to merge the efficiency of markets with the scale of government to create a safer, more liquid housing market that will help make housing more affordable while reining in the risk to our economy,” Himes said. “I look forward to gathering input from housing experts across the spectrum and am particularly interested in working to improve the availability of multi-family housing.”
“I welcome the principles and approach that are included in this proposal,” said Congressman Gregory Meeks. “It preserves a government back stop, which is critical for sustaining the thirty-year fixed rate mortgage, and creates additional funding for low income housing. I look forward to further discussions and clarifications on the specific details that will be included in the legislation.”
Below please find a summary of concept.
Key Components of Delaney, Carney, Himes Housing Reform Proposal
This bill establishes a system of government reinsurance for eligible mortgage backed securities, marrying the government’s ability to provide the necessary capacity to accommodate the size of the United States housing market and the private sector’s ability to better price risk. A government guarantee under this system will be explicit, but taxpayer money will be protected through adequate private sector capital and accurate pricing of government reinsurance.
Under this system, issuers will be required to secure 5% private sector capital (standing in a first loss position) provided by adequately capitalized monoline insurance companies. After securing this minimum level of private capital, issuers may securitize their mortgages through Ginnie Mae. Separately, private insurers will prospectively contract with Ginnie Mae and share the reinsurance pricing and risk, with the private insurer assuming a minimum 10 percent on a pari passu basis.
By leveraging the government’s capacity and the market’s ability to price risk, you strike the correct balance between public and private participation in the U.S. housing market.
Private Capital and Extraordinary Government Guarantee
Private monoline insurers would be required to hold a first-loss position on an eligible government security of no less than 5%.
A mortgage reinsurance system would be supported by Ginnie Mae and carry the full faith and credit of the United States Government, but with private sector directed pricing.
95% of the senior risk will be shared between Ginnie Mae and private reinsurance companies (on a 90% to 10% split).
Private Sector Pricing of Risk
Ginnie Mae will prospectively contract with private reinsurers to lock rates based on private sector assessment of market risk.
Ginnie Mae and the private reinsurers will receive the same terms and the same price for the risk that they share.
Any loss on the remaining 95% will be shared equally between Ginnie Mae and the private reinsurer based on their market share of the security (90% to 10%).
Small Lender Access
Fannie and Freddie may remain as aggregators of mortgage loans for smaller entities such as credit unions and community banks that do not have the sufficient volume to pool and create these new securities with their mortgage loans alone
Issuing Platform
Ginnie Mae will securitize and reinsure each mortgage-backed security. Ginnie Mae will stand behind the 5% private capital once it is exhausted.
The platform will allow for standardized securities thus creating a single security and creating a deeper and more liquid TBA market which will reduce the cost of mortgage credit for consumers.
Standardized Mortgages, Servicing, and Capital Requirements
Transition FHA regulation to Ginnie Mae with oversight over the secondary mortgage market
The FHFA and the Federal Reserve will collaboratively regulate the new secondary market
FHFA will be funded through assessments of the entities it regulates
Winding Down Fannie and Freddie
The Director of the FHFA will oversee the discontinuance of the Enterprises’ ability to issue, guarantee, or purchase any mortgage-backed securities.
After the Ginnie Mae platform is established, the Enterprises will operate as one of the several anticipated monoline insurers and one of the several anticipated private reinsurers for a five year period.
By the end of the five year period, the FHFA Director will ensure that the total market share of mortgage-backed securities insured by the Enterprises in either of these capacities will not exceed 30 percent of the total market share.
Affordable Housing
Ginnie Mae will charge a fee for the insurance that they provide for these securities.
The fees charged will range between 5-10 basis points of the total principal balance of these mortgages.
The monies acquired will be allocated to strengthening affordable housing programs facilitated by the federal government. The funds received will be allocated to the Department of Housing and Urban Development (Housing Trust Fund) and the Department of Treasury (Capital Management Fund).
Multifamily Housing
Create a structure for multi-family housing financing that follows this public-private model and provides the government backing necessary to create a fluid market.
Well-functioning TBA Market
Investors will receive timely principle and interest payments through Ginnie Mae.
This model will also ensure that the one standardized security is delivered to the TBA Market. This will increase liquidity and limit disruptions to the secondary mortgage market, which will ultimately benefit consumers.
Bridgeport, CT
Stamford, CT
Washington, DC
His (Bob Ryan) views on shareholder's vs. mutual or co-op start at 1:00:10.
Bob Ryan speaking at Zillow conference about GSE reform.
Starts @ 21:35
http://www.youtube.com/watch?v=mLy7CFzZxK4&autoplay=1&app=desktop
Bob Ryan speaking at Zillow conference about GSE reform.
Starts @ 21:35
[/yt]mLy7CFzZxK4?t=21m35s[yt]
http://www.youtube.com/watch?v=mLy7CFzZxK4&autoplay=1&app=desktop
Happy New Year Obi!
How Do You Solve a Problem Like Fannie? With $3.3 trillion in assets, the mortgage giant ought to be a 'systemically important financial institution.'
By ALEX J. POLLOCK
Dec. 23, 2013 7:17 p.m. ET
While Congress has reached an agreement on the federal budget, consensus on housing policy continues to elude lawmakers. Despite lengthy and extensive efforts, there's no agreement on how to reform the failed mortgage giants Fannie Mae FNMA +1.29% and Freddie Mac. FMCC +1.34%
There are currently two options. Plan A is the House Financial Services Committee's bill, the PATH Act, a market-based reform that would phase out the government guarantee and these two government-sponsored behemoths. The hitch: No one thinks it can pass in this Congress. Plan B is the Senate's Corker-Warner bill, which would wind down Fannie and Freddie but establish a new government guarantee for mortgage-backed securities.
What if neither bill can get through both houses? Then Fannie and Freddie will carry on the way they are: as mortgage-market-dominating wards of the state, run as part of the government, with no capital, entirely dependent on the Treasury Department's credit card, while longtime political supporter Mel Watt runs the agency that regulates them. On top of that, the Federal Reserve buys and monetizes their mortgage-backed securities—so far to the tune of $1.5 trillion and continuing at $35 billion a month.
No private entity can compete with this setup. The status quo makes the politicization of Fannie and Freddie more likely and sets the stage for repeating past mistakes. While we await a broader reform of housing finance, I propose a Plan C with the following components.
First, designate Fannie and Freddie as SIFIs—"systemically important financial institutions." Dodd-Frank gives the Financial Stability Oversight Council the authority to classify institutions that pose systemic risk to the economy as SIFIs, imposing additional regulatory requirements to protect taxpayers. It is undeniable that Fannie and Freddie pose great systemic risk. If the government refuses to take the obvious step of designating them as SIFIs, Congress should direct it to do so.
Fannie Mae already holds more assets than any other SIFI with $3.3 trillion on its books. J.P. Morgan JPM +0.94% comes in second with $2.5 trillion, followed by Bank of America BAC +0.58% at $2.1 trillion. Freddie Mac would take fourth place, holding $2 trillion. Designating Fannie and Freddie as SIFIs would put them in the category they belong—enormous players in the international financial system.
Second, require Fannie and Freddie to adhere to the same capital requirements as SIFI banks. Domestic and international regulators have laboriously analyzed how much capital an institution should hold to prevent government bailouts, and the same rules should apply to Fannie and Freddie. History makes clear that taxpayers need protection from the threat of Fannie and Freddie's insolvency at least as much as they do from those of banks. The protection should include the Fed's leverage capital requirement for systematically important banks—currently proposed at 5%.
Third, if we can't get rid of Fannie and Freddie's government guarantee, we can at least make them pay for it. All banks pay a deposit insurance premium—a fee to the government in exchange for a guarantee of their deposits. The fee is currently running at 0.17% of aggregate insured deposits per year. Fannie and Freddie have gotten a pass on paying for their government guarantee, but this should end. Congress should set an annual offset fee of 0.17%, payable to the Treasury, assessed on the liabilities of Fannie and Freddie which the government backs. That is, all of them.
Fourth, all of the regulations to protect mortgage borrowers should apply in full force to Fannie and Freddie. The Consumer Financial Protection Bureau has defined many requirements for mortgages with the goal of protecting borrowers. The qualified mortgage rule, for example, requires mortgage lenders to follow specific rules about assessing a borrower's ability to repay a mortgage. The government waives these rules if the mortgages are sold to Fannie and Freddie. That is ridiculous.
Fifth, Congress should direct regulators to impose standard loan-to-one-borrower limits on any Fannie and Freddie obligation held by banks. Long-standing regulation prevents a bank from lending too much of its capital to any one borrower, but investments in Fannie and Freddie don't count. During the housing bubble, the banking system was used to leverage Fannie and Freddie—regulations even encouraged banks to use deposits to buy preferred stock in Fannie and Freddie. This proved to be a big mistake that increased systemic risk and resulted in large losses to the banks involved.
Finally, Congress should set in statute the dividend on Fannie and Freddie's senior preferred stock—the taxpayers' $187 billion bailout—at the original 10%. The dividend rate is currently determined by political appointees at the Treasury and the Federal Housing Finance Agency. This authority belongs in Congress. After Fannie and Freddie meet capital requirements, pay the government for the privilege of having a guarantee, and pay the 10% dividends, then any excess capital should go toward retiring the taxpayers' senior preferred stock. There must be no dividends on either junior preferred stock or common stock until the taxpayers' forced investment is completely redeemed at par.
This Plan C is not intended as a solution to the problems of housing finance. It is meant to pre-empt the dangers posed by our pernicious and long-standing status quo, without waiting for Congress to reach a grand housing-reform bargain.
Mr. Pollock is a resident fellow at the American Enterprise Institute. He was president and CEO of the Federal Home Loan Bank of Chicago 1991-2004.
http://online.wsj.com/news/articles/SB10001424052702304011304579220154026887972
Thanks!
Washington Federal's Response to Government's Motion To Dismiss
Posted by bryndon.fisher on google FNMA board.
"The very nature of the conduct alleged in the Complaint supports that FHFA likewise has such a conflict of interest here. Namely, as described in Section IV(A)(1) above, FHFA imposed and has used the conservatorships to accomplish the Government’s own objectives rather than preserving the Companies’ assets with a view towards their eventual emergence from conservatorship. No understanding of conservatorship would include actions that destroyed the value of the Companies and siphoned their control and profits to the Government."
"In contrast, the various Government actions challenged by Plaintiffs went far beyond anything authorized in HERA. Instead, FHFA, acting as conservator and regulator, and Treasury, acting as loan shark, took the unprecedented and unforeseeable move of placing the Companies into conservatorship, saddling them with largely unnecessary debt, using them parasitically to protect unrelated financial institutions, and then steering all of the Companies’ profits to the Government's coffers indefinitely and without regard for the debts imposed upon the Companies by the Government itself - all at the expense of the Companies' shareholders. Each of these acts, which were part of a broad governmental scheme, had nothing to do with the statutorily-defined purpose of a conservatorship - to preserve and conserve the assets of an allegedly troubled institution - but were rather orchestrated to serve a wholly unrelated purpose, namely creating stability in the greater economy and providing Treasury with needed funds."
Link to response:
https://docs.google.com/viewer?a=v&pid=forums&srcid=MDUxNDQwNjExMTIwMzQzNjc3NDIBMTA2MjY0NjIzMzA1MjMyOTg2MDEBZ21GUVY5WW5VYzhKATQBAXYy
A lot of great work done today! Many thanks to everyone.
Wow, thanks for taking the time to post this!
"This is usually a case of politicians commenting on a service they know very little about and pandering to their constituency …" he says. "Fannie and Freddie have done more for home ownership in the last 30 years than any economy. They are profitable and have returned any monies they received in the bailout. They create an open market where investors can go and buy mortgage-backed securities, allowing home buyers low interest rates and the availability of mortgage money to buy a home … I'm not sure how any politician can make an argument to eliminate these companies."
Nice find!
Thanks for breaking that down!
“When you look at what happened with Fannie & Freddie, they were unfairly penalized” - Kyle Bass @ 4:05
http://mobile.bloomberg.com/video/hayman-s-bass-on-gm-stake-herbalife-j-c-penney-RmQZdUl5Szqr8y5dgB2pDg.html?cmpid=yhoo
Precisely.
Nice find!
"I probably cost Berkshire at least $5billion for example by sucking my thumb twenty years ago or close to it, when Fannie Mae was having some troubles. We could have bought the whole company for practically nothing." @ 0:30:07 - 0:30:23
"Omission is way bigger than commission. Big opportunities in life have to be seized!" @ 0:31:05 - 0:31:12
- Warren Buffet, from 2001 speech at University of Georgia
Points of Interest from US Senate Hearing on GSEs - http://www.restorefanniemae.us/banking
Also.
Ackman is on Bloomberg at 10:00
Don't forget.
http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=43c24d50-cb8c-4aff-8bed-7f1ab8038f18
Friday, November 22, 2013
10:00 AM - 12:00 PM
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
will meet in OPEN SESSION to conduct a hearing on “Housing Finance Reform: Developing a Plan for a Smooth Transition.” The witnesses will be: Mr. James Millstein, Chairman and CEO, Millstein & Co.; Mr. John Bovenzi, Partner, Oliver Wyman; Dr. Mark Zandi, Chief Economist, Moody’s Analytics; and Mr. David Min, Assistant Professor of Law, University of California, Irvine School of Law.
All hearings are webcast 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.
Add To My Calendar (vCal)
Witnesses
Panel 1
Mr. James Millstein [view testimony]
Chairman and CEO
Millstein & Co.
Mr. John Bovenzi [view testimony]
Partner
Oliver Wynman
Dr. Mark Zandi [view testimony]
Chief Economist and Cofounder
Moody's Economy.com
Mr. David Min [view testimony]
Assistant Professor of Law
University of California, Irvine School of Law
His book is out now! Great read!
http://www.amazon.com/The-Mortgage-Wars-Big-Money-Politics/dp/0071821090
“Sizable positions are now being established in the stock reflecting the possibility that the government will change its position. It is a reasonable but extremely high risk speculation,” writes Bove.
http://www.valuewalk.com/2013/11/bove-revisits-the-fannie-mae-freddie-mac-investment-case/
Bove Revisits The Fannie Mae, Freddie Mac Investment Case
by Michael IdeNovember 20, 2013
http://www.valuewalk.com/2013/11/bove-revisits-the-fannie-mae-freddie-mac-investment-case/
Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) have attracted increasing attention over the last few weeks, despite the fact the US government still intends to keep all of the companies’ profits for itself and wind them down between now and 2018. Earlier this month, Rafferty Capital Markets LLC vice president Richard X. Bove decided to examine Fannie and Freddie as possible investment opportunities in a series of newsletters, and what seemed surprising at the time is starting to look prescient.
Bove sees much uncertainty, risk
A week after Bove’s first newsletter, Bruce Berkowitz-led Fairholme Capital Management sent a letter to the Treasury outlining its plan to take the lead in a buyout of both companies, infusing $52 billion into them and taking them private. Almost immediately, hedge fund manager Bill Ackman filed 13-Ds showing that he had taken a 10% stake in each companies’ common stocks. Now Bove has released another newsletter analyzing the investment argument, but the risks are as high as they ever were.
Bove doesn’t take a strong position for or against government intervention in the housing market, but it’s clear that he doesn’t think everyone understands the implications of simply liquidating Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC).
“The current option will increase the cost of owning a home; reduce housing values; shrink the available funding for homeownership; and reduce the size of the housing market impacting economic growth. It will return housing to being a highly cyclical industry; and it will return the United States to a policy of supporting semi-public housing or the creation of instant ghettos,” writes Bove, referring to the political options currently in play in Washington.
Fannie and Freddie have made housing available
Delving into the history of the US housing market, Bove argues that Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) has effectively made housing available to many Americans, and that the company’s structure is tried and true; there was a breakdown in the company’s management in the run-up to the housing crisis, but that can be, and arguably has been, fixed.
If Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) were private companies, you’d expect their stocks to be soaring, but the government has laid claim to all of their profits. Fairholme has previously sued the government for some sort of compensation but “Congress has given Fannie Mae’s conservator the right to ignore any court decisions that interfere with the rights listed above,” explains Bove, referring to its sweep of profits. “This is important. The government is using its sovereign authority as a right to ignore the law – despite the separation of powers.”
Political factors to play huge role
The main issue to anyone investing in Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) is political: their liquidation is supported by President Obama and a bipartisan bill in the Senate. It’s one of the few issues on which the two parties generally agree, and investors have to hope that they can convince the government to change course. But Fairholme’s offer to buy them out seems to meet everyone’s goals: the government exits the secondary mortgage business, shareholders get to earn money on their investments, and the country hopefully avoids the housing crunch that Bove predicts if the companies are shut down. Now it’s only a question of whether the government will agree.
“Sizable positions are now being established in the stock reflecting the possibility that the government will change its position. It is a reasonable but extremely high risk speculation,” writes Bove.
This is a very good video indeed! Thanks;)
The information is out there for those that look.
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=9615398
Great videos. Could be used as a sort of psychoanalysis in figuring out Ackman's current thinking and knowledge about the company's and their future.
Ackman takes big stakes in the GSEs
09:03 AM ET · FNMA
Pershing Square discloses a 9.98% stake in the common stock of Fannie Mae (FNMA) and a 9.77% stake in the common of Freddie Mac (FMCC), and its intention to get involved in the reorganization discussions.
"In light of the proposed Fairholme transaction on behalf of certain holders of preferred stock of the Issuer which was reported in the financial press, the Reporting Persons have determined that they may engage in discussions with management, the board, other stockholders of the Issuer, representatives of the Federal government, and other relevant parties ..."
New Fannie Mae Board Member!
November 14, 2013
Diane Nordin Elected to Fannie Mae Board of Directors
Callie Dosberg
202-752-3117
WASHINGTON, DC – Fannie Mae (FNMA/OTC) today announced that the Board of Directors has elected Diane C. Nordin to the company’s Board. Ms. Nordin, a seasoned asset management executive, will complement other members’ areas of expertise and strengthen the Board’s governance of Fannie Mae as the company works to create a safer, more transparent, and sustainable housing finance system.
“Ms. Nordin brings to the Board a deep and broad understanding of the global markets and excellent fixed income investment experience,” said Philip A. Laskawy, Chairman of the Board. “Her experience coupled with her pragmatic approach will be valuable as we continue to strengthen the company and improve the housing finance system.”
Ms. Nordin, 55, most recently spent a year as a Fellow at the Advanced Leadership Initiative at Harvard University. Prior to this, she spent twenty years at Wellington Management Company, LLP, a private asset management company, where she served as a partner from 1995 to 2011. She served in many global leadership roles at Wellington, most notably as head of Fixed Income, Vice Chair of the Compensation Committee and Audit Chair of the Wellington Management Trust Company. Previous positions at Wellington include Director, Global Relationship Management and Director, Fixed Income Product Management.
Ms. Nordin graduated from Wheaton College with a Bachelor of Arts degree, with a concentration in biology. She was also a participant in the Harvard Business School Leading Professional Service Firms program.
Ms. Nordin currently serves as a Trustee of Wheaton College, where she is an Audit Committee member and Chair of the Investment Committee. She is also a Board member of the Vineyard Nursing Association of Martha's Vineyard, a Director of the Appalachian Mountain Club and a Foundation Board Member of the Massachusetts College of Art and Design.
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Interesting...