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.
Hi Dg1964,
maybe they'll discuss Treasury and HUD's reform plans.
GLTY
Hi KengKong,
how do you think Blue should count?
a) 4,5,6,7,8,9,10,11,12,13,14,15,16,17,18,19,20...
b) 4,8,10,12,15,20...
I'm not sure about that.
Hi Guido2,
I really would appreciate Oberdictum accompanying us through the golden autumn.
And "next stop 4,5,6.. Blue"...
Hi brooge,
K is the most knowledgeable of all the downside commentators I have seen. As absurd as it sounds, he deserves my respect.
I have not put forward any theory at all here, but have clearly explained why there is a threat of another bailout if the NWS is not terminated by the end of September.
I'm surprised that you didn't notice that according to my explanation it can be assumed that on December 31st there will probably be a last sweep because the Q3 earnings will then be due. Unless the JPS holders win En Banc for us common shareholders. Well, a win would speed up recap and release by one to two years. This would also benefit the JPS. After all, a "fast recap" has apparently moved into the distant future.
Hi brooge,
just in case K doesn't answer you. That's my 2 cents:
Calabria strives for comprehensive reforms at various "stages". This is difficult to reconcile with a "fast recap". A "slow recap" is fine with us commons because it results in less dilution.
Calabria wants to make the reforms introduced by the FHFA permanent. So far most of them would expire after the end of conservatorship. That will take time.
In short: Calabria still has some plans for the FHFA. Some things have to take place before release, others can be set up later, such as closer cooperation between the various government agencies on the housing market.
GLTY
Hey Commons_Cancelled,
Hi kthomp19,
Hey, CC,
you're obviously not a common shareholder. Therefore, I would suggest that you focus on your JPS. What are they worth if the plan suggests a slow recap to strengthen the value of the warrant? 4 years recap, no previous conversion of the JPS to commons... perhaps no conversion at all.
#no bueno, amigo.
Don't let rumors unsettle you.
Is the plan out? Where can I find it?
Hello, everyone,
the NWS must end in September to prevent a further bailout at the end of March 2020. For this purpose, the treasury plan must be available, the final capital rule must be known and a 4th amendment must have been agreed. All in September. Not much time...
Here is my explanation, which I posted on Friday:
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=150849261
GLTA
Exactly, YanksGhost,
you got the point:
Hi skeptic7,
so if you are not quite sure what year the $5 will be reached
please choose "c) next Friday?"
or expand the response options. TY
$5 by Friday?
a) amen
b) nay
c) next Friday?
Hi YanksGhost,
What are you talking about?
Hi Rick,
my crystal ball from Alibaba predicts $12.34. Unfortunately there is no time indication. The operating manual says:
Accuracy in solar operation: > 98% < 7 days; < 90% > 30 days
Accuracy in power operation: > 95% < 14 days; < 90% > 365 days
I need help.
Hi action8101,
if Mnuchin can enforce an " activities-based approach " in his SIFI committee to determine the risk of financial companies, then that would be a great achievement from him. The financial system needs change. I think Mnuchin's approach is right and would bring " Safety and Soundness " to the global financial markets. Okay: Currently there is not a single SIFI. But Mnuchin's thoughts are not in vain. These considerations will most likely influence the future design of capital requirements for financial institutions. And if his approach is well done, I would even agree to declare F+F as SIFI, although I would prefer to keep the FED out.
Hi action8101,
I just wrote this on another board:
"Is the treasury plan coming today?
I have a feeling... but it should come next week at the latest. Because the administration doesn't have much time to prevent another bailout of F+F:
In Q1 2020, Fannie is expected to need $4 billion to offset credit losses resulting from the introduction of a new risk assessment base, the CECL, introduced by the FASB. But the capital buffer is only $3 billion.
That's what Fannie writes in her latest quarterly report on page 5 of Reader:
"We are permitted to retain up to $3.0 billion in capital reserves as a buffer in the event of a net loss in a future quarter. However, any net loss we experience in the future could be greater than the amount of our capital reserves, which would result in a net worth deficit for that quarter. For example, we currently estimate that our adoption of the CECL standard will result in a reduction in our retained earnings in the first quarter of 2020 of up to $4 billion on an after-tax basis, which could result in a net worth deficit for that quarter."
https://www.fanniemae.com/resources/file/ir/pdf/quarterly-annual-results/2019/q22019.pdf
The introduction of the CECL was already decided by the FASB in June 2016. It comes as no surprise. It won't be binding until Q1 2020. I just wanted to mention that.
So: By the end of March 2020 Fannie probably needs more money than it has as a buffer to prevent a bailout. But it won't be able to have that as long as the NWS is intact and all profits beyond the buffer have to be transferred to the Treasury. Consequently, the buffer would have to be increased or the NWS stopped in order to prevent the imminent bailout and to follow Trump's maxim "no more bailouts".
I do not expect a piecemeal approach, but a comprehensive 4th amendment. Therefore I think that the NWS will be stopped and not that the capital buffer will be increased. Calabria himself said that he does not intend to amend the 3rd amendment several times.
The following steps should be done before finishing the NWS:
1. treasury plan must be available.
2. the final rule on capital requirements should be published by Calabria.
3. Calabria and Mnuchin are developing a comprehensive 4th amendment.
Calabria itself has given this order in an interview. And it certainly makes sense:
You only stop the NWS when you know how much capital Fannie needs - of course, it would work the other way around, because you know that Fannie needs capital, but it wouldn't be so "clean".
Now we have the following starting position: Fannie always pays its quarterly profits at the end of the following quarter. This means that if the NWS ends in September, the September profits will not be transferred until December 31. Thus, the company would have its Q4 profits to compensate for the imminent losses in Q1 2020 without any bailout. But if there is no end to the NWS in September, then ... Bailout.
The treasury plan is more than obsolete because of the threat of a bailout. And Calabria's Final Capital Rule will have to strongly follow Watt's proposal in order to avoid another "public discussion round", which must last at least 3 months.
How can I put this? I hope and expect fundamental changes in the capital rule. But I see the required capital close to Watt's proposal. This could avoid another round of discussions, although it should be about the way the rule works, not the dollar amount that comes out at the end. We will see. The public discussion could also take place while the NWS is already over. But a 4th amendment is simply easier to write when everything is already discussed out. It is fitting that Calabria said weeks ago that he does not necessarily assume that Watt's proposal needs to be fundamentally overhauled - the rogue.
I expect changes in the valuation of certain asset classes and especially in procyclicality. These points have already been raised in the last round of discussions, in particular by Fannie's ex-CFO Howard. Calabria could sell changes in these areas as a consequence of the public discussion and thus avoid another round.
Well, perhaps that is going too far now. I would point out that the treasury plan is overdue. The Final Capital Rule is overdue. The 4th amendment is overdue. There is still time until the end of September to stop the NWS. Otherwise there will be another bailout in Q1 2020."
GLTY
Lemmings love "choo choo".
Hi HappyAlways,
That's good news, Ace Trader,
Moody's says:
"The Aaa long-term senior unsecured debt ratings and (P)Aa2 subordinated debt ratings are based on Moody's assessment that despite a lack of an explicit (formal) guarantee, there is very strong government support underpinning Fannie's senior unsecured debt and subordinated debt ratings. Our government support assumptions reflect the critical importance of Fannie to the US mortgage market. Over the past several years, Fannie Mae has acquired 27%-28% of US residential mortgages originated. This market share demonstrates the firm's role in anchoring this very large market, particularly in periods of prolonged uncertainty."
Instead of Fitch's "formal support agreement" Moody's calls it "government support assumptions" because Fannie is so important - an anchor for the market.
Implicit, explicit, charter: Moody's says: Fannie does not need an explicit government guarantee. Top.
GLTY
Well, I still have a house in Los Santos.
Hi Donotunderstand,
Hi brooge,
good to see you.
The Growth Fund Of America holds GSE common stock worth about $500M and JPS of about $1B, right?
What do you think would be the point at which it would be worthwhile for the fund to agree to a conversion of the JPS into commons? Is anyone going to figure that out for us? I think the Growth Fund is hedging its commons as well as Ackman. No conversion in sight...
GLTY
Hi kthomp19,
I think Ackman is all in Fannie now. He may own 7-10% of the common stock. With the proceeds from his FMCC sales, he is likely to have purchased preferred stock from Fannie to hedge his commons. His aim is to prevent as many series as possible from potentially being converted into common stock. That means hedging in this case. IMHO
Hi kthomp19,
please do not overlook: everything in the "Shareholder's Equity" less preferred stock is 'common equity'. This means: "retainend earnings" is 'common equity'.
Hey courious999,
So you know how many common stock Ackman owns? Do you have a link?
Please don't ignore the facts I just presented. Nobody knows who owns how many FNMAs because they are not subject to the 5% reporting requirement. Voluntary information can of course be provided.
I would be glad if you would start to understand my posts as information. Thank you.
Hi curious999,
Hi HappyAlways,
that is true. If the market assumes that a company is too big and therefore too systemically relevant to let it go bankrupt, one can speak of an implicit government guarantee. However, this is not enough for the rating agencies to give the best rating. F+F need their congressional charters for this as it is a formal support agreement.
GLTY
Lightningvinny1,
Hi Donotunderstand,
there is no doubt that any explicit government guarantee flows into the national budget.
As the New York FED says:
"Why then use implicit guar-antees? First, the guarantee may remain implicit because of a political desire to keep the GSEs “off the books” of the federal government. An explicit guarantee might force the government to consider the GSEs in preparing its budget."
The following options of government guarantee exist for the GSEs:
1. no guarantee at all: I.e.: no backing, no charters, no more government sponsoring. F+F become fully private.
2. implicit guarantee: The GSE Charters remain intact. Big brother helps when it burns.
3. explicit guarantee on certain MBS: Then these MBS must be included in the national budget.
4. explicit guarantee on F+F: If the guarantee is limited to an amount like $ 100B, exactly this amount, here $ 100B, flows into the budget.
It may be possible to use the existing line of credit as an explicit guarantee on F+F. Then the liabilities of the Secretary of the Treasury would probably not change. IMHO
GLTY
Hello, folks,
maybe there's some other participants here who aren't looking to chat me up? Holy Mary...
GLTA
If I understand correctly, is your argument that my posts are misleading because Howard has a different opinion than I do, even though I told you we were talking about other things? That is too little for me to make such an allegation.
When have you or possibly others been misled by me? How do you come up with such nonsense?
Can you give me an example, please? Two examples would be better. After all, I would like to avoid my posts being misleading in the future.
Exactly.
I only wish Ackman had taken more care of the " media work". He left this field to the JPS holders. And they no longer want the scandal to be exposed. Other interests...
Hi trunkmonk,
We had our chance with Gretchen Morgenson and Richard Epstein - a long time ago. These were heavy calibers. But nobody jumped on the bandwagon. Sad, but true.