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L2? Bid totally stacked at 156 and ask super thin at 157 yet no movement at all? Whats goin on?
I shouldn't forget Zargis! A lot of his posts are helpful and informative too!
If you can search members you'll be able to find where some have posted recent and solid due diligence (DD). Blue has done a lot of this, of course. You'll also find excellent DD and helpful info posted by Obiteridctum. A member known as NT had posted s lot about his trading strategies for FNMA. MrFence has posted a good deal of DD, too. And if you want to check out the more negative info on our Fnma prospects, MonestMind has offered a good deal of that, sometimes with fairly informative links and sometimes with more "shoot from the hip" type of comments.
Maybe try taking a screenshot of it and posting the picture?
I'm no Blue but let me try to sum it up for you. Fnma ran up last spring mainly bc it started reporting record profits and the housing boom was obviously well under way. Look at the dates of fnma's recent earnings reports, and you'll see the price per share rose in anticipation of good earnings reports. Then when the reports were actually released, the share price continued rising because the were reporting record profits. The news and hype was that fnma might now be able to "pay back" the gvt earlier than anticipated, and would then be "released" from conservatorship and be able to freely grow from there, which would basically return most of the latent value per share back to shareholders.
Now, since then, politicians started talking more about winding down fnma and other bad things. Its a political uncertainty what will happen. But earnings will continue to be good, lawsuits are fighting for what's right, and legally the gvt appears guilty of massive theft yet again. Now the next earnings report is on or near Aug 8th, talk of winding down fnma is sorta starting to abate, and more are talking about reforming housing policy in a way that does not screw shareholders, and more and more well-founded lawsuits are piling up on behalf of shareholders. We might / should see some oind of a run leading up to August 8th. But there is a ton of detailed info out there that will be important for you to dig through. Check out Rich Epstein's recent interviews on the merits of the lawsuits, for instance. And read up on senators corker and warner and reed and also rep. Hensarling. Each have proposals / bills that are relevant. But congress will hopefully / probably be too slow to act and by the time they do, fnma will have probably handed over enough $ to the treasury to equal what they borrowed from or were given by them. The market and possibly the law / courts will see that as fnma having paid back the treasury, and pressure to release fnma from conservatorship will grow significantly at that point. But the gvt takes what it wants, does what it wants, when it wants. And it takes serious balls to sue the gvt. So that's the wild card.
Good point. That conversion would make any splitting formula tricky. Still, I cannot dismiss the possibility of commons getting screwed in settlement negotiations. But I'm only saying that as a precautionary way of keeping expectations a little lower. Do you think the hedge funds in general would prefer to go to court? Or prefer to negotiate settlement?
Say the lawsuits get Treasury to settle. Can't we imagine this exchange to be realistically possible?
Treasury: Ok, you've got us by the constitutional balls, but we still regulate a lot of what you do. We can be on your case for many years if you're not willing to accept our offer. Here is it: We will make the prefereds whole again, at fair value. But not the commons.
Hedge Funds: Well, we're mostly in prefereds, but we do hold some commons. We'd be happy to settle here and now if all it means is we have to sacrifice the commons. It's a deal.
C'mon, we all know such conversations can take place. Am I just being overly imaginative here?
Would the hedge funds really fight tooth and nail for every single common and risk going to court and facing a potentially bad decision from a judge that makes them lose their entire case?
Would treasury ever be willing to make such an offer?
Why do I ask? I heard the recent Epstein interviews and read his articles. It's Excellent work and gives us all some hope. But that's all well in a world where the law ultimately is enforced. We all know that is certainly not the world we are dealing with here as we contemplate the future of FNMA (Hedge funds and Government are both quite willing to bend the law on occasion).
At some point the question of settling would naturally come up. As Epstein said, it's very difficult to sue the gvt, and very risky. Both parties would have a lot of leverage when it comes to settlement talks. Seeing as the hedge funds are mostly into the commons, they'd be most interested in protecting those. The treasury would be most interested in screwing the commons. To me, that is a realistic settlement possibility (unless, of course, I'm missing some big legal obstacle to such a settlement). Again, I'm optimistic and long while being willing to flip (not always my strength at this stage). I'm just trying to think of possible outcomes. Thoughts?
Direct democracy leads to the many voting to steal from the few. That's why we are a democratic republic. One party named after the election process, another named after our representative form of gvt. And both steeling from us equally. Why isn't there a party named "kleptocrat"? It'd be at least the most accurately named party.
We have to assume privatizing FnF would be keep shares in tact. What about specifically commons, though? Can anyone see a way whereby Fnf could be privatized in which the commons are wiped out?
Wouldn't commons necessarily be left in tact?
You think this interview is hitting people beyond the U.S.? As in- well we know China has been buying a lot of real estate in the U.S. recently, often paying cash! And I have also heard that they are holders of FnF shares (I have no clue if that info was correct. Feel free to chime in if you have info on that). Anyway, is this interview sending the clear message that FnF shareholders will not be screwed? Cannot legally be screwed, etc? Do you think this information will soon trump (in the public's perception) all the scary negative news that seems to have been driving pps down lately (corker, various wind down proposals, etc)?
Sounds very interesting. I might be wrong because I haven't listened to it yet, but i think this might be a link to the audio recording you're talking about. If anyone on here gets a chance to hear it tonight please post your thoughts because I won't hear it until morning. Ok try this link and scroll down past the first 5 selections to the one called "Fannie, Freddie, and Your Money". It's a Hoover Institution recording with Rich Epstein's picture on it. Looks like it might be from 2 days ago, and so far only has been heard 182 times.
Https://soundcloud.com/hoover-institution
How convincing and / or bullish is the content of this audio exactly?
Seriously here, what do you all think you will do if Aug earnings does not generate a significant enough run? Some say the earning report is ready included in the current pps (everyone knows it'll be a good report). I'm expecting a run. Maybe not as big as last time. I don't know. But really, if Aug report fails to cause a significant pps boost (say we only see maybe .70-$1 increase over 4 days), then it starts reversing downward, what will the market make of that?
Will it think - ok this has no momentum and thus that means the politicians have decided to screw commons so let's get out of FnF?
Any sarcasm in there? Hard to tell since I don't know you guys. Were you referring to Watt clearing the committee vote or was there something more ominous for FnF that you heard?
Hey don't feel so bad. Sleeping during the run to 5.44 was much better than what some of us did; mis-played a bit that day!
Woa. Is DC leaking / chatter now starting to shift now towards keeping FnF? It would be great news for longs. But still there would be many potential devils in the many details (would they still figure out a way to screw commons?).
Maybe I'll try to play the earnings run (hoping there is one) in such a way as to take some profits and shift them into a portion of preferreds for my long position, while I flip the rest as the political decisions develop. I'd shift some of my holdings to preferreds right now if I weren't averaged above current pps. (I am averaged below current pps actually, in a smaller account of mine). Decisions, decisions. Everyone should be plotting their exit plans and flipping plans and accumulating plans right now for August! Don't wait for the emotions of rapidly changing pps to make your decisions for you! Easier said than done, though.
How do you like that? The official talking points refer to recouping the taxpayers' loan to FnF, when there was no "loan" at all! It wasn't a loan.
How did Lew respond to the dividend / bond holder question?
...the right thing with the GSEs, I mean.
Keep voting for these people and we'll just see more of the same kinds of behavior. In a gvt-declared "crisis", who's to day the gvt won't sick the treasury on, say, Google and put it into cship? Isn't information as critical to our economy as housing nowadays? Google's solvent, you say? Doesn't matter to the fed gvt because hey, the precedent has been set! GM, FNMA, etc. The gvt's gotten completely out of control and fundamentally detached from regular peoples' interests. Gvt behaving the way it is with the GSEs does not happen in a free republic. It's common in banana republics. Over the last 10 yrs or so we've witnessed a massively expanding and completely unaccountable gvt go insane in this country. Are our markets free if the gvt can simply take your business over? We have to hope that the bigger picture forces (not convinces, because the gvt cannot be convinced except by its donors) to do the right thing
Thanks. Path of least resistance really seems best for all parties doesn't it? Heck even the tbtf banks will still be able to rake in the dough. So maybe one could predict that some reform bill will eventually pass that will essentially be the path of least resistance (mostly status quo), but will also contain provisions that the prez can grandstand about for the entire 2014 campaign. Plus maybe some more control centralized into the executive branch, only because that seems to be the theme of this admin.
I'd not be too surprised if they attempted a big over-reach (another common theme of theirs) that would sound bad for us fnma longs, but I would doubt they would succeed in getting it passed. So they'd be better off following the simple path of least resistance. Let's hope they do!
Agreed Watt / Obama want to get mortgage forgiveness of some sort. Gop doesn't want that. Anyway, we should think not along the lines of what Watt wants to do with the GSEs (wind down, release, nationalize), but rather, what actions will make it easier to get the mortgage forgiveness the president wants to get so he can look like a hero next year? Will the proposed FMIC solution make that easier? Will releasing the GSEs make it easier? Will keeping the GSEs in Cship make it easier? Or will passing some small reforms but mostly keeping the GSEs as they are make it easier? Which of those approaches makes it easiest for obama to get his mortgage forgiveness? That could be the real question, because frankly, that's all we really know for sure that the prez wants to do. He's been talking about it for years now. If we assume that's his priority, and that he doesn't care much for the bigger picture beyond that (as most politicians don't), then which scenario serves him best in his effort to get mortgage forgiveness?
I'm not sure I have that answer. I imagine keeping FnF mostly the same but adding / including a few extra strings controlled by the executive branch in the reform would be enough to make mortgage forgiveness possible. I'm sure it would be possible with the FMIC proposal too. But I don't see how winding down or dissolving the GSEs would help him get mortgage forgiveness. Any thoughts?
Yeah it was 7 weeks of flat candles on weekly chart after the march peak before the May run started on the 8th week. We are now in the 7th week since the peak of the May run. So if there's gonna be a repeat of that time span, then next week would be the 8th week and that's when the run would start.
Just for fun, if you wanted to rely on America as a place where the gvt can't take things from you, you'll come up short if you look for a lot of support for that thesis in history. FDR forcibly confiscated the citizens' physical gold with an executive order, paid them approx market value for it, melted it down, put it in the brand new Fort Knox, then revalued the dollar so that the $ people were paid by the gvt for their gold was suddenly worth much less than when they turned in their gold. The Kelo decision by the Supreme Court allows for gvt to take your property as long as it then gives your property to a developer who has promised to bring in more tax $ to the gvt than you did with your property. The obama admin sent federal thugs to wall st in 2009 to take over GM, unilaterally and arbitrarily putting bondholders at the back of the line for reimbursement, behind the unions. That was contrary to hundreds of years of corporate law / precedent. Bond holders are usually first in line. And of course, there's fnma. Henry Paulson himself clearly explains that the gvt took over fnma somewhat brutally and we see these lawsuits rightfully claim that action was unconstitutional. So how did the gvt follow up its unconstitutional act of 2008? It made things worse with a 2012 amendment that puts fnma and its shareholders in an even worse position. So, you are right in that what the gvthas done is fundamentally illegal. But look into the past and you will see that that doesn't necessarily mean they won't get away with it. I am counting on them not getting away with it. But i know that's not a certainty. The gvt is not on the people's side. They do what their paymasters tell them to do.
Though i agree with a lot of that (again i'm optimistic), I'm not the only one saying the obama admin has not told us their preferences for reform of housing (other than mortgage forgiveness). So yes i am serious. Please direct me to any obama admin quote that definitively states their stance on reform. See it for yourself in this article, for instance, which closes with this statement:
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The Obama administration has not yet weighed in with its preferences for reform. Engagement from the administration would be the natural next step.
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http://economix.blogs.nytimes.com/2013/07/17/further-progress-on-housing-finance/?partner=yahoofinance
I'm optimistic but that's a huge unknown! We have yet to be told what the admin's stance is on the GSEs' future. Why haven't they made this known? One has to assume they have an idea of what they want to do. Other than some measure of mortgage forgiveness, which they do seem to be in favor of, what else are their plans?
And how would mortgage forgiveness affect pps? Some foreclosures would be prevented. Maybe house prices would inch up because of that.
Looks like it's settled into a range, as it does most days. 1.46-1.48 ish. Channeling in here for a few more hours with maybe a bump when Paulson and / or the Bernanke speaks?
I'm fairly optimistic too but I see a misunderstanding in your post when you say progressives will have their way and that's good for fnma. In the world of political science, "progressives" are the kind of people who would want fnma to be fully nationalized. So, though I share your optimism (and i also have some healthy skepticism) I certainly do not want progressives to get their way here. I want the politicians in both parties to be virtually forced by the powerful and obvious benefits of releasing the GSEs into doing the right thing, even if they normally would want to do something else (like nationalizing it or dissolving it for instance).
How do we know the hedge funds into fnma are long? Couldn't they just be holding until a future moderately sized bump in pps? Question is- how long are they? Months? Years? Weeks?
Also - is there some source that shows how long they are? I haven't seen anything like that yet. Granted, it would make sense that they would be long with a target of months or years, but I haven't really seen any "proof" of that. The lawsuits would suggest a longer target date, but maybe they only filed those to get a temporary boost in good publicity for the pps. I'm just throwing questions out there. Any real "proof" that the hedge funds are long term into fnma?
Maybe the best piece i've seen that summarizes what happened and what could happen from here on out.
Thats an excellent point about why BofA would love to keep the status quo prior to 2008. Thanks! I had been suspicious that BofA would want to be put in a prime position in the new FMIC configuration that dissolves FNMA. Basically, i think your angle on it is a much more pragmatic and realistic take on BofA's motives here. I mean, there should be no doubt that Watt is to be their guy on the inside whenever reform eventually happens. But BofA would probably prefer the pre 2008 status quo over becoming, say, the new backer of the proposes FMIC, right?
I can't take credit for that find! Nogoodtrader posted it on July 3, 2013. Post #84078
The book is from 2010. It's called "on the brink". Exact quote is Bush asks Hank Paulson about FNMA, "Do they know it's coming Hank?" Paulson replied, "we're going to move quickly and take them by surprise. The first sound they'll hear is their heads hitting the floor."
Basically, Paulson, via Treasury, and at the behest of his Tbtf bank buddies no doubt, setup a scenario whereby the gvt could USE the GSEs as a dumping ground / "bad bank" into which they would dump the banks' toxic assets. That's our gvt at work; it's just thievery by another name. But also, I think Paulson's book has already been used / cited in lawsuits. It could be cited in some Fnma lawsuits; clearly fnma signed the conservatorship contract "under duress", and any contract signed under duress can be challenged and voided. It's one argument the lawyers will hopefully pursue at least.
Exactly! It's not news to radicals, who have been studying and applying such techniques for decades in this country. The bill was also designed to eventually force private sector insurance out of the health sector entirely, which is slowly starting to happen. The idea is that at that point, the only "possible solution" (our dear leaders will then tell us) is to have the federal gvt act as the sole payer / provider / insurer of health (because hey, there ARE no more private insurers left!). That's been the goal all along; the gvt as single payer. This health bill was just the first big step toward that. They simply erect obstacles via legislation, distorting the free market so that institutions behave the way they want them to. They can even "force" businesses out of certain sectors if they want, by writing laws that make it unprofitable to stay in that sector. This is the way it works in almost all gvt. So we should hope Fnma is bigger than their attempts to gobble up more control.
I believe the verbiage you are looking for can be found in Henry Paulson's book he wrote about dealing with the 2008 crisis when he was Treasury Secretary. He himself says that he told Bush about FNMA, "the first thing they'll hear is the sound of their heads hitting the floor. They'll have no idea what hit 'em" (when we take them over). How's that for verbiage? Straight from the thief's mouth himself.
No, there don't "have to be people in office" who have the sense it takes to do the right thing. They are all paid advocates who do what their donors tell them to do, and then they just make their public statements in a wat that makes it seem they are only considering the public's interest. There's often no "sense" to it other than the sense they have to obey their paymasters. But yes, the GSE situation might just turn out to be obviously bigger than the admin's agenda, as you put it. I think that's possible, and it could turn out in shareholders' favor eventually. Alternative plans for our housing finance system each seem to have flaws that would prevent them from passing. The status quo prior to 2008 or something a lot like it might just be all either side can get from the other.
Those who designed the health bill knew exactly how the private sector would respond (cutting workers' hours). It's partly an effort by them to create a nation of part time workers, who will then be more likely to become dependent on the gvt, thus reinforcing th Dem party at the ballot box. It's not a mistake. It's deliberate. We just should hope that fnma isnt nationalized!
Daxxer gets it.
Yeah i didn't have any political anger there when i wrote that. And i do agree with you. It's only good to try to be able to read what the two parties might want for the GSEs, even though generally the two parties have almost merged over the last 10 yrs or so. Just like in trading, people who take their emotions out of their view of politics will learn a lot about how the country really works!
Banking predominantly republican? Politics here isn't our normal focus but let's be realistic and look at the revolving door between DC and goldman and look at how generous the current prez is to the tbtf banks etc. face it, banks own both sides and both sides operate as the banks' paid advocates. Check out matt taibi's incredible reporting on just this subject if you're interested to see how deeply in the banks' pockets the dems are. And repubs. I'm just being objective here. Both sides are robbing us blind every day they go to work.
Exactly. I haven't understood why Ihubbers have been anxious / happy to get Watt confirmed. He'll gladly do what Obama wants, either keeping GSEs in conservatorship or unwinding them. Not good for longs or for pps.
If there's no big $ in commons, that'd be potentially bad news for longs. We've seen some DD showing that some of the big $ funds have at least a small portion of their GSE holdings in commons. And certainly some big $ seemed to be jumping in on the last run up. But I assume they stopped themselves out or sold short back then. And I have yet to see since then any info suggesting that big $ is getting into the commons. Anyone have any recent info on this?