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.
Bad spin in WSJ on restructure:
"But a behind-the-scenes effort to jump-start the debate over Fannie's and Freddie's future is under way, and the broad outlines appear to favor winding down the two companies, expanding the role of the private sector and placing more emphasis on government support for rental housing."
this guy is a solid reporter. requires subscription, so here's the copy:
http://online.wsj.com/article/SB10001424127887323699704578324141792357594.html?ru=yahoo&mod=yahoo_hs&cb=logged0.9236703017255746
Debating Future of Fannie and Freddie
By NICK TIMIRAOS
Four years after Fannie Mae and Freddie Mac were taken over by the Treasury Department, there has been little serious movement to revamp the housing-finance giants and the $10 trillion U.S. mortgage market that they support.
But a behind-the-scenes effort to jump-start the debate over Fannie's and Freddie's future is under way, and the broad outlines appear to favor winding down the two companies, expanding the role of the private sector and placing more emphasis on government support for rental housing.
[image]
These and other recommendations will be at the center of a report scheduled for release on Monday by the Bipartisan Policy Center, a Washington think tank. The group's housing commission is headed by former U.S. Sens. George Mitchell, a Democrat; Republicans Mel Martinez and Kit Bond; and former Housing and Urban Development Secretary Henry Cisneros, who served in the Clinton administration.
Obama administration officials believe the BPC paper could test the waters for the Treasury to advance its own, separate proposal that has been in the works for the past year, said people familiar with internal deliberations. Senior administration officials met with the BPC's housing commission and said they hoped that the proposal would help build a political consensus, said Mr. Mitchell.
Housing-finance reform faces a crowded agenda in Congress, which is preoccupied with deficit reduction, immigration, and guns. Some analysts believe Fannie and Freddie aren't likely to be addressed until next year at the earliest, especially now that the companies are no longer losing money and the housing market has turned around.
But the BPC co-chairs said their report, the product of a 21-member commission that met over 16 months, is a bid to push housing back onto the front-burner. "There's been a kind of stalemate of ideas," said Mr. Cisneros.
With the government—through Fannie, Freddie and federal agencies—backstopping nine in 10 new loans, not taking up the debate "is in effect throwing up your hands and letting the problem continue indefinitely," added Mr. Mitchell.
The BPC paper calls for replacing Fannie Mae and Freddie Mac with a "public guarantor" that would oversee a new mortgage market through which banks and other private companies would originate mortgages and issue mortgage-backed securities. Currently, Fannie and Freddie issue mortgage-backed securities.
Private insurance companies would guarantee the mortgages and cover losses when loans default. The public guarantor would only step in if private-insurance providers were wiped out. To protect taxpayers, a fee paid on each issue of mortgage-backed securities would fund a separate federal insurance pool.
The public guarantor would determine which mortgage products would be eligible for government backing. The paper suggests limits of around $275,000 for loans eligible for backing from the new entities, down from today's national limit of $417,000. The limits might be higher in more expensive housing markets.
At the heart of the commission's report is the conclusion that the U.S. mortgage market should continue to offer access to low-cost, 30-year fixed-rate mortgages and that the government will need to play some market backstop in order to attract the capital needed to fund those loans.
While some conservatives have criticized the idea that the government would continue to guarantee even a small part of the mortgage market after suffering tens of billions of dollars in losses during the financial crisis, the housing commission took the view that there is no such thing as a purely private mortgage market. The government will inevitably step in during a bust, they say.
Consequently, it is better to have firms pay upfront since the the government is already at risk of losses later. "It is a guarantee of last resort, and it is a funded guarantee," said Mr. Martinez, who served as housing secretary in former President George W. Bush's cabinet.
The BPC report isn't the first to offer a blueprint on how to restructure the mortgage market and reduce the government's role. But the report is the most comprehensive effort thus far, building on earlier proposals put forward by industry groups such as the National Association of Realtors. It is the first designed to build bipartisan consensus.
While industry groups such as the Mortgage Bankers Association and the NAR are likely to support any plan that continues to provide a government backstop, it will still have to overcome deep reservations. One concern is whether the new public guarantor could appropriately set insurance costs.
"You are asking a lot of that entity," said Thomas Lawler, a former economist at Fannie Mae. During the past crisis, "private markets completely miscalculated risk."
The paper goes beyond the mortgage market to discuss broader housing issues and calls for greater attention to rental housing, including using any savings from scaling back the mortgage interest deduction to pay for rental initiatives.
Fannie and Freddie failed in 2008 as rising losses wiped out thin capital reserves. So far, taxpayers are on the hook for $137 billion for the two companies, although that number is projected to fall as the companies send more profits to the Treasury.
The plan could offer clues about where the Obama administration is headed. It includes many of goals that Michael Stegman, a top Treasury housing-finance adviser, outlined last month in a speech as prerequisites of any overhaul. Mr. Stegman funded the grant that created the BPC housing commission before joining Treasury two years ago.
Write to Nick Timiraos at nick.timiraos@wsj.com
fully diluted shares outstanding is different than shares outstanding. warrants have not been exercised, but reporting on fully diluted basis gives the investor a truer view of the situation. take cisco (CSCO)...on a fully diluted basis, you will see basic EPS and fully diluted EPS. the fully diluted is taking into consideration if all outstanding stock options are exercised.
the government has not exercised the warrants.
4cent...some pfd. are at 7cent...almost 8cent
will you be changing alias accordingly? or too hard on ihub vs. YMB???
on commons valuation...for them to be worth anything:
Govn't must be paid back...how???...will they convert the warrants? if so, commons worth 80% less than they are today. will govt convert some sr. preferred into common...now they are worth even less? maybe govt. forgives the principal on the sr. and makes money by selling warrants into the marketplace like AIG? possible...and commons then have value.
but to really have value, I think this (and have not the time to run what the billions add up to):
sr. preferred principal paid back...at LEAST net investment...but remember, with the time value of money, if dividends make the principal whole, the govt. actually still loses money because the money could have been earning a return somewhere else rather than waiting 5,6, or 7 years for the dividends to make the principal whole...only AFTER the net investment is zero do any further sweeps of excess cash began providing a return on principal...ok...that said...let's start over:
(yeah...so many ways to cut this cake...this isn't simple)
How many billions to bring net investment to at least ZERO (no returns on principal)?
How many billions need to be generated to pay dividends to preferred?
Now, anything left over is a dividend possibility for commons. Until those other billions are covered, there is no reason to invest in common.
[what other opinions are lurking out there?]
back to pre-august 17th tank!!!! whew! what a ride...now what? hang on, or sell out at the now-pre-crash-price???
i'll take the slow trickle up over the panic sell thrashing we took last august. i'm glad I hung in there.
many apologies to those YMB folks that had to see my panic displayed for all the world that day...
i'm with fourcent
i think a leak about something serious would have these at 50 cents on the dollar...IMHO
the snow is pretty too...what a perfect way to cap off a perfect snow day home with my four year old boy and little baby girl and hot chocolate...a $10,000 gain in one day was the cherry on top
$5 on FNMAG! this thing is a freakin roller coaster....
still have my $1.5mm....sucks I'm down from $2.1mm RV...but hey, till we get our $60mm company sold for our client, I have to sell stock to buffer my salary... :(
thx new jericho...i didn't bother reading the article...smelled fishy immediately
it's a joke...can't be real. zero hedge is not the brightest bulb in the box
what is the energy and shipping cost? LOL!
freddie on twitter, my response:
Freddie Mac ?@FreddieMac says:
RT: @NickTimiraos NAR: Homes for sale fell by 4.9% in January. The 1.74 million homes for sale was the lowest in 14 years.
Reply by @skibrian says:
@FreddieMac @NickTimiraos #freddiemac @FannieNFreddie home prices will blow up! buy prefd stock! homes for sale was the lowest in 14 yrs
https://twitter.com/FreddieMac
this zero hedge sounds like pure sarcasm...reminds me of a warning on humour at Bronte Capital Blog (I mean...how do you monetize the nickel holdings LOL!!)
http://brontecapital.blogspot.com/
"A note on humor
"I find Americans sometimes do not get a British or Australian sense of humor.
"If something on this blog makes you really angry I suggest you read Swift's Modest Proposal... you will find the link here."
Jonathan Swift article on population control (sounds very much like the zero hedge article in format, if very different subject):
http://art-bin.com/art/omodest.html
"That entity could replace Fannie Mae and Freddie Mac, which were publicly traded companies with no explicit government backing before they were seized in 2008 after investments in risky loans pushed them to the brink of insolvency. The two companies have since drawn about $190 billion in taxpayer aid and paid Treasury $50 billion in dividends."
http://www.bloomberg.com/news/2013-02-20/limited-mortgage-finance-role-for-u-s-government-gains-support.html?cmpid=yhoo
entity replacing fannie and freddie is not good language if you ask me....
Over 50% of the float! 20,000,000 shares outstanding...
wow....
St.Louis' view on Missouri/Kansas border war:
Summary:
"Concern is heightened, Schmitt said, that Kansas’ tax cuts could lead to more businesses in western Missouri moving across the border. Kansas already has lured some Kansas City area businesses from Missouri by offering tax incentives.
Kansas’ latest cuts, signed into law in May, eliminate business income taxes as of 2013. The top individual income-tax rate also will be reduced to 4.9 percent from the current 6.45 percent.
As a result, Kansas’ personal income tax rate – which had been slightly above Missouri’s – will soon be lower. Still, the tax breaks for business are seen as more significant.
“They definitely have put a marker on the table now, and we’re going to have to figure out how to deal with that,’’ Schmitt said.
Full article:
https://www.stlbeacon.org/#!/content/28233/mo_tax_cuts_biz_112812
Missouri GOP members call for broad tax cuts to counter Kansas
In Economy
By Jo Mannies, Beacon political reporter
2:32 pm on Wed, 11.28.12
When it comes to tax cuts, what’s happening in Kansas may not stay in Kansas.
Missouri state Sen. Eric Schmitt, R-Glendale, says various business tax cuts are being proposed by state Republican legislators as part of a broader effort for “broad-based tax relief” – and to counter Kansas’ action to eliminate all business taxes.
Schmitt, chairman of the Senate’s committee on jobs and economic development, plans to press next session for his proposal to cut state taxes for all businesses by 50 percent over the next five years.
Other tax-cut proposals also are in the works, including some that would trim Missouri’s current individual income rate of 6 percent, the senator said.
New Senate President Pro Tem Tom Dempsey, R-St. Charles, confirmed that was the case. “We’re looking at broad-based tax relief,’’ Dempsey said, calling it “one of the items that we want to move very early on’’ when the General Assembly convenes in January.
During fiscal year 2012, Missouri’s corporate income tax collections totaled $341 million after refunds. That includes income from the state business franchise tax, which is being phased out. At its peak, the franchise tax brought in $90 million a year.
Missouri’s individual income tax is the state’s biggest source of income, by far, accounting for about two-thirds of the state's general-revenue total. In fiscal year 2012, the state collected $4.9 billion in income taxes. About 20 percent of that total may have been from small businesses, said state Budget Director Linda Luebbering.
To help pay for income tax cuts, Dempsey said the Senate will considering trimming the state’s tax credit programs as well as other tax incentives now on the books.
He also expects legislators to resurrect proposals to impose sales taxes on internet sales, which are now exempt in Missouri. Dempsey said the exemption hurts Missouri businesses by offering consumers an incentive to buy online instead.
Although Schmitt and others have proposed for years cutting income taxes for Missouri businesses, Schmitt acknowledged that Kansas’ tax cuts are fueling some of the new fervor.
Kansas' tax cuts contribute to urgency in Missouri
Schmitt was among several St. Louis area legislators, including Dempsey and state House Speaker Tim Jones, who have traveled to western Missouri recently to meet with business leaders, including some in Kansas City.
Concern is heightened, Schmitt said, that Kansas’ tax cuts could lead to more businesses in western Missouri moving across the border. Kansas already has lured some Kansas City area businesses from Missouri by offering tax incentives.
Kansas’ latest cuts, signed into law in May, eliminate business income taxes as of 2013. The top individual income-tax rate also will be reduced to 4.9 percent from the current 6.45 percent.
As a result, Kansas’ personal income tax rate – which had been slightly above Missouri’s – will soon be lower. Still, the tax breaks for business are seen as more significant.
“They definitely have put a marker on the table now, and we’re going to have to figure out how to deal with that,’’ Schmitt said.
Kansas’ action already has had a financial impact – on its own state government. News reports already predict that the state will be forced to make dramatic budget cuts in the hundreds of millions of dollars by 2014, affecting public education and social services.
As far as Missouri’s planned tax cuts are concerned, Schmitt said, “I have a fundamental belief that it grows the economy.”
He and Dempsey say that if Missouri is seen more attractive to business, more jobs will come into the state, thus bringing in more revenue to the state.
Gov. Jay Nixon, a Democrat, has yet to comment on the GOP's efforts, although he has said that he plans to make economic development a hallmark of his second term.
But a fiscally conservative group, United 4 Missouri, has been calling for some time for Missouri to cut its income taxes, in the wake of Kansas' action. There's also a web site, SaveMissouriJobs.com, that features a little girl in a video making similar points.
The Show-Me Institute, co-founded by wealthy financier Rex Sinquefield, also has been calling for Missouri to cut income taxes to compete with Kansas. Sinquefield has sought to eliminate Missouri's income tax, and replace it with a higher sales tax.
Sinquefield said in a recent interview on KTRS (550 AM) (link via the Turner Report) that he has donated money to the efforts in Kansas and Oklahoma to eliminate business income taxes.
Missouri House Speaker Tim Jones, R-Eureka, issued a statement highlighting his private meetings Tuesday with “business leaders from around the state.” Many are members of the Missouri Major Metro Partnership, which represents the three biggest metro areas in the state: Kansas City, St. Louis and Springfield.
Jones didn’t mention tax cuts but did report that he will focus on proposals to revamp the state’s laws regarding lawsuits, and discrimination in the workplace, to be more business friendly.
“We are heading into a session where members from both sides of the aisle know we have to work together to improve our business climate so that our state is an ideal home for existing employers and potential new businesses. That is the No. 1 issue and concern for all Missourians,” said Jones.
“I have had the opportunity to meet with business leaders and chamber members from all over the state and I feel like we are on the same page when it comes to some of the major issues we would like to address in 2013. You will certainly see employment law reform and health-care litigation reform at the top of our list of priorities in the coming year.”
a border war between the one million kansas residents and one million missouri residents has begun as the dozens of KC metro municipalities fight each other over movement. here's one recent case...and there have been many, many dozens of businesses moving as little as a quarter mile to cross the state line into the new tax jurisdiction. Gov. Brownback is aware that this is a huge experiment. Like us, hero or zero for him too!
Tax breaks draw Plaza CPA firm to Leawood
Meara Welch Browne says it was attracted by change benefiting pass-through firms.
February 8
By KEVIN COLLISON
The Kansas City Star
http://www.kansascity.com/2013/02/08/4056084/kansas-incentives-lure-cpa-firm.html#storylink=misearch
A well-known Kansas City certified public accounting firm has moved its offices and 22 employees to Leawood, lured by a new Kansas incentive program that eliminated personal income taxes on profits earned at what are called pass-through businesses.
The firm, Meara Welch Browne, had been at 800 W. 47th St. in the Country Club Plaza. It moved this week to an office building at 2020 W. 89th St.
John Meara, a principal at the firm, said Friday that the company’s new home is just across the border.
Meara said the Kansas program, which allows owners to avoid paying the 6 percent personal income taxes on their profits from the company, clinched the deal. The program, approved last year at the urging of Gov. Sam Brownback, was aimed at benefiting pass-through businesses such as S-corporations, LLCs and partnerships.
“I think there could be a mass migration to Kansas if Missouri doesn’t do anything about it,” Meara said. “Twenty-two people have been provided huge incentives to move, and once we get there all the profits are not taxed by Kansas.”
The firm, which provides audit, tax and business support services, also will receive benefits from other Kansas incentive programs. Meara said it is too early to know the total amount of other tax incentives the firm expects to receive. The company will occupy about 7,500 square feet.
Meara also noted the building on State Line Road where his firm moved is the new home of SelectQuote Senior Insurance Services. SelectQuote announced in December that it was moving 150 jobs to Kansas because of incentives. The firm had been at 9200 Ward Parkway in Kansas City.
To reach Kevin Collison, call 816-234-4289 or send email to kcollison@kcstar.com. Follow him on Twitter at kckansascity.
Read more here: http://www.kansascity.com/2013/02/08/4056084/kansas-incentives-lure-cpa-firm.html#storylink=misearch#storylink=cpy
wow...going up? for good? wish I had a crystal ball.
great day:
http://finance.yahoo.com/quotes/FMCC,FNMA,FMCKJ,FMCKI,FMCCM,FMCCK,FMCCT,FMCCI,FMCKK,FMCCG,FMCCH,FMCCL,FMCCN,FMCCO,FMCCP,FMCCJ,FMCKP,FMCCS,FMCKO,FMCKM,FMCKN,FMCKL,FNMAP,FNMAO,FNMAM,FNMAG,FNMAN,FNMAL,FNMAK,FNMAH,FNMAI,FNMAJ,FNMAS,FNMAT,FNMFM,FNMFN/view/v2?info=view_updated
that article is from 2011...that's probably where we got our initial estimates from to begin with....
going back to YMB, i'm pretty sure we always knew that it would settle for much less...and this was right in the ball park of this team's initial estimates. well done! $20bn in gravy to freddie is ok by me. even $10bn...10 cuts the obligation down by about 25% right? if "net investment" definition is used, even though the "sweep" isn't technically reducing principal.
freddie mac on star wars:
Patrick Fong ?@PatrickFong
So new #StarWars films in 2015, 2016, 2017, 2018 & 2019? NICE!!! - WSJ http://blogs.wsj.com/speakeasy/2013/02/05/in-addition-to-sequels-disney-developing-films-based-on-star-wars-characters/ … #Disney
Retweeted by Freddie Mac
[yup...whoever is manning the reigns on freddie's twitter account certainly has a lot of rope!]
new board member:
http://finance.yahoo.com/news/steven-w-kohlhagen-elected-freddie-211037387.html
MCLEAN, VA--(Marketwire - Feb 11, 2013) - Freddie Mac ( OTC : FMCC ) today announced that Steven W. Kohlhagen, Ph.D., a veteran executive in the financial services and investment industries, was elected to serve as a director on the company's board. Kohlhagen, 65, brings over three decades of experience to the board and will serve on the Business and Risk Committee and the Compensation Committee.
"Steve is nationally recognized as a leading financial expert with extensive knowledge of mortgage finance and the capital markets," said Christopher S. Lynch, Freddie Mac's non-executive chairman. "He will bring to the board a unique combination of senior executive leadership skills and a deep understanding of economics, modeling and complex financial instruments. Steve will be invaluable to the board during an important time for the housing industry and the nation."
Over the course of his career, Kohlhagen held senior executive positions at leading financial institutions. From 1992 to 2003 he worked at First Union National Bank (predecessor to Wachovia National Bank) last serving as managing director of the Fixed Income Division. Kohlhagen served in senior roles at AIG from 1990 to 1992, Stamford Capital Group from 1987 to 1990, Bankers Trust Corporation from 1985 to 1987, and Lehman Brothers, Inc. from 1983 to 1985.
Kohlhagen's public sector experience encompasses consulting work for the Organization for Economic Cooperation and Development from 1980 to 1981, the United States Department of the Treasury from 1976 to 1977, and the Federal Reserve Board in 1976. He was also senior staff economist for the Council of Economic Advisors, White House Staff from 1978 to 1979.
Since 2006 Kohlhagen has been a director of AMETEK Inc., where he is a member of the Audit Committee. He is also a director of Abtech Holdings Inc., where he is a member of the Audit Committee, and Reval Inc., where he is a member of the Governance and Nominating Committee. Kohlhagen served as a director of the IQ Mutual Funds, a family of Merrill Lynch registered, closed-end investment companies, from 2005-2010.
Since 2001 Kohlhagen has been an Advisory Board member of the Stanford Institute for Economic Policy Research. He also served as a professor of international economics and finance at the University of California, Berkeley from 1973 to 1983.
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four homebuyers and is one of the largest sources of financing for multifamily housing. www.FreddieMac.com. Twitter: @FreddieMac
FMCCK well over 1 million shares traded, only up five cents...this is strange...I wonder who is buying and selling and why...sucks we can't know. CCK 2-month average volume is just 3,667 shares.
www.otcmarkets.com/stock/FMCck/quote
(ask is now $3.35)
green day...something's up...
http://finance.yahoo.com/quotes/FMCC,FNMA,FMCKJ,FMCKI,FMCCM,FMCCK,FMCCT,FMCCI,FMCKK,FMCCG,FMCCH,FMCCL,FMCCN,FMCCO,FMCCP,FMCCJ,FMCKP,FMCCS,FMCKO,FMCKM,FMCKN,FMCKL,FNMAP,FNMAO,FNMAM,FNMAG,FNMAN,FNMAL,FNMAK,FNMAH,FNMAI,FNMAJ,FNMAS,FNMAT,FNMFM,FNMFN/view/v2?info=view_updated
i think this is beyond retail buying...then again, many series trading just a thousand or so shares. FNMAS strangely over a million, but little movement, but CKJ several hundred thousand and big pop...
....reading the tea leaves...all told, there must be some larger players buying today, I think...
shares short decreasing:
http://www.otcmarkets.com/stock/FMCkj/short-sales
CKJ is the largest weight of the ones I track: CKJ, CKI, CCM, CCK, CCT
no chance...if FHFA didn't redeem FMCKJ last fall, they aren't redeeming anything.
earnings for freddie have been as late as early march...but we are in the "any day" window now...
well, despite my anxiety, things are generally up on whatever "news" is different today than yesterday. who knows...
i always like to enter a weekend on green...sleep just a tad better :)
http://finance.yahoo.com/quotes/FMCC,FNMA,FMCKJ,FMCKI,FMCCM,FMCCK,FMCCT,FMCCI,FMCKK,FMCCG,FMCCH,FMCCL,FMCCN,FMCCO,FMCCP,FMCCJ,FMCKP,FMCCS,FMCKO,FMCKM,FMCKN,FMCKL,FNMAP,FNMAO,FNMAM,FNMAG,FNMAN,FNMAL,FNMAK,FNMAH,FNMAI,FNMAJ,FNMAS,FNMAT,FNMFM,FNMFN/view/v2?info=view_updated
i don't monitor all...but here's a ton of them...fnmat being one of them.
crazy that launched ahead of ckj....
fnmat a $50? trading well below the rest if so...can't imagine it is outpacing CKJ if a $25
no replacement of sr. preferred...milk them dry, never change the agreement...i don't know how politicians stomach that...but don't say they can't do it.
am well aware of the capital structure common vs. preferred vs. debt
indeed beta...indeed
if they are nationalized..bad, v.v. bad
millstein said at 6:23 that we are on path to nationalization. says need to be scaled back. how much? who gets the cash? he has never actually said what to do with private shareholders...only hints at a structuring, but never says who gets the goodies.
so, we sit in limbo...month after month....
i am very fearful more some days than others.... they are minting cash, hand over hand, but the risk is very apparent to me....
interesting movement on fnmas and fmckj for sure...wonder if millstein had something to do with it? who knows....pps doesn't move, who knows....we can only guess methinks...
http://www.bloomberg.com/video/millstein-says-fannie-freddie-must-be-scaled-back-YngxamhwRIqSd6o8YA9Wzw.html?cmpid=yhoo
repeat of duncan on bloomberg i believe:
http://www.bloomberg.com/news/2013-02-07/fannie-mae-s-duncan-says-qe-unwind-is-biggest-risk-audio-.html?cmpid=yhoo
Doug Duncan, chief economist at Washington-based Fannie Mae, says an unwind from the Federal Reserve's asset purchase program known as quantitative easing is a "significant risk to the economy." Duncan talks with Bloomberg's Tom Keene and Michael McKee on Bloomberg Radio's "Bloomberg Surveillance."
(Source: Bloomberg)
Running time 10:37
good site to subscribe if free though...thx rosen
thx...always good to have a link to the whole thing (access related articles, maybe I can tweet it if it's good, etc.)