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.
True. Elon is one helluva salesman to Gen Xers and millenials.
Yes, if you absolutely need to raise some extra capital at $20/share or so later, the dilution factor is substantially reduced. Investors will be willing to pay those share prices readily, later in the process......as risk will be nil at that point and extent of share count will be known.
Yes, Robinhood investors dont even consider dilution, just growth potential.
Very conservative. And as raising core capital continues only with retained earnings, the more the price will continue to rise. It wont just stop at $10. It's still a fantasy to try to do PO's at the kind of numbers some are thinking, that have never been close to happening before.
They can do a slow steady mostly earnings based recap with consent decree, with perhaps a reasonable PO or 2 down the line, if necessary.
Here we go again. Sigh.
Yes, that tweet is exactly how I see it. The language in the new proposed rule is clearly directed in that manner. You posted this before. And I highlighted the applicable parts.
Do I need a BOOM to go after it? LOL.
http://www.mortgagenewsdaily.com/12172020_gse_conservatorship.asp
In November, the Federal Housing Finance Agency (FHFA) released a new regulatory capital framework for Fannie Mae and Freddie Mac (the GSEs). At the time FHFA said the final rule fulfills Congress's mandate in the Housing and Economic Recovery Act of 2008 that FHFA establish risk-based capital requirements for the GSEs to ensure their safety and soundness by increasing the quantity and quality of their regulatory capital and reducing the pro-cyclicality of the aggregate capital requirements. This week the agency submitted for comments a companion rule regarding liquidity requirements for the two companies.
The agency says its rule is designed to ensure that the GSEs are a source of strength for the mortgage market during downturns in the economy, and to incentivize them to issue an appropriate and stable mix of debt over the long term. The proposed rule takes into account the GSEs' lack of access to the Federal Reserve Bank discount window, unique structure, and public charter. Currently, Fannie Mae and Freddie Mac would meet or exceed all requirements of the proposed rule.
~snip~
FHFA says the proposed rule is a result of the experience FHFA has gained from managing the GSEs' liquidity positions during the 12 years of conservatorship. The rule seeks to implement minimum liquidity and funding requirements, daily and monthly disclosure of liquidity positions and other liquidity-related requirements.
FHFA Director Mark Calabria said, "During the 2008 financial crisis, Fannie Mae and Freddie Mac did not have enough truly liquid assets nor did they have consistent access to the longer-term unsecured debt markets. This liquidity and funding failure, along with their low capital levels, necessitated placing the [GSEs] into conservatorship. A companion to the new capital rule, today's proposed rule will better ensure that the [GSEs] are positioned to fulfill their countercyclical mission. Requiring [them] to have enough liquid assets to continue supporting the mortgage market during times of severe stress protects taxpayers and the housing market."
P.S. I hope all investors do well here, commons AND preferred.
My only issue is with some of the preferreds who have previously used this board as a means to influence commons to believe that preferred will get converted to commons...in a vain attempt to think they will get them at cheaper prices by doing so. And to likewise try to influence commons that they are totally wrong in thinking that they will do better than preferreds in the long run.
I continue to believe that commons will outperform preferreds in that long run.
Guido......agree. Converting JPS to commons is not a way to increase capital in any realistic sense. Its capital to capital.
Any notion that it raises capital in this case....whether by CET1 or otherwise....is just a gimmick that would seem to me to go nowhere.
In November, the Federal Housing Finance Agency (FHFA) released a new regulatory capital framework for Fannie Mae and Freddie Mac (the GSEs). At the time FHFA said the final rule fulfills Congress's mandate in the Housing and Economic Recovery Act of 2008 that FHFA establish risk-based capital requirements for the GSEs to ensure their safety and soundness by increasing the quantity and quality of their regulatory capital and reducing the pro-cyclicality of the aggregate capital requirements. This week the agency submitted for comments a companion rule regarding liquidity requirements for the two companies.
The agency says its rule is designed to ensure that the GSEs are a source of strength for the mortgage market during downturns in the economy, and to incentivize them to issue an appropriate and stable mix of debt over the long term. The proposed rule takes into account the GSEs' lack of access to the Federal Reserve Bank discount window, unique structure, and public charter. Currently, Fannie Mae and Freddie Mac would meet or exceed all requirements of the proposed rule.
~snip~
FHFA says the proposed rule is a result of the experience FHFA has gained from managing the GSEs' liquidity positions during the 12 years of conservatorship. The rule seeks to implement minimum liquidity and funding requirements, daily and monthly disclosure of liquidity positions and other liquidity-related requirements.
FHFA Director Mark Calabria said, "During the 2008 financial crisis, Fannie Mae and Freddie Mac did not have enough truly liquid assets nor did they have consistent access to the longer-term unsecured debt markets. This liquidity and funding failure, along with their low capital levels, necessitated placing the [GSEs] into conservatorship. A companion to the new capital rule, today's proposed rule will better ensure that the [GSEs] are positioned to fulfill their countercyclical mission. Requiring [them] to have enough liquid assets to continue supporting the mortgage market during times of severe stress protects taxpayers and the housing market."
Parties wishing to comment on the proposed rule have 60 days after its publication in the Federal Register. Comments can be made at FHFA.gov.
https://www.lawinsider.com/dictionary/adjusted-total-assets#:~:text=Adjusted%20Total%20Assets%20means%20the,for%20acquisitions%20in%20conformity%20with
Adjusted Total Assets means the total amount of assets of the Company and its Restricted Subsidiaries (including the amount of any Investment in any Non-Restricted Subsidiary), except to the extent resulting from write-ups of assets (other than write-ups in connection with accounting for acquisitions in conformity with GAAP), after deducting therefrom (i) all current liabilities of the Company and its Restricted Subsidiaries, and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, all as calculated in conformity with GAAP. For purposes of this Adjusted Total Assets definition, (a) assets shall be calculated less applicable accumulated depreciation, accumulated amortization and other valuation reserves, and (b) all calculations shall exclude all intercompany items.
I'm not interested in making that determination on a poster until all of the pertinent facts are out in public.
And they are certainly not, not by a long shot.
Key Modifications to the Proposed Rule
After carefully considering the comments on the proposed rule, and as described in this preamble, FHFA has determined to make a number of changes to the proposed rule to ensure that each Enterprise operates in a safe and sound manner and is positioned to fulfill its statutory mission across the economic cycle, in particular during periods of financial stress. Key modifications to the proposed rule include, among others:
~snip~
The stress capital buffer will be periodically re-sized to the extent that FHFA's eventual program for supervisory stress tests determines that an Enterprise's peak capital exhaustion under a severely adverse stress would exceed 0.75 percent of adjusted total assets.
Thank you!
Amelia......I don't see anyone being right or wrong until this thing plays itself out.
And there wont be any reason to be concerned about who has been right or wrong then. I take everyone's opinions with a grain of salt, including my own.
This is just a constantly changing, very complicated situation...and we are dealing with the careers and emotions of those directly involved, which makes things especially tricky.
Those are the facts.
Its not one for those who dislike unusual risk/benefit plays.
Very possible. Just like Pence leaving town right after confirming Biden on 1/6, per Politico.
Not exactly profiles in a lot of courage.
I have respect for Bradford and he is certainly entitled to his opinion.
But this particular article feels a bit rushed and presumes a lot.
WSJ is not going to determine whether or not this gets done. Agree it's a damn shame that they posted that article. But that only mattered for one day. It's do or die time now for one guy....Mnuchin.
He will have to move quickly with a proper framework to make all of this happen before Jan 20.
His time is limited, and he is also involved with stimulus/government shutdown possibility at the same time.
I always felt that a Biden election would be the impetus to get this process kick started.
But time is now getting short.
Calabria is going to neeed them AND the mortgage/banking/housing industries on board in order to get follow through to completion.
This is not some Trump go it alone proposition attempt that doesnt work.
Makes perfect sense. This is what Mnuchin was hinting about a few days ago.
My read is this. Along with finalizing/canceling the PSPA, Mnuchin, in this framework, is going to establish the minimum capital requirements that the GSE's will need to conform to the consent decree provisions for GSE release.
And he will leave it up to the GSE's to decide how to get there.
That starts the process....as he has promised....but places the burden on the GSE's to develop a CRP to get there AND to the full final requirements.
I'm thinking that the capital requirements for release by consent decree may be somewhat reduced/offset by the payment of a periodic contingency/commitment fee by the GSE's to the treasury.
The latter may be enough to satisfy the Democrats as a trade off for the PSOA extinguishment.
Thoughts?
My goodness. That explains it. JPS converted are too afraid to watch that, so they come here.
Lol. How are those JPS doing for you? That magnet is pulling down hard.
Watch for coming stimulus package and corresponding bump in share price.
That means the GSE's need to submit their CRP before Biden is inaugurated, correct?
It's normal, they are Democrats. Doesnt mean they will repeat Obama-era policies.
History is pretty clear on how prior VP's operate.
We shall see.
Unlike yesterday, we are up a little in pre market.
Wow. Nice.
All true. A Trump top-down administration definitely got some push on these matters.
What is now needed is the ability to follow-through to finish the job. This is where you need to let the people work through the mechanics of the process.
Believe it or not, I think the bureaucrats Bair, Yellen and Calabria....working together....can get this part done.
Yes, I can see that group of 3 working together rather easily.
I've had my disagreements with Calabria, but have always thought that he was a mere pawn in these matters, in this administration.
I actually think he will fare better in a Biden
administration, working with Yellen. He will have more clout.
Rumple......sure, that's a good path. And it looks like that will happen.
Personally, however, I would also like to see a consent decree.....because that would clear up the matter completely for shareholders and with the operation of the GSE's.
Who knows......maybe Calabria will have an easier time convincing Yellen of this then Mnuchin. Often times, politics can work in ways you might not expect.
Modifying the Senior Preferred would be big news in and of itself.
Navy....thanks. In effect, absolutely nothing has changed via the WSJ article. Mnuchin hasn't said anything different from before.
If there is a path to adequate capital to allow for a release with consent decree, he will take it. If not, he wont. A full release from conservatorship was not going to happen in any event.
Nothing has changed.
Rumple......I listened to that section. I think Gaby is right on the best case/worst case.
One thing that was missed, however (with the caveat that I didnt hear the entire interview and it was done earlier) is the significance of Janet Yellen in these matters.
Remember, Yellen has worked in the past with both Mnuchin and Calabria. I dont see why she would not be receptive to a meeting of the minds with both of them. And I certainly dont see Biden interfering with this, as he will have his hands full with covid, stimulus, and the immediate needs of the economy in the first 100 days.....and more.
Biden is not going to overrule Yellen. He is the anti-Trump in matters like this.
We will see. I think this can certainly go back up just as fast as it came down this morning. I thought we might have to wait until afternoon, but it is moving back up quickly already.
I think we will be at $2.50 or higher by EOD.
We may even have a more drastic reversal than that if a contrary news article comes out.
Its basically a tempest in a teapot.
Bottom line is WSJ suggested that full conservatorship wouldn't end under Mnuchin, based on his statements. Probably true, nobody has ever indicated that would happen soon.
They also inaccurately inferred that his statements indicated no conservatorship end WITH consent decree was in the works. Mnuchin's quotes indicated nothing on this.
And then Bloomberg jumped on the bandwagon....without any interview themselves....and echoed WSJ's conclusions.
The fact that Bloomberg made no reference to the Business Insider article is an indicator that they are putting a slant on things.
Yep. Sooner than I expected.
Here we go, starting the trek back up already.
Smart. Its just the nature of this beast until there is finalization on the remaining matters at hand, one by one.
The market is emotional and reactionary at times. We know from history what usually happens afterwards.