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Tune into this - Conference Going on Right Now!!!!
http://bipartisanpolicy.org/events/2014/03/forum-implications-gse-reform-federal-budget-and-national-debt
Nice to see the Voice of Russia chiming in on the article......
Bad trade? Day range says 2.93 to 3.33
Appreciated the warning Blue last week. I missed the news article but saw your post. I got lucky as I should have sold the day before but tried squeezing one more day out of it. Made a good profit and will be using some of it to help pay for the kids college next year as I have twins to get through the system. Again, I appreciated the hint last week. Take care.
BOVE NEws out
http://www.valuewalk.com/2014/03/fannie-mae-freddie-mac-crapo/
Fannie Mae, Freddie Mac Will Be Set Free
by VW StaffMarch 17, 2014, 11:50 am
With the fates of Fannie Mae and Freddie Mac still unclear at this point, Richard Bove takes a step back to consider the situation from multiple angles
Rafferty Capital Markets’ Richard X. Bove comments on the latest news from Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), contending that it’s time to step back and asses the situation from an objective perspective.
Time to Actually Think
The promised Johnson/Crapo Bill to restructure the housing finance industry has not appeared at the time that this is being written although it is likely to surface soon. There are a few items worth discussing as we await this legislation. First is the legal issue. Second is the concept of shuffling the insurance function of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) to the private sector. Both raise serious questions as to whether this legislation has any chance of passage. Also, wipe away any thoughts that this bill has bi-partisan, or even partisan, support. This concept is being sold by a press to lazy or uncaring to actually investigate before it speaks.
Fannie Mae, Freddie Mac: The Legal Issue
In numerous interviews on television and in the press, Senator Crapo (R., ID) along with his colleagues have indicated that the legislation being proposed must take into account the court cases against the U.S. Treasury related to Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) (together GSE or the Company). Thus, it is important to have some grasp of these cases.
The Law
The Housing and Economic Recovery Act of 2008 (HERA) deals with the status of Fannie Mae and Freddie Mac. It creates the basis for putting the two companies into conservatorship. In this Act, there is a segment entitled Title I – Reform of Regulation of Enterprises: Subtitle B – Regulated Capital Levels for Regulated Entities, Special Enforcement Powers, and Reviews of Assets and Liabilities. By inclusion the Act restates Sec 1369E from the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. The applicable section states:
“The Director shall, by regulation, establish criteria governing the portfolio holdings of the enterprises, to ensure that the holdings are backed by sufficient capital and consistent with the mission and the safe and sound operations of the enterprises.”
Further down in the Act under the included section 1361, it states:
“The Director shall, by regulation, establish risk-based capital requirements for the enterprises to ensure that the enterprises operate in a safe and sound manner, maintain sufficient capital and reserves to support the risks that arise in the operations and management of the enterprises.”
In a statement released on September 7, 2008, at the time Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) were placed into a conservatorship, James B. Lockhart, the Director of the newly formed Federal Housing and Finance Agency (FHFA) stated:
“During the conservatorship period, FHFA will continue to work expeditiously on the many regulations needed to improve the new law. Some of the key regulations will be minimum capital standards, prudential safety and soundness standards and portfolio limits. It is critical to complete these regulations so that any new investor will understand the investment proposition.”
This statement was accompanied by a fact sheet entitled Questions and Answers on Conservatorship. A few points in this fact sheet are worth mentioning:
“The purpose of appointing the Conservator is to preserve and conserve the Company’s assets and property and to put the Company in a sound and solvent condition.”
“The FHFA, as Conservator, may take all actions necessary and appropriate to (1) put the Company in a sound and solvent condition and (2) carry on the Company’s business and preserve and conserve the assets and property of the Company.”
“Upon the Director’s determination that the Conservator’s plan to restore the Company to a safe and solvent condition has been completed successfully, the Director will issue an order terminating the conservatorship.”
“During the conservatorship, the Company’s stock will continue to trade.”
“There are no plans to liquidate the Company.”
There are a few points to be made from a review of HERA and the statements and fact sheet of the FHFA:
The capital of Fannie Mae and Freddie Mac must be maintained to insure their safety and soundness.
The companies must be brought back to health and returned to the private sector shareholders.
The stocks were/are allowed to trade so that the private shareholder position was/is not removed.
While the FHFA could put the companies into receivership, it had no intention to do so. The clear intent was to return these companies to their shareholders.
Variable Liquidation Preference Senior Preferred Stock , Series 2008-2 (Preferred A)
In the description of the Preferred A under Section 2 (c) entitled Dividends, it states:
“Dividend Rate” means 10.0%; provided, however, that if at any time the Company shall have for any reason failed to pay dividends in cash in a timely manner as required by this Certificate, then immediately following such failure and for all Dividend Periods thereafter until the Dividend Period following the date on which the Company shall have paid in cash full cumulative dividends (including any unpaid dividends added to the Liquidation Preference pursuant to Section 8), the “Dividend Rate” shall mean 12.0%.”
And in section 2 (f):
“If and whenever dividends, having been declared, shall not have been paid in full, as aforesaid, on shares of the Senior Preferred Stock, all such dividends that have been declared on shares of the Senior Preferred Stock shall be paid to the holders pro rata on the aggregate Liquidation Preference of the shares of Senior Preferred Stock by each holder, and any amounts due but not paid in cash shall be added to the Liquidation Preference pursuant to Section 8.”
There are two point here other than the government uses words like the “aforesaid.” They are:
• The dividend rate on the Preferred A is 10% and in certain cases 12%.
• If the dividend is not available to be paid in cash it can be paid in stock.
Third Amendment
On August 17, 2012, it appears that the United States government changed its mind about all of the above – the laws and the indenture to the Preferred A stock. It states in in Section 3 that it is amending Section 2 (c) as quoted above. From January 1, 2013 to January 1 2018:
“… the “Dividend Amount” for a Dividend Period means the amount, if any, by which the Net Worth Amount at the end of the immediately preceding fiscal quarter, less the Applicable Capital Reserve Amount, exceeds zero. … from January 1, 2018 the Applicable Capital Reserve amount shall be zero.”
There is a great deal of aforesaid type language in this Section but simply stated it means two things:
First, 100% of the earnings of Fannie Mae and Freddie Mac will be paid to the U.S. Treasury after January 1, 2013 and that has, in fact, been the case.
By January 1, 2018, the net worth of Fannie Mae and Freddie Mac will be zero.
Thus, we have the basis for a series of lawsuits against the government. The Third Amendment reverses the demands of HERA that Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) be well capitalized to protect their safety and soundness. In essence, the Third Amendment disobeys the law as passed by Congress and signed by the President. It completely reverses the comments made by Director Lockhart in 2008 when he placed Fannie Mae and Freddie Mac into a conservatorship. It completely ignores the Fact Sheet which indicated that there was no intention to liquidate the Fannie Mae and Freddie Mac.
Second, the Third Amendment changes the dividend on the Preferred A from 10% to 12% of par value to 100% of earnings. In so doing, the Third Amendment eliminates any possibility of the junior preferred shareholders receiving any dividends. The financial statements suggest that there are hundreds of billions of dollars that are available to pay the junior preferred shareholders and the common shareholders, as well. Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) have already paid over $200 billion to the U.S. Treasury under the Third Amendment.
Fannie Mae, Freddie Mac: Initial Conclusion
The FHFA’s decision to adopt the Third Amendment is also of interest. In the negotiation, the U.S. Treasury Department represented itself
Pages: 1 2Tags:Crapo Bill fannie mae FHFA FMCC FNMA freddie mac household income mortgages Restructuring U.S. Treasury
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Bouncing off the 50?
Something still trying I think... Lots of sells past 20 minutes
Looks like we closed back above the 20.... What a crazy week man......
Will they both close the same?
Toomey - Hmmmmm
http://www.thestreet.com/story/12527173/1/senator-stumbles-in-fannie-and-freddie-shareholder-defense.html
Senator Stumbles in Fannie and Freddie Shareholder Defense
BY Dan Freed | 03/13/14 - 01:58 PM EDT
inShare.3 Comment
Link Find out if (FNMA) is in Cramer's Portfolio.
Updated from 3:16 pm Wednesday with changes to final four paragraphs.
NEW YORK (TheStreet) --Fannie Mae (FNMA_) and Freddie Mac (FMCC_) shareholders found a friend in the Senate last week, though the efforts of Pat Toomey (R., Pa.) to pass himself off as a defender of regular folks as opposed to wealthy hedge funds could use a bit of work.
In a question submitted Friday to Treasury Secretary Jack Lew, Toomey defended the rights of investors in Fannie and Freddie. But the only investor he identified by name, the York County pension fund in Pennsylvania, doesn't have any exposure to the government-backed mortgage giants.
York County Commissioner Chris Reilly told me this week he made a mistake in a Feb. 11 letter he wrote to Senator Toomey.
Urging the Senator to reject proposed housing reform legislation from Senators Bob Corker (R., Tenn.) and Mark Warner (D., Va.), Reilly wrote:
The biggest issue at play is my county's pension investments in Fannie and Freddie. We have millions invested in the two GSEs [Government Sponsored Entities] that would be wiped out completely if the Corker-Warner bill passes. I don't have to explain to you the harsh economic impacts this would have on the county and our pension.
When I called him this week to discuss the matter, however, Reilly said something quite different.
"While we are invested in GSEs to some extent, it's not Fannie Mae and Freddie Mac, so my original letter to Senator Toomey was erroneous in some respects," Reilly told me.
It turns out the York County fund has about $10 million invested in another GSE, the Private Export Funding Corporation (PEFCO), which has little if anything to do with the proposed bill or U.S. housing in general.
Read: Tesla, Now Banned in New Jersey, Seeks Different Outcome in Ohio
Reilly told me initially that he told Toomey staffer Steve Kelly about the mistake two weeks ago -- well before Toomey cited York County in his question to Lew. A Toomey spokeswoman disputed that, and in a subsequent conversation Reilly said he had made yet another mistake. He had not told Kelly about the mistake in the Feb. 11 letter. He had told his friend Dan Hayward, who works at a Harrisburg, Pa. firm called Novak Strategic Advisors.
It was Hayward who got him fired up about Fannie and Freddie shareholder rights in the first place.
"We have 67 counties in Pennsylvania and my understanding was a large number of them could potentially be impacted," Reilly said.
The commissioner isn't sure which counties, if any, have Fannie and Freddie exposure, though. His understanding that "a large number" did came from Hayward, who Reilly assumes works for other pension funds.
Read: Herbalife Tumbles as FTC Opens Investigation
Hayward told me hasn't yet identified any Pennsylvania pension funds with exposure to Fannie or Freddie, but is still researching the issue. He wouldn't disclose his clients, though he said none are big hedge funds with stakes in Fannie and Freddie. On the other hand, he said he is working with a conservative group called the Center for Individual Freedom, a conservative nonprofit group whose president, Jeff Mazzella, wouldn't disclose his funding sources. Mazzella says his group doesn't pay Hayward.
Regardless, there appear to be no shortage of parties eager to dig up shareholders such as pension funds who they believe will earn more sympathy from the public than big hedge funds like Perry Capital or Pershing Square Capital in their fight against the Obama Administration over Fannie and Freddie's profits. Such sympathetic shareholders can also help provide cover for elected officials such as Toomey, a former investment banker who has raised more money from the securities industry than any other industry over the course of his career.
Toomey's spokeswoman disputed the notion that the Senator is doing the bidding of hedge funds.
"This is an issue that matters to many folks across the country and in Pennsylvania such as community banks and individual investors," she wrote me via email. The spokeswoman added that Toomey's office "will resubmit the question to Secretary Lew, striking the reference to York County."
Yep... He's the one we haven't seen on TV yet.... Good call
Frannie wind-down could spare preferreds; faces hurdles in any case - Seeking Alpha
Mar 13 2014, 11:20 ET “It’s hard to find any reasonable outcome that’s really terrible for the preferreds, given what I perceive to be the value of the business that’s already there," says portfolio manager Jeffrey Lewis, an owner of the shares. Investors in the common stock, however, are making a bet Fannie Mae (FNMA +12.4%) and Freddie Mac (FMCC +13.4%) will be allowed to become dominating private companies again and keep their profits.
It's up to the courts to decide how investors will be treated, says Sen. Mike Crapo, who co-wrote the bill to wind the GSEs down. "We are not necessarily going to dictate the outcome.
"As for whether a bill actually becomes law anytime soon, former Senate banking panel aide Mark Calabria gives it maybe a 10% chance of getting to the president's desk this year. The dim prospects look to be giving a boost to the common shares today.
What is significance of March 14? Do new rules go into effect? Appreciate the help.
Nick's twitter feed is very active today.... Encourage folks to check it when they get a free minute
Let the extortion begin..... can we fund this with some of the JP Morgan dollars that got paid out as part of the settlement for selling the bad mortgages?
PBS Documentary On The Cause Of The Crisis
http://www.pbs.org/wgbh/pages/frontline/oral-history/financial-crisis/phil-angelides/
Take some time to listen to this one
Must Watch!
WOOOOOOOOOOO!!!!!!!!!!
Preferred's looking good today.... Someone is accumulating....
Freddie and Fannie Preferred's I own
Interesting Buys/Sells Today for a couple of these
FMCKJ
1,500,000 share buy at $12.40 - looks like t-trade at 15:33:39
195,540 share buy at $12.24 - looks like a t-trade at 15:38:22
TWO x 75,000 share buy at $12.40 - looks like t-trades at 15:48:32 and 16:00:48
FMCKI
Tuesday and Wednesday had 100,000 share buys after hours.
FMCKN
100,000 share buy at $11.00 - looks like t-trade at 15:38:34
FNMAS
100,000 share buy at $12.03 - looks like t-trade at 15:03:22
170,000 share buy at $11.98 - looks like t-trade at 15:38:01
100,000 share buy at $12.01 - looks like t-trade at 15:43:02
400,000 share buy at $12.00 - looks like t-trade at 15:58:21
500,000 share sell/buy at $11.97 - looks like t-trade at 15:51:30
A couple of large sells today on FNMAS during hours
Fannie and Freddie Plaintiffs Eye FDIC Share Sales
BY Dan Freed | 02/27/14 - 03:41 PM EST
http://www.thestreet.com/story/12460420/1/fannie-and-freddie-plaintiffs-eye-fdic-share-sales.html?puc=yahoo&cm_ven=YAHOO
Few noticed when the Federal Deposit Insurance Corp. (FDIC) sold some 31 million preferred shares of Fannie Mae (FNMA_) and Freddie Mac (FMCC_) on three separate dates in spring 2011, but as a legal battle heats up between the U.S. government and private shareholders of the Government Sponsored Enterprises, those transactions are taking on new significance.
The question boils down to this: Did the FDIC trade on inside information from the Treasury Department?
The FDIC and the Treasury Department say it did not, but don't expect their answers (which I'll go into more deeply in a moment) to satisfy private plaintiffs.
"We have only recently come to understand ourselves that the FDIC in 2011 sold a very large stake of stock in the GSEs," Chuck Cooper, an attorney representing Fairholme Funds in its case against the U.S. government, told me Wednesday. Cooper said the sales, in light of circumstances surrounding them, raise "gravely important issues."
Those circumstances include a Dec. 20, 2010 internal U.S. Treasury Department memo unearthed recently as part of the litigation, stating "the [Obama] administration's commitment to ensure existing common equity holders will not have access to any positive earnings from the G.S.E.'s in the future." (The New York Times' Gretchen Morgenson reported on the memo Feb. 15.)
The public, including the GSE shareholders referred to in the memo, were not privy to this commitment, but what about the FDIC? What did its officials know when they sold the vast majority of the shares the regulator acquired from failing banks it seized in the wake of the 2008 mortgage crisis? (The FDIC says it still owns about 130,000 GSE shares, of which 46,000 are common.)
Any investor aware of the full extent of the Administration's hostility to GSE shareholders would have thought much more carefully about holding onto any preferred or common shares. That hostility may have been implicit in the fact that the Administration rarely if ever mentioned shareholders in its public statements about the GSEs after the crisis, an argument made frequently by consumer activist and GSE shareholder Ralph Nader. Still, it was never made as plain in public as it was in that internal memo. An investor aware of the memo would have thought much more carefully about holding onto any preferred or common shares.
Hedge fund manager Michael Kao of Akanthos Capital Management says it was widely known in the marketplace the FDIC was the seller when the large blocks of GSE preferred shares that came up for bid in 2011. (The exact dates of the 2011 sales were March 22, April 13 and May 18, according to the FDIC.)
"I remember distinctly asking myself during those auctions, 'hmmm I wonder what the FDIC knows that I don't.'" Kao recounted to me in an email exchange.
Kao, a long-time Fannie and Freddie shareholder, continues to hold on to his stakes of both GSEs.
An investor aware of that memo would also have been less shocked by the highly controversial third amendment to the GSE conservatorship announced Aug. 17, 2012. The amendment changed the terms of Fannie and Freddie's debt to the government. Instead of owing the Treasury an annual 10% dividend, the GSEs suddenly owed the Treasury all of their profits for an indefinite period, aside from minimal capital buffers. That amendment -- also known as the "net worth sweep" -- is at the crux of many of the roughly 20 lawsuits brought against the government by GSE shareholders. The lawsuits taking issue with the sweep contend it violates the fifth amendment of the U.S. constitution's prohibition of the taking of private property for public use without just compensation.
Once the net worth sweep was announced, GSE preferred shares dropped sharply in value. For example, the benchmark Fannie Mae "S" series preferred shares, which closed at $2.35 on Aug. 16, 2012, closed the following day at $1.05 and at $0.86 the day after that. They would remain below a dollar until Oct. 10 and below $2 until Feb. 22, 2013.
As of this Thursday, they are at $12.08, driven higher by a Freddie Mac earnings report, as well as a judge's decision late Wednesday that plaintiffs' attorneys will be allowed to question current and former government officials for the first time.
Given where the shares trade now, it is clear the FDIC would have done far better to have hung onto its shares. However, the shares have rallied largely because of the lawsuits and also because of an increasing consensus that returning the GSEs to something like their pre-crisis status might not be such a bad idea. The FDIC was unlikely to have made such a gamble at the time.
FDIC spokesman David Barr told me in an email exchange that the FDIC was not aware of the "administration's commitment" as described in the memo.
"Generally speaking, it is the FDIC's practice to dispose of inherited assets as quickly as possible while maximizing proceeds to the receivership(s). We also identify opportunities to maximize economies of scale," Barr wrote.
Question to board - When will FMCC go in front of FNMA if ever? What is the driver? FNMA still beating FMCC almost 3 - 1 everyday on volume.
From Obi on the FNMA Board
Court Grants Fairholme’s Discovery Motion in Fannie, Freddie Suit
By NICK TIMIRAOS
http://blogs.wsj.com/moneybeat/2014/02/26/court-grants-fairholmes-discovery-motion-in-fannie-freddie-suit/
A federal judge on Wednesday granted Bruce Berkowitz’s Fairholme Funds Inc. a motion to conduct discovery in its lawsuit against the U.S. government that challenges changes that the Treasury Department made to its bailout of Fannie MaeFNMA +10.64% and Freddie MacFMCC +10.51%.
The ruling marked an initial victory for shareholders in what figures to be a long-running battle with the U.S. government over its 2012 decision to require Fannie and Freddie to send all of their profits to the government as part of the mortgage companies’ 2008 bailouts.
Judge Margaret M. Sweeney of the U.S. Court of Federal Claims said she would hear the government’s motion to dismiss the lawsuit only after lawyers representing Fairholme had the opportunity to seek evidence that could undermine arguments the government has made in seeking to dismiss the case.
A growing class of shareholders has sued the Treasury to challenge the changes to Fannie and Freddie’s bailout terms. They say the new terms amount to an unconstitutional expropriation of assets and illegal self-dealing between Treasury and the firms’ regulator, the Federal Housing Finance Agency, which is charged with running the companies during their federal conservatorship.
The U.S. had argued that the case should be dismissed and that shareholders’ claims weren’t ripe for review because Fannie and Freddie’s future profitability is unknown and because the firms are still in a government-run conservatorship. Those claims, the government had said, meant plaintiffs couldn’t assert that they had sustained losses resulting from the government’s actions.
Fairholme had said that discovery would allow them to resolve the dispute over the potential to forecast future profitability at the companies, and Judge Sweeney sided with the plaintiffs. “Discovery will enable plaintiffs to confirm that such evidence exists with regard to profitability and additional answer the question as to when, and how, the conservatorship will end,” Judge Sweeney wrote.
The government has also argued that the case should be dismissed because the FHFA acted as the conservator for Fannie and Freddie and not as an arm of the U.S. government. The court granted Fairholme’s request to seek evidence that the FHFA acted “an agent and arm of the Treasury,” which could determine whether the case is allowed to proceed.
“Today’s decision by Judge Sweeney is a positive development for taxpayers, homeowners, and investors. We hope this accelerates exploration of a consensual solution,” said Mr. Berkowitz.
A representative for the Department of Justice, which is handling the case, wasn’t immediately available for comment.
Next month, both Fannie and Freddie will have paid more the U.S. Treasury in dividends than the $187.5 billion in taxpayer infusions they received between 2008 and 2011. Those dividends aren’t allowed to pay down the government’s stake in the companies, which prevents them from exiting government control.
Fannie and Freddie aren’t listed on a major U.S. exchange, following a 2010 delisting. On Wednesday, Fannie shares gained 10.6%, or $0.43, to $4.47. Freddie gained 10.5%, or $0.41, to $4.31.
Fidelity says inactive symbol
Close to the bottom of the bolly... Order is in to buy.....
Buy! Buy! Buy!
Commander... Are we taking bets or making predictions on the OTC becoming available again or having a technical glitch on earnings day? There has to be a way to put some type of Las Vegas odds with this.
Agree with you... It's an election year and no one wants to hear how the policies that congress put in place caused the problems of 2008... They will be quiet as a church mouse and we can only hope the courts turn the heat up on these mf'rs with the lawsuits that are presently working through the system.... And by the way.... none of our soldiers deserve to have to do 10 tours in Afghanistan like SFC Remsberg.... Rangers Lead The Way Once Again.....
Tuze
Charlie Company 1/75 Ranger Reg 1988-1991
Promos maybe - check stockpromoters.com as a reference when there is a little chaos in the sector
Why Is the U.S. Downplaying Huge Profits at Fannie, Freddie?
Article: http://blogs.wsj.com/moneybeat/2014/01/24/why-is-the-u-s-downplaying-huge-profits-at-fannie-freddie/
http://blogs.wsj.com/moneybeat/2014/01/24/why-is-the-u-s-downplaying-huge-profits-at-fannie-freddie/
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Nick Timiraos
@NickTimiraos
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Biography
No biggie.
That’s the reaction a top Treasury Department adviser took Wednesday to the record profits hauled in by Fannie MaeFNMA -3.54% and Freddie MacFMCC -2.66% over the past year.
The government-supported mortgage-finance giants have reported combined net income of $151 billion during the first three quarters of 2013, but Michael Stegman, the Treasury adviser, warned that those recent returns “may significantly overstate the true financial condition” the companies, “especially on a go-forward basis.”
Mr. Stegman, who spoke at an industry conference in Las Vegas, said that around $75 billion of the firms’ net income has come from one-time tax reversals, as the companies reversed huge write-downs they were forced to take in 2008, when the companies lost the ability to claim certain tax assets as losses mounted.
Another $11 billion in income, Mr. Stegman said, has come from releasing loan-loss reserves, and the companies have hauled in another $10 billion from one-time legal settlements with Wall Street banks over soured mortgages and related investments sold at the peak of the housing bubble.
What’s left after those gains are the core businesses of Fannie and Freddie: earning a return on loans held as investments in the companies’ large portfolios and collecting fees for insuring loans that are bundled into mortgage-backed securities before they are sold to investors.
The portfolio business, Mr. Stegman said, accounted for around 60% of the companies’ combined income, and those investment portfolios—currently a combined $1 trillion—are being wound down by 15% annually until 2018, when they will be capped at around $250 billion each.
Recent financials also have “benefited significantly from strong home-price appreciation and low interest rates, both of which may moderate in future periods,” he said.
Mr. Stegman didn’t say that he expected the companies to lose money, and a handful of analysts who still follow the companies expect the firms to derive healthy profits, still, from their loan-guarantee businesses.
So why would a top Obama administration official pooh-pooh record profits when, in other instances (say, with General Motors or American International Group Inc.AIG -2.74%) it might be touting such windfalls?
First, the Obama administration doesn’t want the profits to remove the urgency for Congress to decide how to overhaul Fannie and Freddie. Some stakeholders “mistakenly argue that housing finance reform is no longer needed — that the [companies] are so financially flush” to reduce the need for legislation, he said. “We could not disagree more.” The administration has made clear it doesn’t support returning Fannie and Freddie to their former duopoly status as “government-sponsored” entities that are neither fully private nor fully public.
The profits could not only remove the urgency for any overhaul, but they could also lead lawmakers to grow more comfortable with less dramatic changes whenever they get around to proposing such an overhaul. Mr. Stegman’s speech went into more detail about how any successors to Fannie and Freddie, for example, shouldn’t combine the roles of guaranteeing mortgages with issuing government-backed securities. In other words, unlike big banks and automakers that were bailed out by the government and largely restored to their previous private ownership, Fannie and Freddie aren’t going to be returned to their pre-2008 model if the Obama administration has anything to say about it.
Federal courts, meanwhile, are set to weigh in on how the company’s shareholders have to be treated in any such overhaul. The Treasury Department faces numerous legal challenges from shareholders who have argued that certain changes made in 2012 to the firms’ bailout agreements led the U.S. to illegally expropriate the companies’ assets. The Treasury filed briefs to dismiss some of those lawsuits last week, arguing that shareholders didn’t have standing to challenge the bailout changes.
News Out From yahoo
Posted on FNMA by BMP
http://finance.yahoo.com/news/u-senators-urge-fannie-freddie-191135242.html
U.S. Senators urge Fannie, Freddie to aid lower-income households.
1 hour ago
0 shares
.
...Content preferences ....Done ..
....By Margaret Chadbourn
WASHINGTON, Jan 24 (Reuters) - More than 30 Democrats in the U.S. Senate called on Friday for the regulator of government-controlled Fannie Mae and Freddie Mac to direct the companies to resume contributions for affordable housing initiatives.
The senators focused on two unused funds that Congress established in 2008 to finance low-income housing with a portion of Fannie Mae and Freddie Mac's revenue. The Federal Housing Finance Agency, the companies' regulator, suspended payments into the funds in November of that year, after the government seized the companies as mortgage losses mounted.
After suffering huge losses, the companies have turned the corner and are now seeing record profits. The 33 lawmakers, led by Democrats Jack Reed of Rhode Island and Elizabeth Warren of Massachusetts and independent Bernie Sanders of Vermont, want the agency to resume contributing to the fund to help ameliorate a shortage of affordable housing for low-income Americans.
"The time is long overdue to lift the current suspension of contributions, and we ask your full and fair consideration of our request," the letter to newly installed FHFA Director Mel Watt said.
Fannie Mae and Freddie Mac have taken $187.5 billion in U.S. aid since they became state wards in September 2008. They have since paid about $185.2 billion in dividends to the government thanks to a surge in the U.S. housing market.
Congress created the two housing trust funds to build a revenue source for low-income housing. The trust funds provide funds to finance new rental housing or rehabilitate existing units for families with very low incomes.
The group of Democrats cited a study from the Harvard Joint Center for Housing Studies that found many renters remain caught in a pinch due to falling wages and rising rents. According to the study, the country faces a shortage of nearly 5 million units that are affordable and available for extremely low-income renters.
Using the trust funds "would help ameliorate this crisis," the letter said.
President Barack Obama and lawmakers from both parties have said they want to wind down the two mortgage finance giants, which own or guarantee 60 percent of all U.S. home loans, but an overhaul process is years off.
In the meantime, their return to profitability has led to competing demands.
Nonprofit housing groups have sued the FHFA, challenging the decision to suspend payments to the trust funds, while a large hedge fund that owns preferred shares of the companies is challenging the terms of their taxpayer bailout, which requires them to sweep most of the profits into the U.S. Treasury.
I still see a gap at .185 that needs to be addressed. Was hoping last week it would drop to take care of this when we dropped so low but we didn't get that lucky. Have a bid in at .185 and will get back in then. Good luck to all.
Seeing decent sized buys coming in..... Volume picking up... You might be right.... RSI and MRI looking healthy imo
100k buy on fan and Fred at 9:45 cst
.185 I think
Colorado Shops Run Out Of Products
http://denver.cbslocal.com/2014/01/09/pot-shop-runs-out-of-product-others-raise-prices/
Insane!!!
RSI on the daily has cooled down..... Time to get her going
Hope folks took profits..... Are we going to bounce off of .22???
Contact http://www.millionair.com/
Nice aircraft and service
RSI over 90 on the weekly.... Needs to cool down some IMO
MH - Good to see you here...