What are you talking about? Source?

I ran it through Photoshop--adjusted levels, colors, etc.--and didn't really see any artifacts. But I'm still skeptical.

One thing's for certain: this shit is objectively hilarious. I doubt anything will come of this specific court case, but it at least offers us a little pick-me-up during an otherwise disappointing period.

Why is comment section on Glen's site so full of spam?

I imagine most loss harvesting has happened already.

I harvested losses. Now, I'm considering harvesting gains from shares I bought on the dip. I can only deduct $3k/yr in the future from losses, but if I sell winners this year, then I can balance them out.

The only benefit to holding my preferreds instead is hitting that 1-year threshold for tax purposes. My losses this year are large enough where it outweighs any potential benefit, plus I'm in this for the long-haul anyhow and can easily roll into other series.

Only way I get fucked is if the JPS get bought out and I'm forced into cash, in which case I'll still be happier than a pig in shit despite the extortionate taxes I'll have to pay on the gains.

No one cares about docs, tbh. They'll only settle if court loss is imminent.

Even then, they might instead move administratively to recap/buy back JPS, thus avoiding much of the lawsuits.

I agree with what you're saying in the context of a taking. I'm actually expecting it to play out that way.

For breach of contract claims, however, it seems counter-intuitive that you could claim damages on an anticipatory breach if you don't currently own anything. Even with the dividends, weren't all payments halted while in conservatorship? How do you claim rights to future dividends if you currently own no stock?

This is all going to get really hairy with direct vs derivative as well, because although contractual rights to dividends were essentially extinguished (direct), the real injury is that the companies squandered money that would have allowed them to escape and resume dividends in the future (derivative).

I don't know what the remedy is going to look like in this case. I don't know what the authority of the court is to grant a particular remedy is either. Seems to me that the contract that violated shareholder rights should be voided, but idk if that's possible.

I agree, Lamberth is kind of a piece of shit.

I would say that the implied covenant of good faith and fair dealing applies to shareholders' contract rights, which should hypothetically travel with the shares.

If you're assessing things from a damages model, then it's unclear. The net worth sweep harmed shareholders over many years; it's difficult to argue that OG holders were the only ones harmed. Would this be a pro-rated damage model? I've owned shares on and off since 2016 and I would gladly take retroactive dividends for my time of ownership.

That's why JPS are priced at 12:1. Odds are pretty generous

Looks like this is it:

https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/FHFABACSettlementAgreement.pdf

Does that mean that in 2014 the settlement money was paid to the GSE's and then promptly sent to Treasury via the NWS? I guess it's part of the current litigation then.

Hey kthomp,

Unrelated, but do you remember how FHFA sued the banks on behalf of Fannie and Freddie for lying about the quality of the mortgages that they were selling to them? They supposedly recouped $24.9 billion:

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Final-Update-on-Private-Label-Securities-Actions-9172018.aspx

Where did the freaking money go? Shouldn't this currently be on our books? If it went to Treasury we should be suing to get the money back.

I wish the word "unlawfully" wasn't in there, because it sounds like it's a modifier for "taking private property" instead of the entire phrase "taking private property without just compensation." The NWS was basically deemed legal by SCOTUS; it's the lack of compensation that is illegal. I know this is true for every takings case, but it just seems necessary to keep the language clear; maybe I just have PTSD from single words in statutes fucking us over.

Also saying "unlawful" is just redundant because of the continuation "in violation of the Takings Clause of the Fifth Amendment of the Constitution." Anything in violation of the Constitution is unlawful.

"Deep red“ on $1 FNMA buys? 13% down is a cake walk.

Hey kthomp,

Does your model care--or do you care--at all about coupon rate if two series are similarly priced relative to par? I owned a lot of odd series before the Supreme Court ruling, then rolled everything into FNMAT and some other high-coupon series when they were around 17:1, but at 9:1 (currently) they're a little less appealing. FNMAO is nearly 17:1.

I'll say that the coupon rates seem attractive to me, even though I'm pretty sure their dividends won't be reinstated. I also expect a blanket 6% rate or something in a damages scenario, so it wouldn't matter much there, either.

What are some situations where coupon rate might matter? Order of redemption? Am I wasting my time with these, or should I be worried about liquidity--trying to unload tens of thousands of shares of FNMAO--if something cataclysmic happens?

And nothing of significance was said that day

They also have better liquidity.

Lol. This is a huge relief. Schwartz doesn't abide any government overstepping (supposedly).

I don't think he my mentioned the warrants

Nondelegation in this case basically means that there has to be some guiding principle to govern by included in the statute (HERA). According the Supreme Court in 1928:

Any logic about the non-delegation claims? Not that I expected it to go anywhere, but given the SCOTUS ruling, it seems hard to defend HERA as providing intelligible principles for governance.

Hi kthomp,

Thanks for this breakdown; it's very easy to digest.

Worth noting that 10% ROE scenarios in 2023 and 2025 both require SPS to take a rather significant haircut (190B face value becomes 48B and 98B respectively). The incentive is obviously there for the government to set the capital requirement lower.

The incentive is also there--at least somewhat--to wait till 2025 for ~$50B more, although one could argue that the uncertainty over the future administration might force Biden's hand to get this done sooner. Control of $48B to $300B is nothing to turn your nose up at.

IMO, people taking a short-term bet on there actually being a plan submitted tomorrow. Unlikely, IMO, but little downside risk.

Prolly more like 60.

Lol. Just lol.

What was your point, again?

lol

What's with EOD rebound? People expecting an announcement tomorrow or something?

I've looked a bit at Sandra Thompson. She spent two decades at the FDIC and it seems like she's more concerned with risk management than affordable housing initiatives. Ironically, if Biden is trying to push his housing agenda, the white guy who has written papers on the racial homeownership gap is probably more qualified.

Here's a little video snippet to check out:

Pretty sure they'll be adjusting the capital requirements to something more reasonable. The odds of them reinstating the sweep is low, considering it would allow shareholders prospective relief as per SCOTUS.

I think you're right. But wiping out SPS goes a long way toward recap. Also basically makes JPS money good.

Page 8:

And what does this mean?

Several years? Guy only had two.

How you gonna take companies from zero capital to free in two years? Y'all have such bullshit timelines on stuff I swear.

Tbh I'm not sure if that's the case or not, because I'm not sure what the contract in question is. My post assumed it was SPSPA's, but since shareholders weren't party to that contract, it's probably the contracts concerning the rights of shareholders.


So then the question is whether that contract carried the implication that the GSE's wouldn't remove shareholders from the capital structure for no consideration.