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Preferred was "raised capital". Most of it in the last 8 years before C-ship. There is a duty an obligation to pay back the capital. Given that 5 years of dividends have went by, the shares have been "dinged" approximately 30-35% when compounded. That is a loss in capital/loss in investment.... Loss in opportunity to use those dividends to buy undervalued stocks in the crisis.
Since they have been wildly profitable this year, it will be difficult to argue against dividend restoration.
they are clearly solvent and sound IMO. That was the goal of c-ship.
If they do a 10 for one reverse split and a capital raise, they could probably raise an additional 200 billion(minimum) in capital without problems in this mkt environment IMO.
I agree on all points, Catbird.
All of the below is contingent on release from C-ship.
One thing to keep in mind.... If treasury does a cash tender for the pref. shares @ a certain price, some may accept it.(they may make some argument against paying pref divvies even after release if they release in a settlement)
If they agree to settle the lawsuits, they could attempt a tender of common or preferred.
They could also try to buy all of the shares in the company but it would have to come down to a vote of shareholders, regardless(IMO).
The buying all of the common shares is still highly unlikely given the optics of the national debt increase. The buying of the preferred would not change(or move the company) it to being owned by the gov't, so that is possible with no change in optics.
The preferreds being bought out have a higher likelihood given that it wouldn't affect the national debt. I am sure this point had been thrown out. Just not sure if I remember seeing it.
I am not an attorney.....
To clarify.... FMCCS traded @ 47(pretty much par) in january 2008. FNMAS above par in jan 2008.... In august 08, FMCCS briefly traded @ 15. That is why I said that it traded @ 15 with divvies.
https://www.google.com/finance/historical?cid=14937583&startdate=Jun+8%2C+2008&enddate=Sep+7%2C+2008&num=30&ei=CZ-jUtiqBMTYqAGDsAE
https://www.google.com/finance/historical?cid=11682080&startdate=jun+1%2C+2008&enddate=sep+7%2C+2008&num=30&ei=zZ-jUpD6G4W2qQHYMg
That is why I said: "maybe the market is pricing in retro(or the slight possibility of retro divvies) divvies with the recent prices"
One observation I have made regarding the preferreds:
They are likely to be volatile. The reason is the float. The hedge funds own more than half of all the shares and may be approaching 60-70%. With that in mind, they are likely in this for the long haul and will let it play out in court vs. someone like Kyle Bass who bailed. A bunch of the small investors with cost basis of 1.00-1.50 aren't selling, either. (most of them)
there just aren't a ton of shares avail to trade making it fairly illiquid. Even FNMAS and FMCKJ are fairly illiquid.
I think it means any adverse court ruling between now and final resolution will send the shares down. Any positive ruling subsequent sending it back up. Before C-ship(right before), the 50's were at 15 bucks a share. That was while they paid divvies.
One other thought....
The market may be pricing in the possibility of retro dividends if restoration happens.
Likely to be bumpy in both directions.
those are cool, 2 cents!
I needed em 10 yrs ago when i lived in omaha. AKA "flyover" for you
I am in SAT. Luckily, the rain didn't freeze last night. Otherwise the whole town woulda shut down till noon like Feb 2011. Really cold compared to normal. Coldest days (today and tomorrow) for the "high temps" since I moved here in Oct. 2008
Someone else posted that video earlier this week. I just wanted to point out a couple of things. He makes a ton of other points but we could spend an hour discussing it and him(millstein)
I am glad it is supposed to be 54 for the high on Sunday. Maybe we should get together sometime if you ever come to the riverwalk.
I don't like the piggy bank mentality. I hope that this gets through the courts quickly. they don't have the superstars that perry has. Us little guys have help since all these investments became public. It surprised me when they said Perry had been in preferreds since 2009 like me.
I agree with all of that.
I should have said "picking winners and losers again" by forcing them to "lose" even though they were never declared "bankrupt" or taken over @ a nominal price. The real moral hazard starts when you say: Well, we did this the best we could(putting them in C-ship to stabilize lending, not wanting to put 5 trillion on the debt because of optics) and now want to destroy it/pilfer it/use it for political gain after previously saying "conserve and preserve"
We all know FNF are losers along with AIG, Citi, RF, BSC etc. (although they didn't go bk like LEH amd WM.
They also "picked" MER as a "winner" with a takeout at 28 when the stock was 10 a day or two before(they pretty much admitted that they told BAC to "buy em or else"
At least BSC got something like 10 bucks after the shareholders cried foul for the dollar or 3 dollar offer they got (and accepted w/o shareholder approval)
also backed the Citi purchase of WB (till WFC stole it after a week with buffett counsel)
The whole point Millstein is rightfully making is: They need to do it slow and not mess with a bunch of stuff otherwise congress/treasury/exec branch will "create a crisis where there wasn't one". like a housing crash and variable rate mortgages with 30-40% down. He is also making a play to run the thing like AIG. I personally think he would do it correctly. he has the experience. his problem is he pissed some off like ron paul.
I think it is still a possibility.
any other thoughts chrisanj?
I remember somebody asking Buffett if the gov't was picking winners and losers. He point blank said something like: If your stock is down 90-95%, you have lost. (at the time Citi, AIG, etc were down that much)
Even if the FNF common stock goes to 15-20, they are down 75% over 5-7 years and preferred shareholders didn't get 5-6% divvies for 5-6 years.(a 30-35% loss or more when you take into account reinvestment opportunities) Those common stocks were 80 bucks a share. Not a good investment for people who bought it in '06-'07). Compared to the market being up since that time, I 'd argue FNF common and preferreds are losers of capital/dividends, etc. Doesn't sound to me like it is the gov't paying off to "make winners" out of losers. The common and pref have already taken huge losses.
We also live in a capitalist/semi capitalist society(arguably). Speculation should be encouraged when prudent, no derided as "right" or "wrong"
also....
The gov't is the winner so far. They have warrants, too.(as Ackman pointed out, he is on the same side of the table as Berkowitz and the gov't!)
Millstein, private capital, Berkowitz, Ackman, Perry Capital, small community banks, investors across the USA and globe.
http://www.bloomberg.com/video/jim-millstein-on-fannie-mae-freddie-mac-2VsoOkALQsGHANjYyzS2LQ.html
Millstein made a great point about FNF. I think his point is:
Guys, even if you manage to win in court(I think most think they will lose), you are now "picking" winners and losers.
I think Millstein's point is this: The MBS securities market will have zero confidence without explicit guarantees and private capital will only invest where the returns are defined and guaranteed. They will make a risk assessment and avoid any "first loss" capital investments unless the returns are dramatic and well defined for the risk taken. Even if they take that risk there will be demands to transparency of exactly what the portfolio consists of and/or guarantees of returns based on the case/shiller index or some other measure to the construction of and the MBS portfolio(the CSP as fud says). If they don't say exactly what is in it they will have to use a "benchmark". There will be no "equity/preferred or any other capital investments" as the gov't just crowded that out(if equity/preferred are wiped out) if this isn't done correctly.(without explicit risk return contracts so to speak) I think the common securitization platform can work(only if done properly and left with FNF) and agree that the banks want this built for them with sucking up more profits without risk as the goal. Problem is: Nobody in their right mind would line back up with their money and say figuratively "take my money and shoot me in the head" It could take 10-15 years for people to even consider that if Congress wiped out FNF risk takers without proper rule of law in place(bankruptcy proceedings, vote by 20.1 shareholders on a buyout proposal, etc) When I saw the chart on the Millstein interview with bloomberg illustrating that after the S&L crisis that the only buyer left was FNF, it told me a lot. The commercial banks were always steady @ 10% but once the crisis hit, there was no lender of last resort except these two(FNF). It took 22-26 years(2006) for private capital to come in after the S&L crisis and they came in as a result of MBS being packaged together and sold as AAA for a slight yield premium(which we all know now was nefarious at best). I don't think THAT capital will come back w/o super transparency. Back to the chart..... What it told me was that Millstein is not just smart, he presents the facts as we all know them in an intelligent way to hammer a point home in no way that speaking would. Like they say, a picture is worth a thousand words. Just some random thoughts. What do you guys think?
^^^The actual chart is at the two minute mark.^^^ Pause it and look at it for a second to review.
This is not about a bunch of hedge funds. It involves regular investors, community banks, rule of law. I know we all know this, but it is crazy to just assume that private capital will invest immediately when congress commands them. Especially with that chart. He is schooling corker. I swear it was almost a public taunt....... Payback for the whole interaction where Millstein was virtually accused of self dealing.
Happy Thanksgiving. Much to be thankful for other than investment gains(on paper)
1. Health
2. Family and Friends
3. Great co-workers
4. Get to live in America where people honor property rights in 2013.
Sensitivity seems to be high on the board lately. Remember that it is the "silly season". Some of us have lost loved ones in tragic ways or just have a rough time missing those who passed on that we won't see for a while. Try to be understanding of each other.
I for one have a rough time this time of year. I will yell and be angry at least twice about something irrational for no good reason.
I will be cool on here, though.
Happy investing, y'all.
The Federal Housing Finance Agency could slow efforts to shrink Fannie Mae (FNMA) and Freddie Mac and boost aid to troubled borrowers if U.S. Representative Mel Watt is confirmed as the agency’s director early next month.
Watt, a North Carolina Democrat, has the unanimous support of Senate Democrats who voted this week to change the chamber’s rules to approve nominees with a simple majority. Watt could gain confirmation as soon as the week of Dec. 9, when the Senate returns from a recess.
Enlarge image More Fannie Mae Borrower Aid Expected After Watt Confirmation
U.S. President Barack Obama congratulates U.S. Rep. Mel Watt, after nominating him to be the next director of the Federal Housing Finance Agency in Washington, DC. on May 1, 2013. Photographer: Mark Wilson/Getty Images
“We believe he is less inclined to lower the conforming loan limit, raise guarantee fees, or take other steps that could make housing finance more expensive,” Jaret Seiberg, an analyst at Guggenheim Securities LLC’s Washington Research Group, said in a note to clients. “Yet he is also a threat to engage in broad principal forgiveness and to expand the HARP refinancing program.”
Watt would be taking over as independent regulator at a pivotal time for the two government-sponsored enterprises, which provide liquidity to the housing market by packaging loans into securities on which they guarantee payments of principal and interest. FHFA’s director has the power to set and modify terms for the 50 percent of existing U.S. mortgages owned or backed by Fannie Mae and Freddie Mac. (FMCC)
Acting Director
Watt would replace FHFA Acting Director Edward J. DeMarco, whose focus during his four-year tenure has been on improving the companies’ bottom line and conserving assets for taxpayers. Fannie Mae and Freddie Mac received a $187.5 billion bailout from the U.S. Treasury after they were seized by regulators in the midst of the 2008 financial crisis.
The two companies have begun posting record profits and sending billions of dollars in dividends to the Treasury as the housing market rebounds. At the same time, Republicans and Democrats in the Senate are working on a bipartisan plan to wind them down and replace them with a new housing finance system.
In naming Watt, Obama was responding to months of pressure from housing activists and groups including the Congressional Black Caucus who wanted an FHFA director who would place more emphasis on aiding financially struggling borrowers.
Watt may reverse DeMarco’s ruling prohibiting Fannie Mae and Freddie Mac to cut the principal balance on delinquent loans. DeMarco argued that policy would hurt taxpayers more than it would help homeowners. Watt called for principal reduction as a member of Congress; after his nomination, he said his congressional positions wouldn’t dictate his views as a regulator.
HARP Expansion
Mortgage industry participants are hoping Watt will expand the Home Affordable Refinancing Program, or HARP, which allows borrowers with Fannie Mae and Freddie Mac loans to lower their interest rates even if they owe more than their homes are worth. The current program applies to loans originated before June of 2009, and some housing advocates and lenders have been pressing for it to be extended to more recent originations.
Certain Fannie Mae and Freddie Mac mortgage bonds slumped on the potential for an expansion of HARP. Fannie Mae’s 5 percent securities underperformed similar duration Treasuries by about 0.5 cent on the dollar for two days ending Friday, the most this year, according to data compiled by Bloomberg.
Watt may also slow some of DeMarco’s efforts to gradually wind down Fannie Mae and Freddie Mac’s operations in the absence of action from lawmakers on a broader housing-finance overhaul.
Loan Limits
DeMarco has announced he wants to lower the maximum size of loans the companies can purchase, raise the fees they charge to guarantee loans, charge additional fees in states with long foreclosure timelines, and cut the amount of financing they make available for apartment-building loans.
Participants in the housing industry have pushed back against some of those initiatives, saying they are premature as the housing market is still recovering.
Senate Republicans, who approve of DeMarco’s policies, blocked Watt’s confirmation in October when all but two of them voted against moving his nomination to a final debate, leaving Democrats short the 60 votes they needed at the time.
Senate Majority Leader Harry Reid, a Nevada Democrat, cited that vote as one of the reasons to change the rules to require a simple majority vote on nominees.
“Senate Republicans simply don’t like the consumer protections Congressman Watt was nominated to develop and implement,” Reid said during a speech on the Senate floor.
Watt, a lawyer, has served in Congress since 1992, representing a district that includes the second-largest concentration of the banking industry next to the New York district that contains Wall Street, according to his website.
To contact the reporter on this story: Clea Benson in Washington at cbenson20@bloomberg.net
To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net
Sunday night, again. No news.... I keep checking because I think one of these Sunday nights in the next two years will be amazing.....
Knowing what we know about the other side of the ideology spectrum, it may not be in our best interests to have some guy handing out 10,000 bucks to every underwater homeowner that chose to buy a house. Of course the argument will be: "The taxpayers saved Fannie and Freddie, they have a duty to do the taxpayers bidding". Of course he won't say it in the confirmation hearing.
Watt may use the entities to further his and the progressive agenda at the expense of both shareholders and then taxpayers. The damage will be difficult to prove, though.
These are still corporations with a duty to pay back the treasury(which I argue they have done) and then pay shareholders (including the gov't 79.9 unexercised stake) the profits after bonds are paid.
The treasury (and by extension, Watt) will say that they are upholding the terms of conservatorship while plundering if possible. Maybe the CEO's will stand up and say that they won't do his bidding because it violates c-ship principles. If that happens, things will get interesting.
It is evident that Watt has no shareholder interests in mind. That is why the r-pubs won't let them vote on him.
Just my thoughts. In any event, they may argue in court for a non-biased conservator to protect their interests. It would not surprise me. It also wouldn't surprise me if the judge granted such a request while the litigation is ongoing.
Thanks for the post. If this number can get even lower before Watt gets going, it should help. He will damage shareholder interests like Taint said IMO. It may help the court case if he does the opposite of DeMarco and doesn't Conserve and Preserve.(and starts doing a bunch of loan forgiveness) More difficult to prove in court, though.....
Without DeMarco, we might not be seeing as much in earnings as have.
They could easily break it into 4, 6 or even 8 entities using the same technology, platform(electronically) and release them. They may do it in the end to promote competition. Funny thing is SLM is pretty much a monopoly.
They just like the cash cow like the seeking alpha article said. They would rather milk it and take a chance in court. They probably figure they can settle if things start looking awful.
file a complaint on a bad print(or a mistake trade that got cancelled)?
it is not a regulated market. There are no rules to the trading in these like the NYSE/NASDAQ/AMEX.
Trying to file a complaint just wastes everyones' time. Including yours.....
The SEC will respond but you won't hear anything for months (and it won't matter)
The firm will just say: There are not rules that certain fills are due.
You have to be more specific. For instance:
If you bought one of the highest grade Honus Wagner cards in existence, you would have done well. If you had went "all in" on 1990 Donruss unopened wax boxes, you wouldn't have done so well.
You could also say something like:
This is feeling more like my SLV purchase on April 26, 2011....
Or my Enron buy in November 2001.
Worldcom in January, 2002.....
or
This is like my herbalife distributorship "investment" that is currently sitting in my garage.
Like my Fantastic gym I bought on the infomercial last month.
I think it is all/all depends on a court battle unless/until they can come up with a settlement where everyone is in a win/win situation.
I am sure he made an honest 8-10 bagger. Nothing wrong with being a capitalist. He has the most sensible/pragmatic mind for capital and capitalism. He knows that they might put him in charge since he did AIG. He is no dummy.
In fact, don't be surprised if Ackman and Berkowitz suggest him as a disinterested leader for the re-organization/re-cap like AIG.
you just need to know that this is trading in an unregulated market. There could actually be trades @ 10 bucks a share and no fill for you.
they don't owe you a fill. If you get one, that would be amazing, though.
Yes, I was attempting humor.
they are researching by asking "carl the janitor" if you are due a fill on an unregulated bulletin board stock.
good luck.
Watch at 1:13:20 it is truly beautiful. You see how contentious Millstein and Corker are toward one another with strong opinions. I think they respect each other but Corker seems to think he is "the smarter guy"
http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.LiveStream
Millstein then got cut off.
As if making money from doing the "right thing" is evil inherently. Millstein obviously now wants to make the argument for doing the right thing without additional gains.
Best thing I have seen all day.
at 1:23:00 is pretty good, too. He is saying "why do a full wipe out?" "it is crazy!"
Millstein is the one with the most knowledge and experience. He is almost saying "if you guys don't do a capital raise now, you may not be able to do it later" Warner and Zandi then agree that the timing should be now for private capital. (at around 1:27:00-1:30:00) then 1:31:00 Millstein agrees that private capital is ready now to invest.
Any links to the hearing?
he was saying "if FNMA/FMCC go up 4 fold, the common shareholders still wouldn't make as much as the gov't since they own 4x as much in terms of the warrants"
He didn't go deep into his thesis.
He just wasn't going to talk about it in specifics at this point.
that he is on the same side as the gov't since they own warrants for 80% of the company. He wants every stakeholder(including homeowners) to benefit.
he is a "you catch more bees with honey than vinegar"
10-12 EDT today. millstein is testifying before congress with two other folks.
I don't know who had the plan. I read it on the YMB way back when. It was one of you guys who posted it. It made sense.
On another note:
The take down and accumulation was apparent yesterday to anyone following this closely. I think the hedge funds were trying to shake retail investors out yesterday. Not that the price can't go to 7.
There is so little float that this is going to be volatile both ways until resolution.
Thoughts on this? I have been reading tea leaves all my life. On the press release rejecting the Berkowitz proposal, they did not say they wouldn't release them in a sale. They said releasing it as one entity was risky. They may be re-visiting the idea of breaking it up into 12-20 pieces like 'ma bell in the 80's. No guarantee. Stricter capital requirements. More oversight. More competition since it is smaller. Use the new common securitization model. If one fails, ok. Maybe they are given regions(like the AT&T breakup), maybe not. AT&T is a public utility.
I couldn't figure out how to undo the underline part of the whole thing. The bold parts allude to it below.
Any other thoughts?
Here is the text from the article:
Recently, Miami-based equity fund manager Fairholme Capital Management LLC’s plan to recapitalize Freddie Mac (FMCC) and Fannie Mae (FNMA) was rejected by the White House. The National Economic Council Director Gene Sperling stated that recapitalization would create two new ‘too big to fail’ financial institutions.[/u]
Last week, Fairholme had announced its intention to acquire the insurance businesses of these two Government Sponsored Enterprises (GSEs) – Freddie Mac and Fannie Mae – through exchange of equities worth $52 billion. Fairholme is the largest stakeholder of preferred shares in these two GSEs.
This recapitalization plan would have resolved the uncertainty related to the future of Freddie Mac and Fannie Mae and freed them from government control. However, any proposal to recapitalize these GSEs requires government approval.
Freddie Mac and Fannie Mae, that own or guarantee nearly 67% of all the U.S. residential loans, were on the brink of collapse in 2008. The U.S. government bailed out the companies by taking approximately 80% stakes in both. Though an aggregate of $188 billion of capital was infused in these GSEs, the major part of it has been returned to the government in the form of dividends.
Additionally, if Freddie Mac and Fannie Mae were recapitalized, they would have likely dominated the mortgage market and possessed economies of scale. All these would restrict the entry of new firms in the market.
The government is against such a duopoly and wants to build a stronger mortgage market with scope for healthy competition among firms. Further, the government intends to restructure the entire housing mortgage market through housing finance reforms.
The Trifecta is usually a big payoff and refers to picking the first second and third place horse (or dog) in a horse or dog race.
many times, a longshot(or two, or three) will be in the mix making the payoff even bigger. Saying Superfecta, still has no cache.....
Quinela and exacta don't sound cool either compared to "the trifecta"
Even the basketball sports announcers use it I can hear Bill Raftery saying "he hits the free throw to complete the trifecta"
As you can see, sometimes it just means 3(or 3 points)
Looks like 18-24 months until we start knowing the likely outcome. I don't think a court has ever ruled for taking assets with no compensation. I don't know if a court can/will/has ever ruled that the gov't can take intangible assets(ie common stock) w/o a shareholder vote of some kind. I understand emminent domain(like a railroad track being laid thru you living room. I have never seen anything with common stock of a company. They may argue it is "vital" but the litigants can say "you want to wind it down and have others do guarantees, how vital is it?" What about FHA, GNMA, etc....?
the argument that it has no value is now gone, IMPO.
The only real precedent we have is the railroads in the Woodrow Wilson days. They were willingly allow to leave conservatorship. When it happened, the investors who bought the stock at pennies on the dollar became extremely wealthy. Wilson didn't care. It was the right thing to do. They weren't insolvent they just had zero direction and Wilson needed them working together for the war effort from what I have read on it. Also.... It looks like Congress wanted to take control but Wilson spun 'em out just like he took control. Treasury could do the same(with fnma/fmcc) at any time on the prez's direction, IMO. Don't be surprised if this is part of the case(using a past precedent and saying that this was the expectation of how c-ship works, that they would be released once ok again by treasury)
From Google:
Congress attempted to correct these shortcomings in the Erdman Act, passed in 1898.[2] The Act likewise provided for voluntary arbitration, but made any award issued by the panel binding and enforceable in federal court. It also outlawed discrimination against employees for union activities, prohibited "yellow dog contracts" (in which an employee agrees not to join a union while employed), and required both sides to maintain the status quo during any arbitration proceedings and for three months after an award was issued. The arbitration procedures were rarely used. A successor statute, the Newlands Act of 1913, which created the Board of Mediation, proved to be more effective,[3] but was largely superseded when the federal government nationalized the railroads in 1917. (See United States Railroad Administration.)
The Adamson Act, passed in 1916, provided workers with an eight hour day, at the same daily wage they had received previously for a ten hour day, and required time and a half pay for overtime work.[4] Another law passed in the same year gave President Woodrow Wilson the power to "take possession of and assume control of any system of transportation" for transportation of troops and war material.[5]
Wilson exercised that authority on December 26, 1917.[6] While Congress considered nationalizing the railroads on a permanent basis after World War I, the Wilson administration announced that it was returning the railroad system to its owners. Congress tried to preserve, on the other hand, the most successful features of the federal wartime administration, the adjustment boards, by creating a Railroad Labor Board (RLB) with the power to issue non-binding proposals for the resolution of labor disputes, as part of the Esch–Cummins Act (Transportation Act of 1920).
The RLB soon destroyed whatever moral authority its decisions might have had in a series of decisions. In 1921 it ordered a twelve percent reduction in employees' wages, which the railroads were quick to implement. The following year, when shop employees of the railroads launched a national strike, the RLB issued a declaration that purported to outlaw the strike; the Department of Justice then obtained an injunction that carried out that declaration. From that point forward railway unions refused to have anything to do with the RLB.
This Friday morning from 10-12 EDT. I posted it this morning but it might be buried already....
correction to the correction.... last night @ 11:05:29. I included links to the congressional hearing website and the site that describes the Cali guy....
The post says "jim" in it.
here is a copy of the post:
There is only one reason to have Jim Millstein at a senate hearing next friday (scheduled for 10-12 EDT on 11-22).
We all know his opinion and his steps out of conservator-ship. The pols all know, too. Great way for them to all say "wow, great idea!!" when he says the exact same stuff as he has said previously. The other guy says the gov't needs to support housing....
http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=43c24d50-cb8c-4aff-8bed-7f1ab8038f18
http://www.usnews.com/debate-club/should-the-federal-government-provide-support-to-the-mortgage-market/letting-mortgage-markets-collapse-is-worse-than-bailing-them-out
It is cool that the hearing is during market hours. This story is getting so hot CNBC may televise it. I wouldn't be surprised....
I agree with the point that no lawyer that has looked at the "takings" part of this has publicly backed it saying that it is legal.
In obama care, liberal attorneys said it was legal. With this, no one(lib or con) has said that it is. I think NYU is one of the most diverse law places. At their symposium, they all agreed that it wasn't legal.
Just so tough depending on a court (even if you know it is correct)
I personally still believe the affordable care act is unconstitutional. Now if they forced everyone to pay a higher income and said that everyone now would get a subsidy (depending on income), it would have been constitutional.
I still think that ruling was crazy.
The GM ruling on the bondholders(against them) was crazy, too. at least they got some money....
thanks for the post. It is all going to get interesting.
Thanks for the post. excellent
I thought since they were very quiet, it was possible they were thinking of making a deal.
Typical stubbornness of the Obama administration. We know it isn't constitutional. Putting something this cut and dried in front of a court is a wholly different thing. Given that Ted Olsen is the attorney, here, I still think they will win. Ted is probably advising every move they make.
Funny how they basically say:
We took the money for public coffers without a shareholder vote(no compensation for taking the assets), we will continue to take the money, too. It is legal because we say so. let's battle.
Luckily, the strongest wording doesn't come from a politician. Maybe they are working behind the scenes. I doubt it, though. Batkid is way more important.....
The quote is from an analyst....
Jaret Seiberg, an analyst in Washington for Guggenheim Securities LLC, said government officials and lawmakers are unlikely to even discuss a deal with private investors until a court rules on that suit.
“Either the government is still owed $187 billion or the government has been repaid,” he said. “I don’t see how you cut a deal until that question is solved.” ""
You never know how a court will rule, though.
There is only one reason to have Jim Millstein at a senate hearing next friday (scheduled for 10-12 EDT on 11-22).
We all know his opinion and his steps out of conservator-ship. The pols all know, too. Great way for them to all say "wow, great idea!!" when he says the exact same stuff as he has said previously. The other guy says the gov't needs to support housing....
http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=43c24d50-cb8c-4aff-8bed-7f1ab8038f18
http://www.usnews.com/debate-club/should-the-federal-government-provide-support-to-the-mortgage-market/letting-mortgage-markets-collapse-is-worse-than-bailing-them-out
that is why on a spec play you only put 10% of your net worth in it. If it works, you can retire. If it doesn't(AKA it goes to zero), you have to work an extra 6 months to a year.....
if your cost basis is 2 bucks on 50 dollar preferreds and they ultimately pay out 3 bucks, you made 50% on your failure...
we all know and understand all of this(including you....)
hard to hold on no matter how small the bet % wise when the figures(percentage wise and total investment size) get bigger than the investor has ever seen.
when it gets to be more than half of a portfolio, it gets psychologically difficult.
They say in investing, the hardest thing is "holding on"
It is too psychologically rewarding to book gains.