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Exactly.
Exactly. Three....of the 55 or so.
Don't let the fact that it's mostly republicans supporting the notion of a GSE "wind down" intrude upon your silly attempt at wit.
It's actually more fair to say "where are the free market fundamentalists now that a handful of republicans want to take over and destroy shareholder value"? Where did those libertarians go now?
So wrong are you.
First of all, let's say the company makes $20 billion per year. With an 8 times PE (market average), it would have a $160 billion market cap. This means it's about a $32 to $40 stock without dilution by the Feds, and a $6.50 to $8 stock with full dilution.
The Feds are never going to convert for political reasons. If they convert, they have to take all of the bad derivatives that FNMA swallowed as well as a lot of debts, and put those on the books. Sorry, but I don't know of any politician wanting to put a trillion dollars of liabilities on the government's books.
The stock is worth $15 - $20 with the dilution risk baked in.
If you think that this Congress can kill Fannie Mae before the midterm election campaigns turn DC into a ghost town (e.g. August), you are kidding yourself.
Even Crappo, Corker, and Warner know that their bill has zero chance of getting passed before the midterms.
There will be a new congress. There might not even be a Senator Warner next year. So much for the "bipartisan" hype they love using to describe this latest incarnation of the Corker Warner fraud on the markets.
Spoke with a couple friends on K Street. They say FNMA is simply unkillable. Too much of our economy rests on the shoulders. Ultimately, their best hope is break it into smaller pieces. But even then, nobody wants to take a chance when it comes to the housing market.
Anyone notice a pattern over the past year? Stock moves up....Senator Corker chimes in an hurts the stock. Stock moves up.....Corker has a new bill and hurts the stock......stock flies up....oh look, it's that crook Bob Corker again, deflating the stock.
Smart money is not leaving this stock for long. They may sell and buy back after the lull, but in the end, FNMA will be here long after Bob Corker has left the Hill for his cushy K street post.
No, that's my point. The outstanding shares will more than double. Look, if the govt exercises warrants, it will be new issue of stock, not from outstanding float. That means massive dilution.
It would take a about 1.4 billion or so (off the top of my head) new shares of stock to be issued by FNMA to the government to allow them to
Own a 80% stake. Those shares won't be coming out of the hands of current owners. Think about it.
At any rate, 25$ isn't too shabby.
I'm long, but there is a mistake in the math here.
If the govt converts their warrants for 79.9% of stock, it would mean about a billion or so new shares of stock would be outstanding. That would mean outstanding shares would be in excess of 2.1 billion or thereabouts.
All things being the same, however, it would make for a share price of approximately $25 in such a scenario.
Yeah, apparently just mentioning racism is now off limits. We are all supposed to stop talking about it, as though it never affects any policy making, ever.
I am? Or you disagree with my opinion?
You took offense because for some reason you thought I was talking about you. Ask your own self why your conscience is guilty. I have no idea.
Nothing is more humorous than seeing racists get offended for being described as what they are.
If you think entitlement hostility doesn't involve racism, you are kidding yourself. This country had no issue with socialism when it was all white. It wasn't until the color of the country started changing that people became more and more upset with the idea of a "free lunch" for the downtrodden.
If you think Lyndon Johnson pushed welfare to grab votes, then why did he push the civil rights act knowing it would cost the democratic party tw South for generations-- which it has?
Lyndon Johnson believed in welfare, and if it had the side benefit of strengthening the party, all the better. But by no means was he blatantly passing it for party gains. If they only cared about that, the civil rights act wouldn't have been pushed. He lost the South-- and all the better for our country, in my view.
BofA will come out of this good no matter what happens. The banks own the government.
What a bunch of unfounded conspiracy theory junk. Let's face it, both parties are involved in policy making that is bankrupting the middle class. Both have their reasons.
One side does it because they are owned by extremely wealthy interests that don't want to pay a penny for some black kid to go to school, and the other side wants to make government larger to keep itself in business.
We are in the crossfire of two political parties that are totally eating us alive.
The corker bill wants to set up a quasi governmental company that is controlled by the banks. (humorously, they call this private enterprise. Who cares if something is private when it's concocted out of thin air by government without competition? But I digress...)
It's a win / win for the banks no matter what happens.
The hit on Fannie Mae was premeditated. It was political as much as it was profit oriented. Go look at which party Fannie Mae used to spend all of its lobbying money on. And then look at how little they can now spend on lobbying. (opensecrets.org)
And then ask yourself, do the republicans have something to gain from keeping them tied up for as long as possible? Yes, they take money out of the democratic national
Committee. Of course they do.
Do the Dena have anything to gain from keeping Fannie Mae tied up right now? Yes, they can milk the cash register and use Fannie Mae as a tax revenue stream to fund government.
They all gain by keeping Fannie down now. But it won't last forever.
I agree with this. This is exactly what will happen.
They must keep the game going as long as they can. Pretend like they are shuffling papers around while they skim the register for as long as they can. But deep down, Fannie cannot be killed.
It is the backbone of housing. This is a long term play. Buy now and just hold it in your retirement account.
He is being specifically questioned, but he isn't answering specifically. Watt is a Congressman. He has served on boards for decades. He knows how these things work. He can't be too specific or he will alienate someone, and he must, must, must make the republicans feel comfortable because he has a few things that they just don't like or worry about.
Thus, he must talk about privatizing housing, blah blah blah. It's nonsense, we all know it's nonsense. The housing market isn't going full private any time soon. But the republicans who vote for or against him have to sell it to their constituents. As long as he lies to them enough, they can blame him for lying to them, when we all know, even the reddest of the republicans don't believe housing can be fully privatized without doing harm to the economy.
So it's basically a dog and pony shoe. Come lie to us, Mr Watt. Come lie so we can vote for you, and say we did out job.
At the end of the day, Watt is a congressman from Charlotte NC. The headquarters of Bank of America. Dont you think BofA likes it when Fannie purchases their loans so that they can go out and loan more money? Dont you think BofA loves the corporate welfare backstop? Don't you think it gives them liquidity to make even more loans and therefore more money, while outsourcing risk?
Let's face it, these politicians aren't killing Freddie or Fannie, but they sure would love us to think they might so they can keep skimming tw registers for as long as they can while everyone is distracted.
I mentioned down below that it's very hard to glean meaning from Watt's testimony. He is trying to get confirmed by a filibuster crazed senate where just one senator can keep him waiting indefinitely for confirmation.
With that, he has to go out of his way to be so broad that everyone thinks he is on their side. This is more a result of how broken our senate is, than a result of watt a liar, although he could be, for all we know.
Watt isn't saying much. He is saying everything and nothing at all.
He uses the terms stakeholder precisely because it is vague enough to make everyone feel comfortable. Had he said "creditors" the hedge funds would have lost their minds and pressured their bought and paid for senators. Had he said preferred shareholders and creditors, he would have heard from Ralph Nader and all huge pensions that still own Fannie Mae stock. By saying stakeholders, he is basically saying anyone with an interest in Fannie mAe. This is wide enough to include employees and third party contracts. That's how wide and broad he is casting his net.
I don't need to google it, I'm a corporate law attorney. Thanks though.
Exactly. A stakeholder can include equity holders (e.g shareholders, including common).
Stakeholder business model? Please enlighten me on what you mean by this.
A stakeholder is a broad term that could include equity right holders just as easily as creditors or hybrid preferred shareholders.
I think you are parsing too far.
Watt is trying to get confirmed by a filibuster crazed Senate where one person could hold up his confirmation with a simple phone call to a clerk.
He has to say he supports "winding down" but the term "winding down" is so broad, you could drive a
big rig through it.
Winding down could mean converting stock into a new entity. It could also mean stock buy back. It
could mean so many things. Not all of them are bad for shareholders but yea, some could be potentially harmful.
The good news is-- Fannie Mae is the goose laying golden eggs right now. Who in their right mind will kill a goose laying golden eggs? Not even free market fundamentalists or budget zealots are that stupid.
Bump!
You are talking out of your arse. You either don't understand, or are deceiving.
This is a publicly traded company that is in conservatorship. Not receivership, conservatorship. The conservator is a government agency.
This doesn't make the company owned by the government, it means the government is managing some top level matters, for now, until the company is strong enough to be released or until the government has sufficiently taken their pound of flesh.
But make no mistake, it cannot be destroyed, because the conservator isn't allowed to liquidate unless conditions mandate. And the conditions are fantastic now.
It's a matter of time before its released from conservatorship. Could be weeks, months, or years, but the day will come. And when it happens, this is a 45$ stock, even after full warrant participation.
Ever try to stop loss when the stock gaps down? (or if shorting, of it gaps up and you want to cover)?
If you think stop losses will save you, you haven't been trading for long. Wait until the price skips your stop-loss by a lot.
See what happens when you stop-loss and the stock gaps up in the morning. It won't process.
Are you kidding? Let's say I play tw stock long risk $10,000, if the stock goes to zero, I'm out $10,000.
Now, say a short shorts $10,000 worth of stock, meaning he sells it now, he might have to buy it back later at $5 or $10 or $40 per share. He would lose about $40,000 if he had to buy back at $5.
How are you talking smack and not knowing this simple point. Shorts risk infinite losses. Longs are limited to the investment.
Why would anyone short this stock. The risk for heavy losses is so apparent. They could wake up to a Fannie Mae out of conservatorship, relisted on the NYSE, all without congress doing a dang thing. The conservator can release the company anytime he feels it's merited. And the NYSE can resist this anyway.
Shorts could sustain crazy damages. When they talk about gambling, it's the shorts who are risking sever losses. All I risk is $1.67 per share. They risk untold damage. It could happen in one gap up. These shorts are insane.
H.R. 2435. Go google it. It basically proposes that Fannie's dividend payments be counted towards paying the government for a "bailout", and once fully repaid, to be returned to the shareholders.
It has about as much chance as getting passed as the corker bill, but my point in bringing it up is simply to tell the people there are things out there that could one day be used as a framework. Won't happen until the next administration. But it will happen.
Who is "they"? There is no conspiracy at play. It's a market.
Give me a break. Lol.
Nothing is holding anything back. It's a market. The market has agreed that 1.72 is a fair price for the stock-- today. This is how it works.
Good luck with that. This thing is inching forward like a pyroclastic flow.
If input him on ignore, I don't get to embarrass him with facts.
Wrong, the shorts gotta break 1.71, 1.70, 1.69, etc. Longs have so much support below. The shorts are running out of wiggle room.
We just got here...
As I read this, I can't help but laugh that the Federal Reserve is basically making detailed housing policy. WTF??