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Letting GSE shares trade reveals enormous corruption. The scale of thievery can start to be understood when one understands what allowing the shares to trade truly means in terms of the companies' balance sheets and also the nation's balance sheet, as well as hundreds of years of business law. Allowing the shares to trade is in fact what let the TBTF "have their cake and eat it to" after the '08 crisis. Allowing the shares to trade was a way of trapping certain firms and people who had (if they hadn't been trapped) the resourced and wherewithal to fight, sue and win against the entire illegal plan. It has also served to keep an illusion going that nothing illegal was done. It has also prevented the GSEs' liabilities from transferring to the gvt's balance sheet. It put the companies' legal status in limbo and allowed room for debate about what truly happened. It allowed the GSEs to remain in existence as zombie entities controlled by TBTF-owned political hacks so that the TBTF had a place into which they could dump their toxic assets. None of that could've happened if the shares weren't allowed to keep trading. There is zero "economic benefit" to owning these shares now, bc there is zero shareholder say in the decision making process. BUT in order for the TBTB plan to have worked, some amount of common equity must have been preserved and must've remained on the GSEs' balance sheet. I could go on, but really, the fact that the shares were allowed to keep being traded is so profound a detail, it's incredible how much that fact alone reveals about the overall TBTF plan and its execution.
Do you know where TBTF settlement$ ultimately went? Obama made sure that money was donated to a few really radical leftist political action organizations. One in NYC for example, where the people running it call themselves marxists. I am only stating facts. I hope that is understood. I'm not trying to start a political debate. It's just horrible that the settlement money did not go to the GSEs themselves.
That's the whole idea. Weak payout intended. Goal is to cover up / distract from what really went down, how incredibly illegal it was, and how totally corrupt the whole Wall St. / DC complex that executed it really is. If they can ram into existence a "solution" like Moelis, it'll enable the politicians to shout from the hilltops about what great heroes they themselves are. It'll enable the TBTF to shift the conversation and attention from what they did, etc. it'll keep the shareholder just barely happy enough to not cause a riot.
This will go beyond 2020. TBTF delaying congress so that they'll have a chance for the next president to finally execute their bidding.
I'd almost forgotten about Sweeney! As closely as I follow FNMA, she's been so inactive that she went from
And everyday topic to a forgotten one.
Totally agree with Howard on this. 50k foot view: it's evidence of how effective propaganda is. It's evidence that what I've mentioned a few times on this board is probably also true: this case involves some high level accounting details that probably no judge in the country understands, let alone political activists disguised and appointed as judges.
The "narrative" is what we all have to be vigilant in recognizing, at the very least. That's because it is "the narrative", on whatever topic, that is destroying this country. The masses don't look beyond the headlines. So they just easily believe whatever "narrative" is being pushed, on whatever issue. Be wary of propaganda, everyone! Once propaganda establishes itself at a key "critical mass" level, it is nearly impossible to correct the record.
And once 2 classes of shares exist, with one new class of newly issued shares diluting the previously existing commons, the two types will become co-mingled. And then I think any judge would be hesitant to attempt to try to re-separate the old and new shares.
That problem could be avoided if the new shares are actually delineated as a new "class", similar to, say Google's two classes of shares. But I doubt any new shares would be issued as a separate class like that.
Your conclusion only addresses share price. Those points are very interesting though! You describe a conundrum the crooked gvt put itself in by its own 2008 and 2012 actions; mainly, how could the gvt have protected itself from such post-c-ship lawsuits? The only way i can think of is by making sure the c-ship does indeed lead to receivership!
And if r-ship is no longer on the table, then there will potentially be a slew of shareholder lawsuits as soon as shareholder rights are returned to shareholders, as you describe. So, has this been possibly one of the reasons there has been no policy solution or legislative solution so far?
And btw, once two classes of shares are created, with some newly issued shared diluting the old ones, if they are not dilineated
Where's Assange when we need him? 2 things this nation needs to see are 1) all the super secret GSE documents. And 2) all the very top-level super secret strategy documents of EACH political party! Not bc they'd give us any info about their GSE stances, but bc they would reveal what each party truly thinks of us. Imagine seeing some strategy document that says "ok keep saying (x phrase) to this particular demographic, bc they always fall for it. But for the other demographic, say (y phrase) bc they are suckers for emotional stuff, and for..."
It would be SO refreshing to see the truth.
All the exceptions are so vaguely worded, it really means there is no limit on capital distributions.
Interesting. Could you point me to more info about this, or at least to a previous post where this might have been initially discussed or described?
After release, maybe TBTF will acquire FnF.
If their charters are removed, I'd think the TBTF might be very tempted to buy one or both of FnF. Wouldn't that make sense for them?
Huge brand name power and technical expertise. The TBTF could acquire, then shut down the CSP, which is basically the system that gives away the GSEs' secret sauce to competitors. That system was forced onto the GSEs by gvt goons trying to wind down the GSEs.
Expert propaganda. Notice that the writer has not acknowledged that the shareholders actually OWN the GSEs and thus have property rights.
Just notice the subtlety of these expert propagandists when they say things like this phrase from that article "it is important that policy makers decide how to handle the shareholders..." (Paraphrasing there). What does that mean? Parse that sentence and SO many questions arise. Is he saying that policymakers should decide and not courts? And what does "handle the shareholders" mean? Handle their dismissal? Handle their property rights? Handle their unpopular hedge fund representatives? That phrase is an example of how manipulators like lawyers and politicians use soft language in order to persuade. The reader is supposed to come away being more in tune with "what's best for the nation" according to the genius "policy makers" rather than, say, upholding the law and enforcing property rights. The reader is supposed to come away being more emotionally / passively on the side of whomever is speaking so reasonably calmly, and rationally and thoughtful as this writer, and not taking time to think about the law. The writer is making it SEEM like he is giving due attention to both sides, when he is not.
I fear this CSP will mean end of GSEs. Some congressman will propose eliminating the GSEs and replacing them simply w the CSP LLC or something. And Wall St. Will love it, and will pay the rest of their DC goons to vote for that plan.
Hm, #2 is easiest argument, but 3-5 will all be argued in court. Gvt will claim it's in the public's interest.
Agreed. It's very scary that way.
Seems entirely reasonable. But Courts are not.
Perfectly true
Is Berkowitz still pursuing lawsuit? Is there any indication that he's giving up on his lawsuit?
He's much more informed than we are. I wonder what he knows that caused him to reduce his GSE holdings so much. It doesn't appear that he bought any commons.
What proposals out there would've been worst for Bruce's GSE pfd holdings? Maybe his reduction of those holdings means that that proposal is the most likely one to be signed into law.
So, probably no administrative fix by Treasury.
GREAT idea! Maybe wikileaks can release the sealed documents.
Prepare for massive propaganda when Congress addresses GSEs.
Tweet that to him
Great summary. Excellent post. Boiled it down succinctly.
Sadly, investors would still flock to pour their money into the "new" GSEs.
So exceedingly relieved to see you back, Rick! We missed you!
Is he a friend?
Please clarify. Are you saying that the gvt *is* willing to take the 5Trillion onto its balance sheet? And that, since all gvt debt is being monetized (by means of printing $), then the 5Trillion amount wouldn't be viewed by the gvt as a big problem?
You and I agree, but institutional money is so huge it might not agree. It might simply put that small chance of a 100% loss into their models and be fine with it. Even a 100% loss on an institution's GSE replacement stock would be a drop in the ocean for them. Plus, they have lobbying money to be able to influence gvt to not screw them. Sure the gvt might be able to screw today's common shareholders, who have zero lobbying power. But institutional money would have lobbying influence to make sure they don't get screwed.
I'm not sure investors would stay away. The world is starving for yield. There are still negative real interest rates in some major nations. And Chinese are still hoping to get their money out of China. In such an environment, I unfortunately think that even some institutional investors would flock to invest in the GSEs (or their replacement entities) even if the gvt ends up successfully completing its purely corrupt play here and screwing existing common shareholders. I just have a hard time believing the (yes, seemingly logical) idea that if the gvt succeeds in screwing current common shareholders, then that will scare away potential future investors. All the hype-machine/gvt-media-complex would have to say to convince capital to come to the new replacement entities is something like, "the extraordinary measures we took to protect taxpayers required a unique series of deals between Treasury and the entities, a unique series of legal settlements, and a unique series of supportive regulations and policies to get us through the last 10 yrs. With those problems behind us now, and with housing finance wonderfully reformed by congress, we can close the book on what happened and move forward knowing that it cannot happen again, due to the geniuses in Congress who passed this wonderful housing reform legislation." And Wall St institutions will be begging to invest again into the GSEs' replacements. There's no honor among thieves. Institutions will just say, "eh, we lost this round (as current common holders) and the gvt jackals won. But we still need to be in this space so let's just take our lumps here, and get in on the IPO of the replacement entities and move on." And the institutions will just build a small gvt risk premium into their models and invest anyway.
Again: Congressmen can legally Insider-trade. They write the laws to give themselves this special privilege. When there was a minor stink raised about this in I think '12, an election year, congress passed a law dis-allowing themselves from trading on insider (congressionally privileged) information. But then the election happened, ad a few months later, in early '13, they passed a new law allowing themselves to do insider trading again.
Now do we all understand how thoroughly corrupt our gvt is? Do you see what's going on here? Congressmen routinely propose bills that affect certain companies, then they trade based on the reaction to their OWN proposal! Then, when their proposal dies or advances, they trade on THAT reaction too. This partly explains the series of circus-like half-witted, half-promoted proposals over the last recent years by people like Corker, who is a known stock trader and a known shorter of the GSEs.
Ugh. Old news again! I Fell for it. Thanks for sending the links. If 8 bills were in the works today, i'd be surprised.
Says GOP's introducing EIGHT bills to kill GSEs. Does anyone have any more info on these bills?
Very interesting point
Pass the Convention of States. Force term limits.
I still could use clarification on sell/buy label. I'm not an expert on the inner mechanics of market transactions. Can someone here please point me to a good resource or link that explains how to tell if a transaction is really more a sell or a buy?
The reason I doubt whether a transaction is really a "buy" or "sell" even when it appears obvious is that market makers exist and can behave in such a way that they are "absorbing" a lot of, say, "sell" orders. Sure, for every transaction there's a buyer and a seller. But if one of those sides, say the buyer, is only the market maker, then that kinda clouds the answer to the question "who's buying?" An entity is buying in that case, yes, but for purposes that are different than a conventional investor's purposes for buying would be. So can we really just look at it and still call it a "buy"? I'm not so sure that makes sense. Is there any way to tell if a transaction was purchased (or sold) by a market maker and not a non-market making investor?
Lack of GSE lobbying has been deadly. We've seen how the TBTF and others use the media to tell huge lies about the GSEs. Well, if the GSEs were able to lobby, the false narrative that's out there would've been squashed long ago, and the various bills to kill the GSEs would've gone nowhere. It's like yet another way to see how influential lobbying is when you're on the side that's been silenced.
How do people here feel about UtilityModel? If that's the result, and we get significantly diluted, we get dilution and a cap on profits. Is anyone here happy about that?
What pps would you expect in that situation, say, 1 yr after it's all said and done?
I screen shotted that. Good find. I wasn't aware Kudlow had commented positively about the GSE shareholders at all since that segment in which he had Rosner as a guest on his show. This April 2017 date on this Kudlow tweet is long after that original segment, if I recall correctly. And April 2017 is recent enough to think Kudlow might still be "with" Rosner on this issue.