the price is the price is the price
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Maloni will let you down easy tomorrow in his blog. Throw in the towel and then buy you an ice cream cone, wipe away your tears, and tell you "we had a good run kid". You'll get em next time, but you gotta let this one go.
I'm letting you down the hard way.
Either way, the truth hurts, real bad.
The path forward for an investor is a 3 step process
1. Sell shares for whatever you can get
2. Get on knees in prayer position
3. Thank God that you got more than $0.00 and that you live to see another day
Many forget that these companies have 30 year contingent liabilities on their trillions in MBS. Right now US Treasury is saying, okay, no need to hold capital, we'll cover that. Given this outstanding guarantee it is very difficult for shareholders to argue that they have any residual claim. Especially common s/h given that there is still $180 billion in Sr. Pref along w/ those pesky Jr. Pref's that trade at only 15 cents on the dollar.
I have the spread trade on Long FNMAS / short FNMA
It's a race to zero for both securities, but they are so far away from parity right now that there is a ton of money to be made on the spread.
Sorry fellas, all future Washington and Vegas trips are cancelled. Find a new dream, dreamer.
The path forward for an investor is a 3 step process
1. Sell shares for whatever you can get
2. Get on knees in prayer position
3. Thank God that you got more than $0.00 and that you live to see another day
Many forget that these companies have 30 year contingent liabilities on their trillions in MBS. Right now US Treasury is saying, okay, no need to hold capital, we'll cover that. Given this outstanding guarantee it is very difficult for shareholders to argue that they have any residual claim. Especially common s/h given that there is still $180 billion in Sr. Pref along w/ those pesky Jr. Pref's that trade at only 15 cents on the dollar.
I have the spread trade on Long FNMAS / short FNMA
It's a race to zero for both securities, but they are so far away from parity right now that there is a ton of money to be made on the spread.
My research now has FNMA and FMCC as perfect shorts. There is no value as the plans in Washington have come to be as follows
1. New Fannie and Freddie business will be merged with FHA and run as always w/ FHFA as regulator.
2. Old Fannie and Freddie books of business will run off over time and continue as they have been. All risk and net earnings going to taxpayers.
3. The common securitization platform will distributed to each of the 10 federal home loan banks. The 10 CSPs will be capitalized and run just as FHLBs are currently.
Old shareholders get zero. It will be an easy and smooth transition.
FNMA stock should go up $2.25 tomorrow
If this thing is worth $10 in 30 days if Hank G wins.
Then we have a binary option that is either worth $0 or $7.50 in 30 days. Current $2.50 price is not part of this option. If probability is a 30% chance of winning.
30% x $7.50 = $2.25.
FNMA stock should go up $2.25 tomorrow.
Trivia Question: How Many Fixed Rate Mortgages will Banks Hold on Balance Sheet?
In a rising and volatile interest rate environment?
Answer: Zero
Look forward to investor conference calls with WFC and BAC this quarter end. It will be a lot of fun and will show that the mortgage markets do not function without the TBA market and Fannie MBS.
They will explain how they now only hold 3/1 ARMs on balance sheet, for the best credits that have deposits and other relationship accounts.
Another reason Corker and Warner so wanted the timing of their bill passage to come sooner. They are dead with rising rates and a long term bond bear market.
The fair weather bankers true colors will be bright and shiny as credit spreads widen.
Right now, the Fed and regulators are actually recommending that banks package and sell seasoned 15 and 30 yr mortgages that they are holding --- to none other than Fannie and Freddie. They want them to get them off their balance sheets. There is a basic math problem for community banks when the Fed Funds rate goes back to normal at 4% if they are holding 4% 30 year mortgages. Their entire mortgage portfolios go under, and you have a S&L crisis all over again. The only survivors would be large diversified banks like JPM with other sources of earnings.
This is going to get real fun as rates rise.
Peter Wallison Admitted to Long-Term Care Dementia Facility
This morning in Maryland. Ed Pinto has retired with him as well.
Vatican Supports Fannie & Freddie
big news, ask Maloni about political power, this is big
http://www.uscatholic.org/blog/201506/human-right-have-home-30168
https://nonprofitquarterly.org/policysocial-context/26265-the-national-housing-trust-fund-on-the-congressional-cutting-block-unless-advocates-act.html
http://www.businessinsider.com/worlds-biggest-landowners-2011-3#3-pope-benedict-13
Need State Attorney Generals to Step Up
hopefully on behalf of state pension funds. State AGs have been the best at challenging OCare and Immigration.
Just a thought. Contact your AG and local pension funds - see if they have an interest.
Given the end of Federalism and overreach by White House, state AGs are pissed and doing anything they can to defend turf. Obviously those guys/gals get more bang on immigration but if state funds have significant holdings and local RE values stand to plummet, they will take an interest.
http://www.governing.com/topics/politics/gov-attorneys-general-lawsuits-policymaking.html
New work being done by Dems in Senate and House for community bank relief. Obviously, there is no stealth GSE legislation attached.
http://www.housingwire.com/articles/34098-democrats-push-new-bill-allowing-community-banks-to-exceed-qm-rule
Mike Stegman is not working on Common Securitization Platform
In his new role on the Economic Council, his focus is Veteran's housing. That's the word inside the Beltway.
https://www.ncsha.org/blog/michael-stegman-become-president-s-top-housing-advisor
Dave Stevens best friend Dennis Hastert
busted for having extra curricular wrestling and Jerry Sandusky showers.
How was Dave involved? Filming, just watching?
Maloni tells all in this week's blog.
Great Publicity! Bank Layoffs Starting Up at JPM, USB
Seems big banks want to lobby for Fannie and Freddie now.
Great public showing of the fickle nature of banking.
All in, a great publicity stunt for Fan and Fred. Who keeps credit flowing? Bank balance sheets do not during margin squeeze, credit events, regulatory pressures, and increased capital requirements.
Gotta think guys like Corker are picking up the phone, calling Minneapolis and Dimon and saying "What the ---- are you doing?" How can I help you when you're throwing families out on the street again?
although banks will probably use the moment to push for regulatory & capital easing.
they'll be hard pressed to explain how an end to Fan Fred is good, especially when GDP dropped 0.7% in the 1st quarter.
important people most people don't realize. when a depositer has over $250K at a bank, the bank automatically creates a new sub account so that everything is insured be FDIC/govt. A depositer w/ $2 million will have 8 accounts. So, 100% of deposits are insured.
Notice that there were no stories during the crisis of Grandma or Corporation XYZ losing their next egg when Indymac or Po Dunk Bank of Omaha failed.
Point is that fed govt stands behind banking system 100% and then some.
<blockquote class="twitter-tweet" lang="en"><p lang="en" dir="ltr">Toomey amendment, requires capital for 2 of world's largest financial cos-- it may or may not see a vote today. <a href="http://t.co/7ZUKfRkOuI">pic.twitter.com/7ZUKfRkOuI</a></p>— Rob Zimmer (@RobTVDC) <a href="https://twitter.com/RobTVDC/status/601351904933912576">May 21, 2015</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
Link to Catbirdseat's breakfast
Pat Toomey Amendment to Shelby Bill to Stop Sweep
Repub from PA is supposed to propose end to sweep and capital build as an amendment tomorrow at the mark-up.
Parrot Zandi Recognize Fannie Will Increase G-fees to Cover Treasury Usury
I take this paper as saying that whatever interest rates and fees that US govt charges Frannie - they will be passed onto consumers.
Bottom line, whatever the arrangement in the privatized system, a minimum Return on Equity demanded will be 10%.
Astonishing. Somebody needs to pass along to the WSJ. No, the companies will not operate at zero or negative profits. They will raise prices, and so will any bank or private mortgage insurer.
http://www.urban.org/sites/default/files/2000229-privatizing-fannie-and-freddie.pdf
Shelby says his bill is a Talking Point
http://video.foxnews.com/v/4241222927001/does-amtrak-need-the-additional-1b-funding-the-wh-wants/?playlist_id=3386055101001#sp=show-clips
Not a serious bill
The Important Fact that Everyone Forgets!!
If Goldman, BofA, Citi or JP Morgan wanted to and could earn a profit issuing a Private Label Security, they would do it.
They already have their own plaforms and very sophistacted trading desks. They have IT departments staffed with PHD's in computer science with budgets of $1 billion ++ per year. They do not need a CSP. How do you think they all issued PLS before 2007?
What they need is for Fannie and Freddie to be shut down so there is no competition. This would allow them to increase mortgage rates and g-fees. Kill the middle class and bring home ownership levels down........Fannie and Freddie are not going to be shut down because it would blow up residential real estate and therefore the world economy.
The CSP is smoke and mirrors.
RF HBAN FITB BBT trading flat means Shelby DOA
Those are the banks between 50 and 500 billion in assets most likely 2 benefit
Also, look at really small banks, CIZN BXS RNST SNV. All trading w/ market or underperforming.
Smarter bigger money than you or I knows Shelby dead.
cheers.
White House has come out against the bill now. Says they will work w/ Democrats to defeat it.
shelby bill just died
Corker is saying he doesn't want to work on it because it is overly partisan and going nowhere.
I picture the chart moving to $3 over next 3 days. maybe faster
Must read for investors that challenge original conservatorship terms. Answers the question of what happened in 2008.
Gives Fannie a bit better odds than Freddie in those regards, but blatant nationalization described by Hank. TG for 5th amendment!
http://abcnews.go.com/GMA/Books/book-excerpt-brink-henry-paulson-jr/story?id=9713451&singlePage=true
some guys like Demarco enjoy prison
because it's the only place they can get laid
it's heaven 4 a guy like demarco gettin torn up
Sherrod Brown took a Cleveland Steamer on Shelby's bill
next
worked on one of those container homes.
Using a blow torch to cut holes for the windows and A/C is scary.
The metal heats up if you're living in direct sunlight with no trees in the trailer park and you die of dehydration. Like living in an oven.
Great way to kill off the poor.
Safer to live in a tent or cardboard box.
Berkshire Hathaway lobbying to put the bottom 99% in Clayton Homes trailer parks. As part of their home packages, you get a 20% interest rate, zero principal paydown, and semi-annual sewage removal.
100% manufactured in USA with free internet and cell service that is monitered by the NSA.
For more information, go to youtube and search Fema Concentration Camps
Okay, never mind, bi-polar episode, Buy Back In
Should breakout today over $3 with lots of room to run to $4
Why Everyone Should Sell and Go Short Fannie Today
http://www.americanbanker.com/bankthink/why-we-need-the-government-to-stay-put-in-the-housing-market-1074199-1.html
Why We Need the Government to Stay Put in the Housing Market
JOSEPH J. MURIN
MAY 7, 2015 12:00pm ET
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Like it or not, the mortgage industry has one of the biggest impacts of any industry upon America's economy, political landscape and even its social well-being.
The American dream of homeownership should not and cannot be allowed to die because of the dark period that brought predatory practices into the mainstream. Housing is every bit as important to America as the national transportation system or healthcare system; it's integral to the country's welfare.
Discussion of reforming Fannie Mae and Freddie Mac and the possibility of a privately-dominated mortgage-backed securities market is rampant. But housing affects too many Americans to simply cast out government involvement, especially where the government-sponsored entities and Ginnie Mae are concerned.
The mortgage industry does not require a tremendous overhaul, as some suggest. Such an undertaking could in fact have damaging and wide-ranging consequences. Instead, industry professionals should seek to tweak and fine-tune the way that real estate transactions are facilitated.
Right now, the pendulum is swinging again between risk mitigation (and tighter available credit) and affordable homeownership. This has happened for decades and will happen again. In an effort to prevent another economic crash because of events in the real estate and mortgage industry, the states and federal government have enacted a sweeping range of regulatory and legislative reforms.
Although there are opinions to the contrary, the value of homeownership remains high. From a public policy standpoint, higher rates of homeownership tend to indicate political, economic and even geopolitical stability. Homeowners are more likely to be producers in the economic, social and political realms. They tend to be people willing to take ownership and responsibility within their communities. This is a broad-stroke statement, but one that remains true.
Nothing has changed the fact that housing remains a unique and vital element of the U.S. economy. The way homes are built might change but people will always need places to live, whether in single family or multi-family residences. Many will continue to seek the benefits of ownership, rather than rent. Unlike the core products of some industries, the core product of the housing industry is incredibly unlikely to ever become obsolete.
Purchasing a home is generally the largest transaction a consumer will ever undertake, and it is a worthy endeavor. Often, a home is the owner's greatest asset. Default and foreclosure damage not only the homeowner, but the community as well, so it's easy to see why the government has such an active role in the mortgage industry. It touches almost every American in some way or another and impacts industries that rely upon housing or mortgage-based dollars in support of housing, such as construction, technology and market securities.
As the mortgage and real estate industry goes, so goes much of the economy. Almost 300,000 Americans are gainfully employed by the mortgage and real estate industry, either directly or through businesses that take in the majority of their revenue from real estate-related activity.
Although there can and should be debates about how the industry is regulated and overseen, it's undeniable that the whole of the industry merits comprehensive oversight. Currently, that structure is in place and it can and will prevent a collapse similar to that of 2008 in the future.
There is no reasonable argument for lower levels of government participation in the housing industry. It is the backstop of government support (implicit with the GSEs and explicit with Ginnie Mae) that helps to keep the American dream alive, even in difficult times.
Joseph J. Murin is currently vice chairman of Chrysalis Holdings and is a former president of Ginnie Mae.
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Everyone here should sell and go short tomorrow
since you dont understand that the derivatives losses offset unrealized gains in the investment portfolio
I'm making my shares available to borrow tomorrow. Should be enough for all of you to take short positions.
kind of shocking to see people who are seemingly obsessed with FnF on this board, Ihub and in the newsmedia completely not understand how the investment portfolio and derivatives work.
we went over it last quarter, and the companies go over it in their earnings releases.
Feel like Sisyphus sometimes.
Wish Maloni and Tim Howard would publish something and go medieval on you turds.
Mel Just Needs to Stop the Sweep Senate's Shelby Signals Fannie-Freddie Fix Unlikely This Year
BLOOMBERG NEWS
MAR 25, 2015 11:55am ET
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The leader of the Senate Banking Committee said he'd rather leave Fannie Mae and Freddie Mac in U.S. conservatorship than pass a bill that includes explicit government support for the housing market.
The comments Wednesday from Richard Shelby, an Alabama Republican, were the clearest indication yet that Congress probably will leave the mortgage-finance companies under federal control for at least the next two years as lawmakers struggle to agree on the structure of a new housing-finance system.
Shelby, speaking at a U.S. Chamber of Commerce conference in Washington, said he opposes replacing Fannie Mae and Freddie Mac with a system that includes a government guarantee for mortgages.
"My God, we might as well leave them where they are if we're going to do that," he said.
Shelby opposed a bipartisan Senate bill proposed last year that would have replaced Fannie Mae and Freddie Mac with government insurers taking losses behind private investors. That measure never got a vote of the full Senate, and now it's up to Shelby to come up with an alternative, if any.
Shelby said he has priorities ahead of dealing with Fannie Mae and Freddie Mac, the largest piece of unfinished business remaining from the government response to the financial crisis. Fannie Mae and Freddie Mac, which were bailed out by taxpayers, have since returned to profitability and currently back almost than half of outstanding home loans. The companies buy mortgages from banks and package them into guaranteed securities.
"I don't know if we would do anything in the area of" Fannie Mae and Freddie Mac,'' Shelby said. "We'll see what's doable. I don't want to do something to make it worse than it is."
The Great Fakeout Day of 2015
That's today. Highly positive news yesterday evening. Reversal now.
http://www.investopedia.com/terms/f/fakeout.asp
My hope is that memo reveals Paulson was Fannie's pimp
Offered free services during the crisis to Johns such as Nomura just to keep things "lubricated" in the markets.
Something to further help the takings cases.
$1 billion from Nomura is change, esp since it is swept to pay UST bills
Then the relevant question in the case is, was Fannie wearing panties?
ie, were there protections from being violated, or did she provide easy access to any chump off the street? If wearing panties, how hard was it to get them off?
Fannie's Board is Back in Business! Is Conservatorship Thawing or Ending?
http://archive.fast-edgar.com//20150317/AA2VA222H222L2U2222322328L4CZ2225272/
On March 12, 2015 the Board of Directors of Fannie Mae adopted performance goals for 2015, which we refer to as the 2015 Board of Directors’ goals. These goals are described below. A principal element of compensation for each of our officers who is identified as an “executive officer” in our Annual Report on Form 10-K for the year ended December 31, 2014 other than our Chief Executive Officer is deferred salary, a portion of which is subject to reduction, or “at-risk,” based on performance. One half of our executives’ at-risk deferred salary is subject to reduction based on corporate performance and the other half is subject to reduction based on individual performance. Performance against the 2015 Board of Directors’ goals will be a factor considered in determining the individual performance of our executives for purposes of the individual performance-based component of their 2015 at-risk deferred salary.
2015 Board of Directors Goals
1.
Sustain and grow partnerships with lenders and other key housing stakeholders.
2.
Serve the market by providing products and services that help people own, rent, or stay in their homes.
3.
Build sustainable financial performance.
4.
Maintain a disciplined risk, control, and compliance environment.
5.
Improve the company’s capabilities, infrastructure, and efficiency to prepare for a more competitive future.
6.
Develop our workforce so that it is ready to meet the business challenges of today and into the future.
http://www.treasury.gov/press-center/press-releases/Pages/jl9987.aspx
stegman admitted treasury directs fHFA and Watt
Stegman "Pulls-out" from Fannie meeting tomorrow
Lawyers say he "screwed" the Sweeney case last time he spoke at the Goldman conference.
Big Buying coming this afternoon Beta!