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Dear IHOB, I mean YankGhost, welcome back (... just kidding and, seriously, welcome back)
Many believe that congressional reform is dead and judicial success is unlikely so, by elimination, that leaves administrative reform. However, if that were to occur, wouldn't the solution need to be attractive enough to the major plaintiffs to end the litigation - especially when its getting closer (though maybe not close) to reaching SCOTUS? Otherwise, any attempts to recapitalize and release the twins might be very problematic. Not expecting $100 pps for commons, but not expecting $2 pps either.
POTUS could reverse (or at least stop) the sweep in a blink, signaling that the theft was wrong and that a more comprehensive solution will take more time. But since he hasn't done that, I think he is more beholden to the TBTF banks than shareholders of two GSE's, especially while the courts give him cover (so far). If this had only been going on for a few years, I might agree with you, but not after 10. BTW, congrats on your switch to Freddie.
Since POTUS seems dedicated to undoing everything Obama did as fast as possible, and POTUS has now declared that HE is the law, why hasn't he acted unilaterally to reverse the sweep? The reason/excuse of waiting for Congress is BS, so what's the hold up? To busy? Nope, he could do it with an EO, or maybe less. Folks, I'm not so sure POTUS is in on our side - and IF that's true - I wouldn't be surprised if POTUS ignored SCOTUS should they ever rule in our favor.
BTW, I remain skeptical about the P's claiming that 100% isn't a rate with regard to dividend preference under Delaware (and VA) law. What would constitute a permissible rate ... 5% ... 25% ... 75% ... 99% ... 99.999999999999%??? I'll be amazed if the court tries to pick a rate somewhere below 100% that is acceptable.
Cmdr, this has been a rough few months ... any update from the hon. judge steele? TIA
Buy and hold (or grow old? ...) I have always believed that the FnF backstory is too complicated and/or full of fake news for a resolution to occur without a court decision to break the log jam. By pure coincidence, I believe that is consistent with the recent conclusion drawn by the real Tim Howard. I'm not optimistic about the courts, but I'm not resigned to hopelessness either. I've waited almost 10 years and seen my pre-cship shares dwindle from $6 to sub $2. At the time, I didn't know I was marrying FnF, but now its death till we part. And I do hope those that orchestrated this theft get what they deserve. Yes, becoming more bitter, but not totally beaten, yet. Thanks for letting me vent. cheers
Cmdr, took a long break from the board but saw this post when I came back today. As always, thanks for sharing. Gotta love anyone who hates to give up (if there on your side :) cheers
Totally agree. The courts have already said that motive doesn't matter as long as the conservator is acting within the bounds of a conservator, and the infamous "may" opened that door wide open. cheers
I think our only hope for a FAIR settlement is through the courts but would be extremely happy to see otherwise. cheers
Depending on the sequence of any RRR announcements, I agree that it could be very difficult to determine how much the recap dilution adversely affects the pps. Since the recap dilution will be needed to replace the capital stolen under the NWS - and said capital is NOT needed to grow the business (as there is ample positive cash flow and debt markets for that), I feel that, no matter what, the recap shares will be detrimental, even if that impact is offset by other positive developments. Always appreciate your input. cheers
I think recap dilution could cause common to go below $12, maybe well below depending on the capital requirement and pps at time of recap.
I wonder what's happening with the quick peak process? Given that the courts haven't cared that the NWS was based on a proven lie, the P's will have to find some pretty damming evidence to pierce the anti-injunction clause - and what could be that much worse than the lies that have already been exposed? I still believe the court cases provide a bit of leverage for any settlement, but I also think common well fare worse than Ackman's projections which I don't think took into account recap dilution. cheers
clark, as a fellow member of the "realist" club, I also view this as a gamble. Since court rulings can be appealed forever, a favorable ruling won't solve this, but it could give us some leverage IF we have a seat at the negotiating table. cheers
kthomp, that's the way I see it as well. great explanation. cheers
bull, if anything needs improving, its probably my understanding and not your explanation! I do see your point, but I thought the scenario being explored was converting the NWS into a loan? If that is the case, we go back in time and (pretending this all happened at once) record the total draws as a liability and the cash received from the draws as an asset. As you pay back the loan, the liability (incl. interest) gets reduced and your cash balance reflects the payments. In the end, our net worth declines by the amount of interest paid (i.e. that exceeds the loan proceeds) - but that difference would be offset to the extent we have repaid more than the loan - and that amount would increase our net worth. I think that's just basic accounting but may not be the scenario you are talking about. cheers
Kthomp, thanks for the post. I agree that paying off the "loan" would not increase the net worth as assets (cash) and liabilities (the loan") have been reduced equally. However, one could make the argument that the MARKET CAP of f&F should increase by a significant, or possibly, equal amount. However, market cap is NOT paid in capital which will be needed to recapitalize the companies - but the increased market cap will make it a LOT less dilutive to do so. cheers
if you are saying GSEs were not to blame, I totally agree - but with the 10% dividend rate, then the 100% dividend rate (NWS), non-repayable draws, 79.9% warrants and dilution that will be needed for recap (IF the GSEs are released), one would think that the GSEs were responsible for the crash of 1929 ... cheers
gov't is running huge deficits and its about to get much worse with tax "reform". they need every penny they can get. warrants are an easy steal.
In order for that to happen, I believe that would require the gov't to forgo the additional windfall from the warrants AND a complete disregard for the lawsuits, including whatever might be discovered in the quick peak.
Trump and Mnuchin will want to be remembered as the financial geniuses who finally fixed the GSEs and housing problem while enriching the tax payers (aka "little guys"). No way they pass on the warrants. cheers
My (cheap imitation) crystal ball says ... the huge gov't deficits (and WS greed) created a giant vacuum that has been sucking FnF dry - and that will get MUCH, MUCH worse if the "Cut, Cut, Cut Tax Act" is passed which could increase the national debt by $1.5 trillion. Money is thicker than blood, so the WH and Congress will keep the NWS, exercise the warrants and dilute FnF further IF a recap occurs. Only a favorable court ruling on the NWS can put a dent in that. I also expect Congress to play games to obscure the soon-to-be-depleted capital, buying them more time to keep stealing. That is why two of the largest and most profitable companies in the world are trading around 3 bucks. Trump's administration didn't create this mess, but their desperation to look successful, especially financially, WILL result in the exercise of the warrants - and Trump will proclaim he, in fact, SAVED the little guy (taxpayer)!! Since the gov't has already been caught lying about the "death spiral" - with no real impact on the pps - the last 3,500 docs will have to contain a NEW smoking gun that unequivocally exposes the fraud behind the CSHIP ITSELF, and I think that is unlikely. So, short of a miracle, expect many more delays - but many more trading opportunities for those of you good enough to do that. Probably my last post for a while (hey, I heard that :), so hope everyone has a safe and enjoyable holiday season! *~<]{:)}}}}} cheers
One perspective/theory ... FnF are huge, profitable and PUBLIC companies. Therefore, you cannot expect anyone in any decision-making capacity (read WH and administration) to really give any MEANINGFUL insight into where this all going in ADVANCE. First, the impact on the stock price could be enormous, which could complicate/undermine any plans AND could create circumstances that trigger a whole new round of laws suits. Any meaningful court decision could have a similar impact. So, given these risks - and as long as there are public shareholders - I suspect we will not hear ANYTHING definitive FROM DECISION MAKERS until the "solution" is announced. That announcement may likely not be the last word on the matter, but it should tell us roughly how much shareholders will be screwed further (or, miraculously, respected).cheers
yes, it is absolutely the same narrative created by the TBTF gang who fund most of the seats on the hill. so those who take the $ keep their seats to do the bidding of the banks AND get the use of FnF's $ to fund their pet projects and save the tax payers. can you say trifecta?!?! honestly, it is one of the slickest scams EVER. still hoping there is a smoking gun in the yet to be released docs - though losing some faith that will help because the courts take forever. cheers
as long as they "hate us" they can defend the continued "necessity" for the cship which, without a court victory, allows the NWS to fund their addiction to our money every quarter. its the perfect cover for the largest taking in history. cheers
rek, thanks, and, yes, this doesn't guarantee anything ... EXCEPT that the issue is NOT dead and it adds, however slightly, to the list of things that might need to be considered for a settlement. And that, in my book, is very good news. cheers
Since we've already lost on this issue, having another shot at it, with the SCOTUS no less, is FAR better than no filing at all. Having some probability of success, no matter how small and/or far away, is significantly better than none.
This finally gets to the crux (or should I say horcrux!) of the matter. I don't know the timeline for this approach but, regardless, I am thrilled to see the filing. cheers
rek, can you cite one reputable source that provides any reason(s) the warrants won't/can't be exercised? I am not aware of any ... though, yes, many believe they are totally unjustified. Again, I'm NOT asking you to repeat your reasons, just looking for any reputable source that concur with you (besides the law suits we know about). thanks and cheers
Harlly, very sorry for your tough news. Wish you the most success with your treatment - and I pray that those controlling the fate of FnF understand that real citizens like yourself have been immeasurably harmed by the theft and delays.
whip, many thanks for posting this. IF there are any smoking guns, hopefully the P's will FINALLY get to see them. BTW, Sweeney is NOT alone in how long each turn of the wheel takes, but she is (almost) alone in steadfastly calling BS on the gov't when we're down for the count. cheers
Yes, I absolutely agree with you and should have noted that in my post. Special interest control law makers on both sides in DC and across the country. It seems that any semblance of moderation only comes from the courts, and they too side with special interest at times in the most critical way (e.g. Citizens United). Still, I think that a favorable court decision is the only way to prevent us from getting totally screwed whenever RRR occurs, as otherwise the gov't will keep the excess NWS, exercise the warrants and further dilute us to recap. Let's hope Trump and Mnuchin like Berkowitz, Ackman and Hindes more than they like WS. cheers
Before you read this, note that I am posting it NOT for political reasons, but rather to demonstrate that the rule of CONSTITUTIONAL law is not as sacred as one might hope under the current administration. And that matters as many believe the NWS (and, possibly, the cship itself) may be the largest taking EVER under the 5th amendment of the Constitution. cheers
One of the unusual things about the Arpaio pardon is that the crime for which Arpaio was convicted isn’t based on a statute. It arises directly from the Constitution. In prior proceedings, federal courts ordered Arpaio to cease a set of unconstitutional racial profiling practices that the U.S. Department of Justice identified as the worst in American history. Arpaio was then convicted of criminal contempt when he refused to comply with those court orders. In other words, Arpaio systematically violated the constitutional rights of large numbers of individuals, and he was then prosecuted and convicted for persisting after the courts told him to stop. So by pardoning him, Trump did not merely forgive an offense against a federal statute: He forgave a refusal to respect rights guaranteed by the Constitution.
Spot on and my approach as well. cheers
I also thought you appropriately qualified your post. The Cmdr exhibits hubris when the "lemmings" don't flock his way, but I was surprised that he jumped on what might have been a positive development. Oh well, rising tensions usually bring out the best and worst in people (and sometimes in the same person!) BTW, I've got family in Denver. Visit them often, though, inexplicably, usually in the winter ... :) cheers
So I thought the Delaware case was totally dependent on the interpretation of the provisions requiring dividends to be made "in relation to" other classes - and that a 100% PSPA dividend failed that requirement (though myself and some others wonder why "100% in relation to zero" is not a valid ratio). IF the dividend ratio is the crux of the matter, it does seem odd that the gov't would introduce the death spiral motive. Is the gov't worried that they are on shaky ground regarding the dividend ratio requirement? If not, why in the world would they introduce the death spiral knowing that evidence exists that seems to totally undermine their fraudulent story? Either I'm missing something very obvious (always a strong possibility) or the gov't may believe that they are in a "dammed if they do, dammed if they don't" position. cheers
Cmdr, what are the obvious holes in the D's arguments that make you so confident? As a layperson, their arguments sound as good as the P's - and maybe stronger? How does the motives/dishonesty of the gov't have anything to do with how dividends are supposed to be declared for different classes of stock? Sorry, I just don't see it - but would love to be wrong. cheers
Letgo and boogie, awesome posts - don't stop - I don't want to come back to reality!!!!!!!!!!!! cheers
BG, awesome call - you totally nailed it! cheers
DNU, I can's see what message your are referring to as it appears to have been deleted (not sure why), but the short answer to your question is that there are too many variables to make an educated guess. The longer response (of limited value) regarding some of the key variables is:
- Sweep: presumably it will be stopped prior to a recap, but how much, if any, of the sweep in excess of the 10% will be returned to FnF (my guess - none will be returned without a court victory)
- Warrants: whether or not the warrants will be exercised will have a big impact on the pps, though some argue that some/most of that impact is already reflected in the price (my guess - some impact of an exercise is reflected, but not sure how much)
- Gov't Guarantee: will there be an explicit gov't guarantee or not, and what fees will FnF have to pay if the guarantee is explicit (I have no idea)
- Required Capital to Recap: this totally depends on all of the above so I have no idea
- Business Model: will FnF be converted into utilities or not? I have no idea
I'm sure there are others but you get the gist of it. Very complicated and highly uncertain overall. cheers
Wood, not sure if you are being sarcastic (doesn't sound like it) but, regardless, I am not challenging at all that he won. He defeated a football team worth of primary challengers and then Hillary in the general election. That said, DJT undeniably pardoned someone who failed to uphold the rule of law, period. That doesn't make DJT special or some kind of monster as other president have done the same - but for folks to hang their hat on a favorable FnF outcome because DJT is a rule of law guys? Well, maybe he is and maybe he isn't. Sadly, as I admitted early, the rule of law stuff is still moot as we haven't won anything that would put US on the side of the law - yet. Still hoping ... cheers
Being from the dreaded realist camp, I must say that the RNC resolution is a stunning document. They even mention those-that-shall-not-be-named (shhh, "shareholders") and that funny little principle called the "rule of law". Holy sea change. Given the Munchkins' latest statement (we expect OUR dividends ... this is a 2018 issue ... etc.), not sure we'll see much in 2017 (except surprise development in the courts?), but 2018 sure seems to be shaping up to be moment of truth. Legacy long 50k shs and looking forward to being released from purgatory before I die. cheers