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"Understand about political correctness, but he needn't have waded in. That's not in his jurisdiction. Setting capital standards is in his jurisdiction. And he is moving at that at a snail's pace."
Agree 100%. It is unnecessary distraction Calabria is creating considering that the past FHFA Directors were involved in so many secrecies, deceptions, and unlawful decisions.
Mark Calabria should focus on doing what is right for country, people and economy and that complies with rule of law.
Mark Calabria should look back and watch the interview videos where he expressed opinion without any constraints. If he follows up on what is said in these interviews, nobody can fault him.
"If the senior preferred is capital, Fannie and Freddie are already capitalized and should be released. If it is a loan, it's been overpaid and the overpayment should be returned. Treasury can't have it both ways."
100% correct. One needs to watch 2015 FBN video interview of Calabria with Gas. Calabria makes it very clear that UST and FHFA are violting the laws and UST and FHFA officials should be made answerable in courts.
"If his words aren't in violation of the SEC I dont know what is. One month he says "We'll wipe-out shareholders if need be" and another month he says "shareholders will be heavily diluted".
I cant believe some people say this guy is on our side or want to give him a pass.
He is against all shareholders no matter if there is a letter behind the ticker symbol or not.
"
Mark Calabria has to show himself very tough on shareholders, to quieten or calm all trouble (law) makers and wall street vulture.
"Video doesn't seem nearly as negative as some of the excerpts I've read. I recommend that everyone watch it"
Please post the video link.
"Incorrect.The conservator is a fiduciary. Judge Willett explained it in the ruling about Collins case in the hearing en-banc.
He added that it's a trustee, protector, guardian, preserver. That's the traditional view of a conservator.
It refers to both the enterprises and the Equity holders, as both transferred their powers, rights, etc to the Conservator to use them wisely on their behalf until they are returned."
You are correct. 5-C also ruled that FHFA conservatorship is not very much different than common law conservatorship as compared to DC-C.
"It is up to Treasury to determine how existing shareholders are treated, Calabria said. He reiterated that his focus is on ensuring Fannie and Freddie raise enough capital to survive another downturn."
When FHFA Director makes such a statement, he is making it very difficult for Trump Treasury to play hard balls with shareholders like previous Treasury did.
Obama Treasury is already in legal trouble for the statements made by Tim to hurt shareholders' interests and starting NWS to drain FnF capital.
Treasury as a controlling party under SPSPA has fiduaciary duties to non-controlling minority shareholders. Treasury can not claim immunity under 4617(f) like FHFA. Treasury has to be fully compliant with very broad APA regulations.
"FHFA Director Says Fannie-Freddie Investors Shouldn't Expect Big Windfall - February 25th, 2020, 10:51 AM PST
Federal Housing Finance Agency Director Mark Calabria talks
about the plans to free Fannie Mae and Freddie Mac from U.S.
control. He speaks to Bloomberg's Mike McKee."
One needs to understand political correctness involved in this statement.
How can FHFA director justify releasing FnF and cause a windfall for shareholders?
Would not this please lawless lawmakers and vulture establishment and keep them away from throwing obstacles?
Very good video. Needs to be played in front of every Judge where FnF cases have been filed.
This also need played on a loud speaker in front FHFA office to remind Calabria what he said as a private man.
"Happens all the time with reverse splits and bankruptcies. Granted these companies are not bankrupt but my point to your post is; new/future investors dont always care about what happened to previous shareholders.
"
Investors (especially big and institutional investors) do care about what happened to previous shareholders when Gov robs them violating rule of law.
"I do have to smile at the 100 excuses for 38 months of inaction by DJT
(who not only could do what is right but hurt BO at same time but very simply has not done so - period. Those who think DJT is on our side please explain)
"
HERA is explicitly against wind down of FnF and mandates preserving private corporate status of FnF. But anyway Obama administration did not care about such laws.
DJT administration ended lawless wind down FnF policy of Obama. Probably SM was complacent or had other motives for not doing enough to end conservatorship. That is why White House finally issued Policy executive order replacing SM from driver seat.
Another thing to remember is, Obama administration robbed FnF of all its capital for its welfare programs and this lack capital is delaying the release of FnF from conservatorship.
One needs time to undo all irreparable damage Obama administration did to FnF in their efforts to wind down FnF. Besides It will take up long time to get rid of influence of revolving door wall street bureaucrats and financial media.
BTW Calabria seems to be no big fan of FnF. Even though White House policy directive is very clear about ending Conservatorship, FHFA is slow walking the whole process with its usual top secret agenda. Probably top intelligence agencies are more open and transparent than FHFA. Calabria has never explained the reasons for continuing the conservatorship when the white house policy directive is to end conservatorship ASAP.
"Unsealed documents prove that it was the goal of those responsible to destroy FnF and its shareholders."
FD,
Thanks for the analysis. Obama FHFA and Obama Administration gave all kinds of excuses, created all kinds of obstacles, tried to hide behind all kinds of false narratives to prevent the FnF plaintiffs from seeking justice.
Unfortunately some judges chose to rule in favor of defendants who ignored and violated the laws with intention to destroy private shareholder companies abusing public offices.
In legal matters the intentions are equally important as violations themselves. In FnF situations, the intentions have been very clear even before the conservatorship was imposed.
"Such an unwinding would leave the seniors in place, though, because FnF never had the option to voluntarily pay them down."
Once again this is peddling the same misleading narratives.
Under original SPSPA liquidation preference value changes based on draws and repayments.
Only after third amendment that FnF are forced to pay all their net worth to UST as dividend at the end of each quarter.
But is there any restriction to pay off SPS before end of each quarter?
"But the FHFA has a fiduciary duty to FnF, as you can see from Sweeney documents. Ripping off their shareholders also harms the companies themselves.
In addition, there is the "Implied Covenant of Good Faith and Fair Dealing", which is subject matter before Judge Lamberth.
You keep assuming that the FHFA can do whatever it wants and be in a legal vacuum. That is not true!"
Any conservator's primary duty is to act in the best interest of conservatees as per the well accepted legal and usual meaning of conservator.
However some miscreants in Gov, mischievously interpreted ancillary clauses in HERA so as to mean that Gov Conservator can primarily act in Gov's interest. However some judges also have correctly interpreted this clause to prevent conservator from robbing the conservatees.
5th Circuit ruled that plaintiffs have APA claims against FHFA conservator, affirming that FHFA conservator is in fact a Gov entity. In US no single Gov entity has unchecked powers and all US entities have to comply with some form of APA.
" is SPS loan or equity?"
SPSPA/NWS is a unlawfully structured contract agreement.
US Gov officials including FHFA Director/conservator have officially stated many times that conservatorship is for the benefit of US Gov and not for the benefit of private shareholders.
So if FHFA conservator is considered to be US Gov official , then SPSPA/NWS can not be valid contract agreement because US Gov officials signed agreement with themselves to bankrupt private shareholder companies for the benefit of WS establishments.
So everything unlawful done by conservatorship including signing SPSPA to bankrupt FnF should be declared unlawful and reversed.
Now if US Gov officials impose JPS conversion and dilution of CS, then it will be icing on the cake in terms of lawless conservatorship.
"moelis never went away ... but who knows what final recap plan gonna look like? to my knowledge, only PUBLIC scenarios are those prepared by moelis and nomura. conversion, though (as thoroughly detailed by kthomp) was acknowledged by calabria, phillips, et al. as possible scenario. and don’t forget, moelis is/was hired by “non litigating pref shareholders “ so pretty good indication that some type of conversion is what it takes to settle."
The JPS conversion hypothesis solely hinges on the great hopium that JPS holers are entitled to some sort of damages from Gov and therefore Gov will throw in JPS conversion to appease the JPS holders. One needs get the clear hints from AIG ruling and Judge Sweeney's rulings.
Besides Gov involvement in any conversion or raising capital will only lead to more litigations and congressional investigations. Any damage payment to shareholders will be seen as burden on taxpayers considering that JPS holders acquired JPS for pennies of dollars.
No court will ever award any direct damages to shareholders.
"Based on Commercial Better Efficiency, any Merger would be ideal, but .. . ."
FMCC was created as competition to FNMA and to provide better products and services to public. That is to provide "Commercial Better Efficiency".
We keep on hearing the same vicious propaganda from the same wall street establishment, about duopoly of FnF. Wall street establishment tried to destroy FnF with mafia conservatorship accusing FnF of duopoly. But mafia conservatorship could not destroy FnF.
Now The same wall street establishment is trying to merge FnF crating monopoly. Is there any sense in such self serving arguments?
Which is better duopoly or monopoly?
"Wait And See !!
The World Don't Goes By Our Desires !"
LOL, is not the idea of merger wishful thinking or "their desire"?
Did not the idea of merger was proposed by "Bridge to No where" authors and then ignored by all?
Read the Tim's response on this on his blog.
"They Not Yet Decided, Merger YES or NO !!
That Finally Is Time Consuming !
IMO"
One needs to be bankrupt in ideas to talk about merger when there are so many important thing to accomplish.
There is nothing to decide.
"Other than getting the story in front of people that know zero about this, I'd call that a big nothing burger. Just vague wording, no dates, no true plan, etc. Just more lip service. Common courts!!!!"
Are you expecting FHFA and UST to announce the dates when they are going to end conservatorship in their letter to congress?
It is a significant news that Gov has agreed to support FnF. This was a pre-requisite for ending conservatorship with FnF not fully capitalized.
"I'll believe it when we see it.
Lots of delay delay tactical words mean nothing until action.
Want some solid action rather than more words.
All of this could be done or have been done anytime long time ago.
Hope mnunchie isn't just blown smoke"
You are right but FHFA and SM can not fool the lawmakers especially democratic lawmakers.
"3. Now they tell us we need more capital, while still confiscating it all. Fannie raising money while the goverment robs it all is a bad idea."
The FHFA Directors have done nothing but tell one lie after another lie, commit one abusrdity after another absurdity. It is time to abolish FHFA and move back regulatory authority back to HUD.
FHFA and Hank impose conservatorship on FnF saying that FnF do not have capital. Then FHFA and Hank tell public that conservatorship was imposed because FnF can not serve illiquid markets with their limited capital.
FHFA writes off FnF capital as worthless and then imposes SPSPA to rob their capital.
FHFA lies that FnF are in death spiral but robs FnF capital with NWS so that shareholder do not get anything.
FHFA tells court that conservatorship documents needs to be treated like national security documents, but it was done to hide its lawless conduct.
FnF are insurance companies but FHFA directors want to impose Bank like capital requirements to burden the companies/public and benefit loan sharks.
FHFA Directors have lost their credibility and can not be trusted.
"wow
I am stunned Mnuchin actually spoke and said consent decree is coming sooner than later.
This is bigly news even if it is from the boy who cried wolf 3 years ago. LOL"
Yes this is a significant news because it is UST/FHFA commitment to congress and can not taken lightly.
Besides the democratic leaders seems to be ok with the plan.
"we know Blooperburg has no chance of winning nor his fantasy of nationalizing FNF"
Requires congressional law to nationalize FnF and also requires putting FnF $5T Guarantee liability on national debt.
Mike can not do it alone even if he gets there with very very slim chance.
"Former FHA Commissioner Dave Stevens has weighed in on candidate Mike Bloomberg’s idea to merge Fannie Mae and Freddie Mac into one: “One thing’s for sure: If Bloomberg starts looking like the front-runner, good luck trying to put out stock offerings on Fannie and Freddie.” Stevens is also a former Freddie executive and once headed the Mortgage Bankers Association…"
Bloomberg terminal customers used Mike as a mouse piece. Mike just read out what was shown to him, just like Obama read out what was shown to him in Phoenix.
No Constituent cares about merging FnF or keeping them separate and this has never been a relevant or significant election issue.
Mike has made himself look like a fool with this kind election agenda. Clearly Mike has portrayed himself as mouthpiece of vested wall street interests.
"None. If nationalizing $FNMA is his plan, why would he own any $FNMA? He will take the GSEs for nothing (since they technically qualify for Receivership at this point)."
CC,
LOL, When did it became a law that private companies can be nationalized without compensating the owners?
Or is Mini Mike thinking of becoming a dictator before nationalizing? Nationalizing FnF requires congressional law. This where king obama could not do much.
Mini Mike'e evilberg news tried extensively to bad mouth FnF in support of his wall street customers and but it made no difference.
"BC..., Welcome back...
Your analysis is spot on.
JPS will get par value based upon dividend yield .. so may actually trade higher than par, won't be converted and could be "redeemed" or repurchased in the market.
The upside for JPS is limited.
The upside for Common is unlimited - not infinite but could be a multiple of 40-50x current price. (Price...not value)"
jeddiemack,
Thanks, Appreciate your validation.
"Buying common shares is mostly betting against these billionaires. Good luck
"
Under previous crony leaderships, it was never good to own JPS or CS, because wind down would have wiped out both JPS and CS.
Under current leadership, there is no wind down and FnF will return to their private corporate status. JPS will get near par value. The conversion of JPS to common is never going to happen.
FnF will be allowed to buy back the warrants because that is the only way to go forward without destabilizing the markets. Why would any administration wants to take any risks and for what gains?
These are probable steps going forward.
1. Continue capitalizing FnF with the retained capital.
2. Announce capital rules based on insurance industry standards
3. Announce SPS has been fully paid back and return excess payments. Allow FnF to buy back warrants.
4. Continue SPS credit line with new market based terms.
4. Release and Relist with consent decree
5. Continue to build capital with retained capital and if necessary from incremental SPO over many years.
6. End consent decree when all conditions are met.
7. Redeem JPS as per contract terms.
"Prefers are the most stubborn investor in the world! Let it go and buy commons! Time is running out!! Life is good"
Prfeds thought FnF are similar to other financially distressed companies where Wall street debtors will easily wipe out the common holders.
But FnF are US Gov public policy companies and Gov will never allow any private entities to control FnF. Besides FnF are not financially distressed companies.
"Boooooooooooooooom ! SHE SPIT the BIT ! RUNNING !
(I'm GOOOOOD at THIS ! )
"
LOL, still LOL.
"you would never have found REPS supporting the FDR legacy GSEs"
Current GSEs are privately funded but serving public policy goals without getting paid.
"the FED - I thought worked on interest rates and the like
TARP for example was 100% Treasury - I believe
While in the background - foreground - the FED reduces interest rates - sends in money and buys bonds and the like - providing strong support to the economy"
Donotunderstand,
You have to read to understand sordid history of Fed. Fed is another legacy independent Gov agency far worse than FHFA in terms of accountability to elected Gov and people.
Fed is mostly controlled by private banks even though some may counter saying that private Banks also control the Federal, State, county and City Govs. Fed as Gov agency should be subject to same accountability standards as any other Gov agencies.
"Jay Powell Obviously knows the GSEs are a YUGE PART
and integral to the "Entire Financial System" -"
Is not this a Fed hypocrisy?
Is not Federal reserve system a way to bailout banks when banks screw themselves?
"Note that the BOD laughs at the litigant Joshua Angel in a reply, stating that it seems that he comes from other planet and the conservatorships don't exist."
It does not matter whether it is the companies or BOD or conservator who are sued. Ultimately the people who are controlling the companies answer to all the lawsuits. As for as BOD or conservator, it is one and the same.
Stevie and his WS team tried their usual games, but now he does not talk anything after White EO.
It was typing mistake:
white house executive order.
"Cat man is messed up, he thinks u can keep caps on profits or not release and control or make his dictatorial threats and expect anyone to buy in. It will be 45million wasted.
"
Catman is working under White house policy direction. When a WH wants something done, it wants it done yesterday. So catman can not test the patience of Trump. Catman is already late by few months.
Stevie and his WS team tried their usual games, but now he does not talk anything after White EO.
"May be it comes in June-July"
Good Guess. There are no valid reasons to continue conservatorship once the White house isued EO and then accepted UST, HUD, FHFA policy framework.
FnF can be released right now keeping everything same and it will be big and bold step in the right direction.
It is important to release FnF from conservatorship and list them on major stock exchanges as a confidence building measure for raising capital. One can NOT expect investors to invest big money in FnF immediately after release.
"QUOTE from today's article:
“Hiring a financial advisor is a significant milestone toward ending the conservatorships of the Enterprises,” said FHFA Director Mark Calabria. “The next major milestone for FHFA is the re-proposal of the capital rule, which will happen in the near future.”"
May be, as the day to end conservatorship comes closer, FHFA and UST will say less about FnF and talk in vague terms.
May be the end of conservatorship will come sooner than expected.
"Gov loaned $180 billion and received over $300 billion equaling a net profit for Treasury of over $120 billion. Can’t raise capital with the PSPA liquidation preference and the NWS, not to mention nullifying the warrants."
Gov loaned about $140B over a period of time. $187B includes accumulated interest. So Gov has earned a net return of more than $160B so far.
During Bush and Obama administrations, FHFA and Gov bureaucrats violated every law and used very mob trick to bankrupt FnF - the private shareholder companies. Thanks to Trump administration for respecting rule of law and constitution and White house EO to start winding down conservatorship.
"I would like Timothy Geithner tried,convicted, and thrown in jail for a long time!
"
Not just Tim but also all public and private actors who conspired and used public office to destroy nationally important private shareholders companies for their own benefit.
BTW FnF are nationally important public policy institutions which underpin the housing economy and national economy. So it is important to know the truth to prevent such future misuse of public office by public and private actors.