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LEGAL STANDARD
Plaintiffs' claim for breach of the implied covenant of good faith and fair dealing against Fannie Mae is governed by Delaware law. Therefore, Delaware law specifies that an award of prejudgment interest serves two purposes:
First, it compensates the plaintiffs for the lost of the use of his or her money.
Second, it forces the defendant to relinquish any benefit that it has received by retaining the plaintiffs' money in the interim.
Only gses have a lot of money.
1. Commercial property crisis
2. Bitcoin and crypto which means nobody will buy Treasury bond.
So last option is to release gses
There are more to know such as plunge protection team or ppt.
Ppt still exist in today market.
Read this link. It tells how ppt was created.
https://due.com/terms/plunge-protection-team-ppt-definition-and-how-it-works/#:~:text=The%20Plunge%20Protection%20Team%20%28PPT%29%20is%20a%20colloquial,of%20U.S%20financial%20markets%2C%20and%20maintaining%20investor%20confidence.
Red or green?
I expect green today
Many people didn't know that Treasury bought shares in Fannie Mae and Freddie Mac.
In July in 2008, Treasury Department got approval from Congress to buy shares of Fannie's and Freddie's stock to support stock price levels and allow the two to continue to raise capital on the private market.
It could happen again due to the unanimous verdicts
The Balance
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US & WORLD ECONOMIES
US ECONOMY
FISCAL POLICY
What Was the Fannie Mae and Freddie Mac Bailout?
By Kimberly Amadeo
Updated on March 31, 2022
Reviewed by
Robert C. Kelly
Fact checked by Aaron Johnson
In This Article
VIEW ALL
In This Article
The Bailout Cost to Taxpayers
Building a House for the Bailout
Fannie and Freddie Debt Offering
HomeStay and HomePossible
Investing in Shares
?
Falling housing prices caused the bailout of Fannie and Freddie. (Photo: David McNew/Getty Images).
The Fannie Mae and Freddie Mac bailout occurred September 6, 2008. The bailout came as the U.S. Treasury Department was authorized to purchase up to $100 billion in preferred stock of the organizations and buy mortgage-backed securities. As a result, Fannie and Freddie were put into conservatorship by the Federal Housing Finance Agency (FHFA).1
The Bailout Cost to Taxpayers
According to an independent economic group, the Shadow Open Market Committee (SOMC), keeping the two agencies afloat cost taxpayers US$187 billion over time as the Treasury paid $116 billion for Fannie and $71 billion for Freddie.
In August 2012 the Treasury decided it would send all Fannie and Freddie profits to their fund rather than simply collecting a 10% dividend. As of 2019, the bailout has been paid back with an additional $58 billion in profit, reported by SOMC. Fannie remitted $147 billion, and Freddie paid $98 billion.23
The Fannie and Freddie bailout was greater than the 1989 saving and loan crisis, which cost the taxpayers $132 billion.4 It was on par with the subsequent 2008 bailout of AIG, which started at $85 billion but grew to $182 billion.5 Both were small potatoes compared to the 2008 $700 billion Troubled Asset Relief Program (TARP) bailout of the U.S. banking system, even though the U.S. Treasury shows only $444 billion of TARP funds were spent as of April 2021.6
The bailout kept Fannie, Freddie, and the American housing market functioning. The government currently has a warrant to buy up to 79.9% of Fannie Mae and Freddie Mac's stock at any time, effectively giving them control of the companies again. They have not, however, executed the warrant, so they are both still private and owned by those who hold their stock. Though, the federal government still holds certain powers over Fannie and Freddie and is able to make decisions regarding how and when money is spent.7
Building a House for the Bailout
Fannie Mae and Freddie Mac were two government-sponsored enterprises (GSE) that bought mortgages from banks, a process known as buying on the secondary market. These purchased loans were then repackaged into mortgage-backed securities (MBS). The MBS were, in turn, sold to large, institutional investors on Wall Street. At times these firms would themselves repackage the mortgages into securities where were sold to smaller investors.
These investments were in great demand because they returned a high-interest income to the investor. Loans continued to be sold, repackaged and resold as banks competed with one another to write more and more mortgage loans to often under- or unqualified buyers. The entire financial system depends on trust. The subprime mortgage crisis decimated it.
Fannie Mae and Freddie Mac remain highly involved in, the secondary market for mortgage-backed securities as they continued to help American families realize the American dream of homeownership. Before the subprime mortgage crisis peaked in 2008, they owned or guaranteed about $5.4 trillion mortgages, or nearly 50%, of all U.S. mortgages, $1.6 trillion of which were subprime mortgages.8 Between 1997 and 2007 the the two entities were invested heavily in risky subprime mortgages, it would eventually capsize them.9 The dream turned into a nightmare and led to the 2008 financial crisis and caused the Great Recession.
The government may have been attempting to avoid taking over the two GSEs, which were only ever supposed to act like private corporations with a government guarantee. However, that set-up was flawed and became a part of the problem because investors had the incorrect view that Fannie and Freddie were back by the U.S. government. Seemingly, with a lack of self-control, Fannie and Freddie took excessive risks to boost their stock prices in the short term, possibly knowing they would be bailed out if their risky practices turned south.10
Fannie and Freddie Debt Offering
Before the subprime meltdown, the two GSEs continued to ratchet up their debt holdings. In August 2007, Fannie Mae announced it would skip a benchmark debt offering for the first time since May 2006.11 Investors rejected even the highly-rated mortgage-backed securities offered by the GSEs. Most investors thought Fannie had enough cash to allow it to wait until the market improved. By November 2007, Fannie declared a $1.4 billion quarterly loss and announced it would seek $500 million in new funds by selling preferred stock.1213 On November 20, 2007 Freddie then disclosed a $2 billion loss, sending its stock price down 29%.1415 In just a month, Freddie's net losses ballooned to $3.1 billion.16
March 19, 2008, federal regulators unwisely agreed to let Fannie and Freddie take on another $200 billion in subprime mortgage debt.17 The two GSEs were desperately trying to raise enough cash to keep themselves solvent. Most people at the time thought the subprime crisis was restricted to real estate and would correct itself soon. Perhaps they didn't realize how derivatives had exported the subprime mortgage defaults throughout the entire financial world. As it turned out, this was another $200 billion the government had to bail out later that year.
March 24, 2008, the Federal Housing Finance Board agreed to let the regional Federal Home Loan Banks take on an extra $100 billion in mortgage-backed securities for the next two years. Fannie and Freddie guaranteed those loans as well.18
In just the first two quarters of 2008, the two GSEs had already lost approximately $5.5 billion.19 Even though their balance sheets were quickly becoming shaky, they continued to take on risky loans. Even four years later, in 2010, 12% of Freddie's investment portfolio could be considered subprime.20 The Federal Reserve agreed to take on $200 billion in bad loans from dealers (such as investment banks) in exchange for Treasury securities.21 Last, but certainly not least, the Fed had already pumped $200 billion into banks through its Term Auction Facility.22 In all, with the passing of the Emergency Economic Stabilization Act of 2008, the federal government eventually agreed to pay over $700 billion to bailout the GSEs taking part in risky subprime mortgages and the failing banks.23
HomeStay Program
In April 2007, Fannie made further commitments to help subprime mortgage holders keep their homes. They developed a new effort called HomeStay. This program gave borrowers ways to get out from under adjustable-rate loans before interest rates reset at a higher level and make monthly payments unaffordable. Unfortunately, it was too little and too late.2425 Unfortunately, it was too little and too late.
Investing in Shares of Fannie and Freddie
In July 2008, U.S. Treasury Secretary Henry Paulson asked Congress to approve a bill allowing the Treasury Department to guarantee as much as $25 billion in subprime mortgages held by Fannie and Freddie. The two GSEs held or guaranteed more than $5 trillion, or half, of the nation's mortgages.262728
The $25 billion guarantee was more to reassure investors. It didn't work for long. Wall Street investors continued to pummel the GSEs stock prices, to the point that they couldn't raise the cash needed to pay off the loan guarantees they held. Wall Street was savvy enough to realize that a $25 billion infusion by the Federal government wasn't going to be enough. Stockholders wanted out before the government nationalized Fannie and Freddie and made their investments worthless.
With the unanimous verdicts, may be this time it will be bigger than $25 billions.
To establish a breach of the implied covenant of good faith and fair dealing in this case,
each class of plaintiffs must prove by a preponderance of the evidence that (1) FHFA's actions in
agreeing to the Net Worth Sweep arbitrarily or unreasonably violated shareholders' objectively
reasonable expectations under the shareholder contracts and (2) as a result, plaintiffs' shares
became less valuable.
Based on number 2, as a result, plaintiffs' shares became less valuable and that is why $612 millions is awarded.
Use your common sense!!
Based on number 2, pps will not be allowed to drop much lower. Pps will only be higher for some reason from unanimous verdicts
BS , stand for Best Structure of reform to meet in modern society i under a new regulatory framework to be completed by bipartisan
Conservatorship started by a president whose name starts with a B.
And conservatorship will end by another president whose name starts with a B also.
Bush started conservatorship.
Biden will transit out of conservatorship.
Together, it's called bipartisan agreement to finish unfinished business.
Quote "Morgan Stanley & Co. LLC
WASHINGTON, DC – June 15, 2020 – Fannie Mae (FNMA/OTCQB) today announced that it has hired Morgan Stanley & Co. LLC as underwriting financial advisor to assist in developing and implementing a plan for recapitalizing the company and responsibly ending its conservatorship."
to assist in developing and implementing a plan for recapitalizing the company and responsibly ending its conservatorship. " It's a plan to end conservatorship which requires a multi years to achieve the goal to end conservatorship. Now is about the right time to end conservatorship.
$1.43 by 1 o'clock
Which commons ?
Republican commons prefer to wait much longer for trump to exit conservatorship.
Democrat commons can not wait any longer. We want an exit from conservatorship right away.
I think Rebecca Chen cause pps to drop.
Here is her article.
https://finance.yahoo.com/news/mortgage-rates-inch-up-but-experts-still-predict-declines-through-2024-170841602.html
Based on the six months chart , pps is moving up at about 65 degree angle , so a 15% drop in commons is not correct.
1. A unanimous verdicts
2. A future drop in interest rate below 6%.
One and two are creating a positive price movement within 65 degree angle in days ahead.
Use your trend to guide you!
By exercising of the warrants , government will own 79.9% of common stocks, this will dilute shareholders.
But how will government exercise the warrant?
How ?
Under an agreement document which is also kept by supreme court, it says that quote " Treasury received the warrant to PURCHASE the 79.9% of common stocks"
The word "to purchase" must be placed following warrant otherwise it will become a different meaning.
Do or did government own warrant already?
Yes
Do or did government own 79.9% stake already?
No
Why ?
Because to own the 79.9% of common stocks then government must exercise the warrant "TO PURCHASE " at 79.9%>
In other words, to exercise warrants to purchase 79.9% is to recapitalized to release from c-ship and then relist to NYSE.
How much will government spend money to buy common stocks in order to exercise the warrant to own 79.9%? It's a lot, in hundreds of billions
That's why dick bove asked us to hold with him , because the price is unusually large.
If commons will not have securities, then why did dick bove ask stockholders to hold with him, becoz, price is unusually large ?
Nar , icba, Whalen , Steven, and dick bove, etc, are they playing the same drum together?
1..Did he switch from preferred to stock that is why he is holding his stock ?
2. If he owns preferred, why didn't he send this message to preferred?
3.. why did he ask stockholders to hold with him?
If he ask stockholders to hold then he already knew but he didn't want to give a complete details.
Does any body remember GameStop (GME) ?
If I tell you , you would not believe me.
Government involved.
Yes it is true.
And you will ask me for a link or proof.
It had been deleted some portion of video.
Did he switch from preferred to stock that is why he is holding his stock ?
I will not say anything.
I hope you understand by yourself
https://twitter.com/Silvereagle1126/status/1743090063159046276?t=uRvKccW44ctazIPLHTwiBA&s=19
You could be right.
Quote "Analyst Dick Bove weighs in - "I am holding on to my stock and I suggest that other holders do the same," Bove wrote. "The prize, if we ever receive it, promises to be unusually large."
Mr. Dick could give us a clue
I agree with you
Read this!!
Is The US Government Investing In Penny Stocks? $700M Could Say Yes
One may think that a near 3 quarters of a billion-dollar government facility would be applicable to major logistics companies. However, YRC held a market value of less than $70 million at the market close on June 30th. It was valued at $1.85 per share; yes, a penny stock. After this news of “expected” receipt of CARES Act funds, YRCW stock exploded to highs of $4.50 during premarket trading on July 1. Shares more than doubled overnight.
According to YRC, here are the specifics of the proposed agreement:
YRCW has entered into an agreement on June 30th under which UST will receive 29.6% fully diluted equity ownership in YRCW (pro forma for dilution from the UST equity issuance), described in further detail below, in connection with the loan from UST to YRCW.
https://pennystocks.com/featured/2020/07/01/us-government-investing-in-penny-stocks-700-m-july-1-2020/?amp
https://investorshub.advfn.com/boards/breakoutboards.aspx
Fnma rised above $1.xx due to a breakout.
This breakout could prove that my reasoning is correct.
When was the last time that we had a breakout?
I think none
Somehow I believe Fannie and Freddie are reconnecting back to their own stock index and let them run for a while before relisting back to NYSE.
I am just guessing. I could be right or I could be wrong.
Show it on stocktwit
Besides monetary and fiscal policies, government ran out of ammunitions to fix the economy in 08. That's why Hank Paulson when to China to ask for help and use China as for a third ammunition to buy shares in Lehman brothers but unsuccessfully China tipped Russia to sell everything.
Since then and that's why CSS is required in order to replace China and other countries.
I am the silver eagle searching for the information through the past and present in order to connect the dots.
Since then and that's why USA and China are at war in economy warfare.
Besides monetary and fiscal policies, government ran out of ammunitions to fix the economy in 08. That's why Hank Paulson when to China to ask for help and use China as for a third ammunition to buy shares in Lehman brothers but unsuccessfully China tipped Russia to sell everything.
In my own opinion, this new market TO-BE-ANNOUCEED required timeline in multi years of operations to provide all earnings results to public
This UMBS can be bought by small retail investors in minimum and in multiple.of $10,000 .
For example!
10000 or 20000 or 30000 so on.
This UMBS will pay yield.
I don't know all the details about how much yield retail investors will get.
Spinning it off to create a new IPO known as utility model.
Green please