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They can release the opinion whenever they want, but I think tomorrow was just added to the calendar VERY RECENTLY.
https://www.supremecourt.gov/
Reasons why it may be prior to May or June:
(1) The SCOTUS tackled many of the issues in Seila Law (Single agency directors that are NOT removable at will by the POTUS, remedies, bulldozers versus scalpels, etc.)
(2) The case has held up major decisions on US Housing Policy by the Executive Branch.
(3) The case has been in their inbox longer than 1 year.
(4) Gives incoming administration knowledge of whether or not they can fire MC at will.
Reasons why it will be in May or June:
(1) There are several cases heard before Collins that need opinions.
(2) Given the complexity and long term implications more thought is required.
(3) More discussion between the Justices may be needed.
(4) Because they feel like it and no one tells them what to do.
Thanks Navy! Don Layton made a good comment that the GSE'S themselves have been unable to tackle some of the issues in Housing, with their highly capable internal people, as they are basically told what to do by FHFA! This is but one of many of the negative side effects of keeping them in "conservatorship" in perpetuity!
Thanks! I think alot of investors who have been in this clusterfock of a trade for the last 12 years have just moved on and think the Government will never remove their boots from the necks of the twins! Hard to believe some people don't think it's a good idea to have plenty of 1st Loss Private Capital in position to absorb losses from $6.7T in MBS! I think FINALLY the MBA, NAR, AND NAHB are on board, but many others are not.
Great points! It seems on the one hand NO RETAINED EARNINGS CAP is a good thing, plus SM opened the door "a wee crack" to a possible exit. But without a favorable ruling from the courts, I don't see any Administration getting rid of the Net Worth Swipe and Warrants (EVEN THOUGH IT IS TOTALLY CONTRARY TO WHAT A CONSERVATOR SHOULD DO IN A CONSERVATORSHIP!). SM just merely kicked the can down the road for the courts or YELLEN to deal with!
One thing seems clear though, AFTER 12+ YEARS OF THE MORTGAGE INDUSTRY TIGHTENING UNDERWRITING AND HOME BUILDERS HESITANT TO BUILD SPEC HOUSING WE ARE APPROACHING A HOUSING SUPPLY CRUNCH.
According to the NAR, we only had 1.9 months supply of housing, the lowest on record since the NAR began calculating this metric in 1999 (6 months supply is equilibrium).
I thought some of Dick Boves BEST STUFF was a historical perspective of how the Government gets involved with Housing once they realize their is a supply crunch (I actually think some of Fred Trumps wealth was created by building middle income housing in nyc WITH AN ASSIST FROM DA GUBMINT WITH INCENTIVES!)
Thus YELLEN, who grew up in the Big Apple and witnessed her admirable father, a medical doctor, treat the working class on their front porch stoop and in his basement office in her neighborhood (and insisted they pay when they can!), IS SYMPATHETIC TO THE MIDDLE CLASS AND SHOULD WANT THE TWINS TO BE RELEASED FROM THE GOVERNMENT BOOT ON THEIR NECK SO THEY CAN GO AND HELP FULFILL THEIR MISSION AND NOT BE CONSTRAINED BY AN OVERLY CONSERVATIVE "CONSERVATOR".
But who knows, nothing is known for sure, and now our best outcome will be for the courts to do the right thing!
I think it's 3% of Total Adjusted Assets (as of 06/30/20 $3.881T, say $4T now):
3% of $4T = $120B
Less $ 20B (Retained earnings)
Less SCOTUS $ 18B
Less 4Q20 $ 5B
Less 1Q&2Q21$ 10B
Equals $ 67B needed to exit?
Do you think it will continue dripping lower until Collins comes out?
I think 4Q20 earnings should be memorable (guessing $4.6B to $6.6B), how long should I keep my powder dry?
I think eventually we will see it, the sp didn't drop precipitously during trading on Friday.
Maybe he should end all of his public appearances with the Bob Barker classic, "Don't forget to neuter your pets!".
Any idea what MC had to say yesterday?
Latest Form 8-K from Fannie Mae:
"Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On January 20, 2021, Ryan A. Zanin accepted an appointment to become the company’s Executive Vice President and Chief Risk Officer,
effective February 1, 2021. Mr. Zanin has over 30 years of experience in financial services and over 20 years of experience in risk
management. Mr. Zanin served as President and CEO of the Restructuring & Strategic Ventures Group at GE Capital from 2015 until his
retirement from General Electric in July 2018. Previously, Mr. Zanin served as Chief Risk Officer of GE Capital from 2010 to 2015 and again
served in that role from November 2016 until his retirement. Before joining GE Capital, Mr. Zanin served as Managing Director and Chief Risk
Officer, International Capital Markets, at Wells Fargo & Company, from 2008 to 2010, and as Chief Risk Officer, Corporate and Investment
Bank at Wachovia Corporation, from 2006 to 2008. Before that, he spent 14 years in leadership roles across Deutsche Bank AG and
Bankers Trust Company.
Mr. Zanin is currently a member of Fannie Mae’s Board of Directors. In connection with his appointment as the company’s Chief Risk Officer,
Mr. Zanin notified the company on January 20, 2021 of his resignation from Fannie Mae’s Board of Directors, effective January 31, 2021."
Okay, because the Government should be able to decide your property rights as only they see fit?
They ALWAYS know what's best right?
It sounds like NLRB is more like one of these multi member run Federal Agencies where the head guy is replaceable by the new POTUS. I don't really know that much about exactly how it is structured to give you an educated answer!
I DO KNOW THAT LABOR RELATIONS BETWEEN MANAGEMENT AND WORKERS HAS CHANGED SUBSTANTIALLY DURING DJT VERSUS BO, so I would imagine that incoming POTUS'S are able to replace the Director of the multiple member board (typically 5 people?) so they have more control over the Federal Agency.
Da Nada! Although she did talk about implicit guarantees and MORE REGULATION of some of these high risk Money Market funds that are tbtf and keep requiring gubmint assistance (see March 2020). She also thinks nonbanks need to be more regulated.
Sheila Barr is scheduled to speak on Bloomberg Radio TODAY @ NOON EST!, I believe.
Notice the 1st statement from the DJT appointed CFPB Resignation letter was how she "supports the Constitutional perogative of the President to appoint senior officials within the government who support the President's priorities, which ensures our government is responsive to the will of the people as expressed in presidential elections."
Classic Unitary Executive Principle!
So you don't think the SCOTUS remanding back to the 5th Circuit to calculate damages for retrospective relief would be a significant remedy?
Isn't it possible that the SCOTUS of the US could conclude, given the governments bad acts over the last 12+ years, let's stop this bogus "Conservatorship" in its tracks?
Jim Parrot, STILL HOPING HIS DREAM OF NATIONALIZATION COMES TO FRUITION:
"Unless, that is, all this winds up being a path to government ownership rather than private
ownership. After all, at the end of this, taxpayers will wind up with an interest in the GSEs equal to close
to half a trillion dollars and warrants on 79.9 percent of their common equity. That is a good deal closer
to government ownership than private ownership, so the next administration could decide that it is
easier, and better policy, to simply convert the well-capitalized GSEs into government-owned utilities.
And this is indeed what several of us have proposed as the best course of policy (Parrott et al. 2016)."
Never in the history of capitalism have I seen one man more responsible for its destruction!
Exactly, the smoking gun, that he is advising JB on housing policy is disturbing!
Given how badly the government has acted here, what kind of conservator TAKES ALL OF ITS WARDS PROFITS INTO PERPETUITY, I wouldn't be surprised if they provide some meaningful retrospective remedy and not solely a prospective remedy!
I don't know, so long as the FHFA is in total control with the 12+ year conservatorship, the Head of the FHFA and US Treasury Secretary can probably do a 5th Amendment if they want.
I am pretty sure it will be a scalpel approach as well!
Jim Parrot, STILL PEDDLING THE DEATH SPIRAL NARRATIVE:"Once it became clear in
2012 that the GSEs could not afford it, it was converted to whatever they could pay, meaning their
profits from one quarter to the next.7"
I think the Justices are wrestling with the issue of how far back are we going to go to invalidate agency actions when those actions were done by an unconstitutionally insulated single member agency head.
I think Justice Kagan asked, "So are you asking us to invalidate every single agency decision from 1994 at the Social Security Administration?"
To which David Thompson responded that not necessarily because of Statute of Limitations and Article III issues, plus he said the court could limit their ruling to FHFA only.
This is kind of the problem, here you have had an unconstitutionally insulated Agency Head at the FHFA since inception in 2008 and which actions are valid and which ones are invalid?
HOW DOES ONE UNSCRAMBLE THE EGG?
Do I hear a bulldozer starting up over at the SCOTUS?
Collins will likely address the SSA issue, how, I am not exactly sure!
Justice Elena Kagan, historically was a law professor at Harvard Law School, I believe at the same time Senator Elizabeth Warren was and I believe they both collaborated on the Dodd Frank Act (CFPB enabling legislation) as well as HERA. I think that's right, but I do know FOR SURE that Justice Kagan wrote quite a bit about Administrative Agency Law and the Unitary Executive Principle!
I posted all this stuff on a slow Saturday here after reading one of her Harvard Law Review articles.
My take is:
(1) She seems to want MORE independence and LESS control of Administrative Agency Heads by the POTUS
(2) She's not a big fan of the Unitary Executive Principle.
(3) She may be naturally defensive when these "Evil Hedge Fund Guys/Evil Banksters" come in and try to hamstring the independence of Administrative Agencies by handing more DIRECT CONTROL to the POTUS and away from the Legislative branch and other actors. Especially since she has vested considerable time and study on this particular issue.
So like in Seila Law, I think she is a prime candidate to write a dissenting opinion in Collins.
"The SSA has been led by a single
commissioner since 1994 and ever since then,
it's rendered 650,000 decisions every year, so
that's about 17 million decisions.
Now you told Justice Alito, well,
maybe there are some exceptions for lower-level
employees. I'm not sure that ALJs would qualify
as that, and even if they do, let's assume,
which I think is probably true, that all of
those decisions are rendered pursuant to
guidance and rules that the SSA commissioner has
enforced.
So are we really going to void all of
those decisions?
MR. THOMPSON: Well, Your Honor, a few
points. Number one, there's the statute of
limitations and the Article III limitations.
There's also the fact that the SSAA is
different than the FHFA. We don't think it
makes a constitutional difference, but it -- it
has much more limited jurisdiction. It's not
running multi-trillion dollar companies.
And so, to the extent the Court wants
to try to preserve the Social Security
Administration, it could potentially try to do
that. We don't think it should. We agree with
the Solicitor General that it's unconstitutional
and that, yes, its actions over the last --
within the statute of limitations should be void
if -- if done by principal officers."
That was Justice Kagan.
Well said, this is why conservatorships are by law temporary and not permanent!
I think the SCOTUS gets it, let's see if they can craft an appropriate REMEDY!
I doubt it, although I wish they would! It could be complicated to release the docs because:
(1). SM and the UST have decided to defend the nws in Collins.
(2). Some of the documents allegedly (probably TOTAL BS) are protected by the National Security and Executive Privilege.
(3). The Executive branch may need the Legislative Branch to grant permission to release the 11,000 docs to the public, since they are the subject of ongoing litigation.
(4). We have probably seen some of the most damaging ones already.
(5). DJT is just a regular citizen now, like the rest of us, and has zero power.
The whole 12+ year "Conservatorship" has really just been a total governmental fiasco, whose direction changes with the political winds at any given point in time!
TH in his Amicus Brief in Collins explained that all the government had to do originally was provide WAY LESS INTRUSIVE governmental interference, but it seems Hank Paulson at the time was hell bent on a takeover. Then the next administration was looking for billions in unappropriated funding. Lately its been an administration who is determined to make them as uncompetitive as they can, because they believe that the free market could be performing the gse function on its own.
If the Executive branch in the last 3 administrations had just followed the letter of the law in HERA AND HAD A GENUINE INTENT TO RIGHT THE SHIP this never ending saga would have ended a long time ago!
I hope the SCOTUS sees what is going on here, and provides appropriate Relief!
Latest from TH: "Midas: You’re raising an issue that seems to be causing considerable confusion among a lot of followers of Fannie and Freddie, so let me try to clarify it, not just for you but for the broader audience. I’ll use Fannie as my example, although the same will apply to Freddie.
Each of Fannie’s quarterly earnings press releases–available on their website–includes either one or two tables at the end titled “Condensed Consolidated Statements of Changes in Equity (Deficit).” The most recent shows that at September 30, 2020 Fannie had $20.69 billion in total equity. This total has six components–senior preferred stock ($120.84 billion), (junior) preferred stock ($19.31 billion), common stock ($687 million), accumulated deficit (a negative $112.68 billion), accumulated other comprehensive income ($120 million), and Treasury stock (a negative $7.4 billion).
What would happen to capital if Treasury were to convert its senior preferred stock to Fannie Mae common stock? You’d move $120.84 billion from the senior preferred stock column (making that zero) to the common stock column (making that $121.53 billion), while leaving total equity unchanged, at $20.69 billion. But Treasury would own billions of shares of Fannie Mae common stock (with the exact number depending at the share price at which the senior preferred was converted), massively diluting the ownership of current–and future–holders of common.
Now consider the alternative requested by the plaintiffs in their “prayer for relief” in the Collins case. They are asking that quarterly net worth sweep payments in excess of a 10% per annum dividend on the previous quarter’s outstanding senior preferred be characterized as paydowns of the principal of that senior preferred. Doing that over time reduces both Fannie’s and Freddie’s senior preferred stock to zero (and leaves a credit balance, likely to be paid to the companies as credits against future federal income tax payments owed). What would happen in Fannie’s “Condensed Consolidated Statements of Changes in Equity (Deficit)” in that case? The senior preferred would go to zero, and, because the senior preferred is being repaid, the negative accumulated deficit of $112.68 billion would change to positive retained earnings of $8.16 billion. Once again, total equity would be unchanged, but Fannie would be free of the $120.84 billion in senior preferred (and its associated liquidation preference) at no cost.
Were FHFA, as conservator of Fannie, to agree to convert Treasury’s senior preferred to common while the Collins case is still pending before the Supreme Court, that certainly would result in immediate lawsuits, since FHFA would be giving to Treasury a highly valuable ownership stake in Fannie that it would not have if plaintiffs prevail in the Collins case. If plaintiffs lose Collins, then the dynamic will be different. But for now, converting Treasury’s senior preferred to common (a) would not increase capital, (b) would massively dilute Fannie’s common stock, and (c) would result in immediate litigation by existing holders of Fannie common."
https://www.housingwire.com/articles/cfpb-director-kathy-kraninger-resigns-at-bidens-request/
No surprise here, given Seila Law. MC next, post Collins?
Well said Chessmaster! I think the SCOTUS gets it, let's see what the remedy is!