Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Rodney, I am not promoting anything, no matter how many times you falsely claim that I am.
In short, there is a thick wall of ignorance surrounding the GSEs.
Someone here recently posted that a new Secretary of the Treasury is only required to transfer his funds into a trust. But regarding Hank Paulson, I now remember that you are right: He had to sell his assets tax free, thanks for correcting me.
But what is "the right thing"? From the perspective of today's government, it is not to "feed greedy hedge funds", but to rake in all possible profits from the GSE release for itself.
"Feeding greedy hedge funds" is the politically correct substitute for "returning stolen property to FnF shareholders".
Thank you. But I could also ask: "Why do you expect an iHub poster to act more ethically than several (borderline corrupt) Treasury Secretaries?"
If you want to predict what will happen to Fannie and Freddie in the future, look at how immoral and unethical FnF have been handled in the past. See my post on Hank Paulson's role.
Thanks Barron
Why do you expect the Secretary of the Treasury to act more ethically than the government as a whole? By the way Hank Paulson, Secretary of the Treasury in the Bush Admin, saved his former employee Goldman-Sachs by first sacrificing Lehman (which later could have been saved with TARP as well) to scare politicians and then forcing Washington to bail out AIG (GS had subprime junk insured with AIG). It was all completely unethical and self-serving. Of course, Hank Paulson had to put his stock holdings (worth several hundred million) into a trust while he was Secretary of the Treasury. But I wonder what happened after his term ended. I guess the trust was just given back to him, and all the profits from his corrupt, unethical policies ended up increasing his personal net worth.
Making a recommendation to other posters here is very different from "encouraging" the government to convert SPS to commons.
I disagree that any JPS holder here is "promoting" a common cramdown.
For a very simple reason: A SPS-to-common conversion would result in a 40% to 50% haircut for JPS. If only the warrants are exercised, there would be almost no haircut for JPS.
So would you really "promote" a solution that only gives you $12,50, when there are other more favorable options that bring JPS to par?
Therefore, no JPS holder in their right mind would promote (encourage) a common cramdown. Many, however, see it as most likely coming.
You should not criticize people here who are expressing their (legal) expectations about the future of the GSE saga. Instead, you should criticize the government itself, because its greed is the source of all the injustices perpetrated against GSE shareholders.
Hardly any of those who hold common or junior shares today owned them before 2008, so buying those shares was speculation coupled with certain expectations regarding the government's actions. That the government would act fairly can only be seen as an illusion, because since 2008 the government (and "its" courts) have clearly acted as enemies of the shareholders.
So in this gigantic poker game it's inappropriate to invoke ethical or moral principles. The government has acted unethically and immorally with FnF shareholders in the past - and will most likely continue to do so in the future.
Anyone speculating here (and posting on this board) is ultimately placing bets on how this poker game will end. No one here has any chance of influencing its outcome. Moralistic whining is hypocritical in this context. Much more important is not to end up as the donkey in this poker game.
Facts don't matter anyway. What really matters is faith. Faith in the good cause, and that the fair, the decent, and the just will win. At least as long as it ends up lining your own pockets.
Powell fights against irrational exuberance. Almost everyone here could learn from him.
So the challenge for common shareholders will be to hold until the "Trump will save us all" rally tops out. The trick will be to sell before the release announcement hits, because commons could very well fall below 10 cents after that.
I have no doubt that Fannie and Freddie stock prices (all classes) will rise with Trump's election chances.
But I very much doubt that a release under Trump - which so many here are hoping for - will be accompanied by a write-down of the SPS. Even under Trump, commons are at risk of severe dilution from an SPS-to-common conversion. After all, he wrote in his famous letter that he wants to get the maximum out of this deal for taxpayers. Trump will not get the maximum if he settles for just the warrant exercise.
So if commons rise in expectation of a Trump victory, the 400$ pipe dream could turn into a below 10 cent nightmare.
Ignorance is bliss.
Sure. If you are invested, you always have to do your homework and calculate the risks involved. But one thing is for sure: I have ZERO influence on how FHFA and Treasury will act. I just have expectations, and they could very well be wrong.
Anyone holding commons should carefully consider the risks involved. Ignore my advice at your own risk.
Selling now is not a problem. If you sell now, you can always buy back later at a higher price
It's good to see you report one of your sales for once.
"Separate account" is also off-topic because you can't prove it actually exists. Yet your last 10,000 posts have been about it.
https://www.cnbc.com/2024/01/29/evergrande-shares-halted-after-hong-kong-court-orders-liquidation-.html
Shares of China Evergrande (China's second largest real estate developer) were halted after plunging over 20% in early trading. Evergrande's overseas creditors failed to reach an 11th-hour restructuring deal over the weekend.
---------------------
China Evergrande has accumulated $324 billion in bad debt, more than the U.S. government has taken from Fannie and Freddie since 2008.
Evergrande owes the bulk of its debt (nearly 2.4 trillion yuan) to China mainland creditors, many of them individuals who paid for apartments they never got.
One reason Mnuchin didn't release the twins was that there was no "deal" for the government in writing off the SPS. Maybe he didn't want to jeopardize his job.
If that's true, the Fed's current unwinding of FnF MBS could be a sign that the GSEs are indeed about to be released.
But that's what may be happening now. Previously we discussed what happened in 2008.
There are two problems with Bryndon Fisher's balance sheet calculations:
On the left side, there's nothing right.
On the right side, there's nothing left.
2.5% is the HERA minimum. And you would still need a capital raise to get there.
CET1 increases by $193 billion if the seniors are cancelled or converted.