Fannie Mae-No Politics (FNMA)

[obiterdictum]

Ownership here means actual majority ownership of the publicly traded common shares with voting rights with the Federal government having the company on its books and being in direct control of its operations. The Brazilian Federal government owns Petrobas in this way. Is Fannie Mae and Freddie MAc on the books of the US Government?

By this measure, no.

Yes. Unlike Petrobas, Fannie and Freddie are not government owned.

FnF never will be on the US government's books either; the 79.9% warrant stake was carefully chosen to avoid a consolidation that would dramatically spike the national debt (and if I remember right, would breach the debt ceiling as well).

Unlike Petrobas, a national company, Fannie and Freddie are currently federally chartered, shareholder-owned private companies with public missions. Fannie and Freddie are not on the US Government books or budget and will not be on the US Government books in the future. https://www.whitehouse.gov/wp-content/uploads/2019/03/gov-fy2020.pdf

Still, the purpose of the capital raise is to get FnF out of conservatorship and have the voting rights of the common shares (including the newly-issued ones) restored.

Yes and unlike Petrobas being owned and controlled in the main by the federal government, once out of the conservatorships, shareholder common stock voting rights will be restored. If the warrants are exercised, they will be most likely be sold as they always have been in the past.

I think this would make it easier to conduct FnF's equity raise than Petrobras's because buyers in the latter still didn't effectively have control after the offering.

Petrobas is a national company mainly owned and operated by the Brazilian federal government that holds the majority of the voting stock and with non-government holders in the minority. Petrobas' non-government stock owners had no effective control since they had less than a majority of the stock with voting rights.

That is about the amount of time to expect barring unforeseen circumstances barring the lock-up period.

Thanks for that. It tells me what I need to know, that a first half of 2020 offering timeline is at least in the ballpark. I don't know why the Raymond James piece said that it would take several years, but I think I can discount that possibility for now.

The delay in the Raymond James note was due to the assumption that other legal, economic and political activities and outcomes had to take place before the preparation and execution of an IPO and there was no reference to an IPO/SPO timeline. See: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=149317373

Potential GSE IPO at least 3-4 years away. We expect the finalization of a GSE capital rule, reworking of the GSE’s preferred stock purchasing agreement (PSPA), adjustments to the qualified mortgage (QM) patch, and determinations on a potential commitment fee as the necessary first steps before a GSE capital raise could be undertaken. The results of the 2020 elections could add some friction to the process.....There will likely need to be a couple years of an established earnings history under the new capital rule and other additional constraints before an IPO can be appropriately considered for additional capital.

Did DeMarco, Watt and now Calabria act as CEOs of Fannie and Freddie in controlling its overall and daily activities?

I'm not sure how to answer. The FHFA director is even more powerful than a CEO because he controls the entire board. The directors had the authority to act as CEOs (and more) by HERA, but I don't know to what extent they exercised it personally as opposed to putting their chosen people in place and delegating those powers.

The FHFA Directors did not operate the GSEs as CEO, but as regulator/conservator. Their power is in oversight and reporting on the GSes and in the prudential supervision of the conservatorships. All of this is in line with what was given in HERA. There is little power or expertise in the overall functioning or daily operations of the companies and the Federal Home Loan Banks. The FHFA sits at the top of the GSEs and pull strings as limited by law or not.

At least five months for writing reports and filing SEC forms. Underwriting and the roadshow add more time possibly up to a year. The number and quality of staff working on the IPO and bumps in the process road also determines time to completion.

The reports and forms part sounds like something that could have already started. If the rumors are true then the underwriting phase might be in the early stages (the New York Times said four weeks ago that "Mr. Phillips and other Treasury officials have been meeting with the biggest American banks to determine how best to raise capital for Fannie and Freddie"),

Rather than speculate about the vague reporting, the easy way to see what has been actually filed is to periodically check SEC's EDGAR for filings of the related IPO forms (e.g. S-1, S-3, 424B#, etc.). https://www.sec.gov/edgar/searchedgar/companysearch.html
https://www.sec.gov/info/edgar/forms/edgform.pdf
https://www.sec.gov/forms

...but the roadshow certainly hasn't begun yet. Of course, I'm taking your estimates ("five months" and "possibly up to a year") at your word because I don't have the knowledge or experience to otherwise know. Where do you get these estimates? From the NYSE IPO guide you linked to?

Yes. The NYSE IPO Guide provides time information. (https://www.nyse.com/publicdocs/nyse/listing/nyse_ipo_guide.pdf, see pages 32-42). Examining the IPO filings of companies from the beginning filings to the IPO final prospectus gives an indication of the time involved as well as actual IPO timetables or checkable reported ones. Media reports are not always a reliable source of information.

I would expect FHFA and Treasury to have ample resources, and the firms they are rumored to have contacted have high-quality staff, especially for a capital raise of this magnitude. I'm not worried about those particular things slowing down the process.

How many IPOs have Treasury and FHFA executed? Yes, it will not be their staffs alone that do this. There will be hired people who determine in part the quality and speed of outcome. Slow downs may be more with bumps in government operations, approvals and changes and bumps between the hired hands and government officials than in filling in and filing forms and a draft and final prospectus.

It is in the works. Links given in previous message.

I didn't think that the planned follow-on would take almost 9 years to come about, I thought they were talking about something more immediate.

They were. Perhaps the huge Petrobas scandal, a significant bump in the road, was missed.
https://www.ft.com/content/850711b6-ac78-11e4-9d32-00144feab7de
https://www.britannica.com/event/Petrobras-scandal
https://www.crunchbase.com/organization/petrobras/timeline/timeline#section-recent-news-activity