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Monday, February 25, 2013 1:10:06 PM
I don't know if I have many new thoughts. What is frustrating is FnF are doing so well. I am getting more and more negative on the story as the "cockroaches" continue to appear at the Treasury department. At least in a bankruptcy our fate would be more clear and we would get steady updates through court filings.
I have been thinking this out. The govt currently guarantees the mortgages insured by FnF. That is not going to change. If there was a new FnF it would probably lose those legacy mortgages and the fees generated to the new 'Public Guarantor'. That would leave FnF only with their mortgage portfolio that they are to reduce 15% a year. We still have no equity so the company would have to some how build capital. The govt is not going to participate to recapitalize us, they would much rather just keep the funds for payback and use of capital. We would almost have to have an new IPO. Another thing we need to think about is that our MBS holding probably have a good amount of interest rate risk.
Sorry, I am having a hard now seeing how this works out past the "elimination" stage wind down. What is left after that. The govt could just as easily keep our buildings and personnel for the new "Public Guarantor", couldn't they? They seem to have no problem treating ours as theirs. Keep in mind, no equity means walking the thin line of insolvency. If we do have interest rate risk like in 1980, FnF could easily slip into insolvency, and then receivership and be liquidated.
I think those holding shares must seriously consider that the future looks less and less bright for FnF. You can keep talking about profits but the treasury is laying claim for all with still no plan for use to reduce the senior preferreds. What we are left with is just hopes of "net investments". IMO, the government will be leery to show and "heart" in this matter. Again, I asked the other day, does anyone really think a Treasury official is going to give the FnF shareholders a freebie? Just right off the senior preferreds as "paid in full". Congress would scream about that. And again, where is a public official that is showing any support for FnF shareholders. There are none. We are being consumed slowly by the biggest cockroach of all - the US government!!
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