Replies to post #356194 on Fannie Mae-No Politics (FNMA)

[bradford86]

you're ignoring the fact that accounting fraud losses were put onto the books of the GSEs in the first place making the massive amount of income reported inevitable

you're stories never add up or are accurate, but they make for good stories, just not anything worth listening to

[Donotunderstand]

First things first

Can a court get involved - HERA judicial castration clause

If the appeals court says yes - then standing and ripe

To me that must be settled as that is what to me LAMBERTH hung his entire decision on

So lets see if THAT is decided and in the opinion in a direct fashion ...........

Big - as you would say - there is no reason to get into the financials if the court rules on the core question in direct fashion

XXXXXXXXXXXXX

That said - the court could simply intervene (rule on the judicial castration by growing a pair to continue the analogy)

That would - in my simple English language world - come if the court found that FHFA was not acting as a conservator in any fashion that is none to mankind .....

In my English that allows the court to avoid second guessing a conservator and much/all of the judicial bar by saying that the way HERA was implemented (process and activities) was SO contrary to HERA that the implementation and process is illegal and thus the court remands or rules --- and such remand or ruling goes around v decides on --- judicial castration

Again - that is thought of and typed in my English

[yambike]

It's been established that without the 3rd amendment/NWS, capital reserve would be more than sufficient to weather nonprofittable quarters.

its not about profit yank. its about net worth and reserve. why don't you know this, yank?

I thought you were smart. or did I get that wrong?

[Letgoofmyfannie]

Yank, thank you for your analysis and certainly your point of view on what may happen is as valid as any from a purely business case perspective. However I think the Political Risk is great and the subsequent fallout could harm the future Administration (either D or R) as well as the future Congress. The GSEs worked well for a long time and with proper Regulation the Housing Bubble could have been attenuated...Home Ownership in the US continues to plummet and in my view that is not good for the Republic. We are already seeing social breakdown in places where folks have no stake in their communities.

I own both classes, if the Appeal is denied my guess is share prices will plummet in both classes in reaction and over time jr preferred may get very cheap. We may see that happen as we approach 12/31, as that has bee the pattern for years in my view due to tax loss selling. I am prepared to buy more jrs. should the Appeal be denied. I also think that the court case will drag on for years, it is the nature of the Legal Process and as you have mentioned there are a lot of moving pieces on the board and far more than two players in the court cases.

These are risky shares as we know and the outcome will be interesting to say the least. I hope I live long enough to see it :) Once upon a time I felt that way about the Giants winning the World Series; sometimes good things happen to those who wait and persevere.


"One bright sunny morning in the shadow of the steeple, by the Relief Office, I saw my people -As they stood hungry, I stood there wondering if God blessed America for me."

--Woody Guthrie

[brandemarcus]

Oh my , two out of the last 3 fiscal quarters. 10 years is forty quarters and 80 quarters including Fannie. Since 2012, what has been the aggregate profitability of the gse's? That's all ready at least 16 quarters and well in excess of 200 billion. Yet you are going to look at the noise from mark to market in 2 out of 16 quarters. Note that less than 40 % is dta reversal. Every quarter the bad loan inventory keeps declining. There were plenty of recessions in the last 40 years and Fannie mae did fine in all but one. The loans from the 2009 book forward are so pristine in loan to value etc, that real losses are a figment of over active imaginations. There is still 35 billion in the loss reserves that has already been deducted from income to prepare for that next recession. Before you hit the income statement for new reserves you have to explain why that 35 billion is not enough. The 2009-2012 loan books have huge implied gains, Fannie mae and Freddie mac would make considerable profits if any of those loans defaulted.