Replies to post #562879 on Fannie Mae (FNMA)

[navycmdr]

Under the forthcoming agreement,

the companies would be allowed to retain about a year’s worth of profits,

or about $20 billion, Mark Calabria, the FHFA chief, said in an interview

after touring a senior center financed in part by the Federal Home Loan Bank

of Indianapolis. FHFA oversees Fannie, Freddie and the

Federal Home Loan Bank system.

“We’re still in the middle of negotiations with Treasury,

but I think we’re close,” Mr. Calabria said. “

I hope to have it done by the end of the month.”

[RickNagra]

Huge news. Huge positive write up in the widely read Wall Street Journal. Calabria said capital buffer $20B each. I think it will be more. Should see a nice pop Monday morning.

[RickNagra]

What is this about - the warrants ?

Meanwhile, Mr. Calabria said, taxpayers would receive additional shares in the companies—the equivalent of new stakes in a firm preparing to launch an initial public offering—in exchange for allowing the companies to retain earnings now.

[Patswil]

Meanwhile, Mr. Calabria said, taxpayers would receive additional shares in the companies—the equivalent of new stakes in a firm preparing to launch an initial public offering—in exchange for allowing the companies to retain earnings now.

Through June, the companies have paid about $300 billion in dividends to the Treasury, while taking some $190 billion from taxpayers in the years after the 2008 financial crisis. The companies have paid an average $18.2 billion annually over the past three years to the Treasury.



This is TOTAL BS!!

Reducing those payments would add to a widening U.S. budget deficit that is on track to exceed $1 trillion a year.

[RickNagra]

Calabria says capital buffer will be $20B each. It appears he let his cat out of the bag LOL.

[TRCPA]

If I am reading this correctly, we may be looking at the following.

1) An agreement to have Fannie/Freddie receive the $20 billion they have previously earned in profits over the last year

in exchange for

2) X number of common shares

Probably by the end of 2019.

As always, the devil is in the details.

If true,

1) How many common shares would be converted and at what price?

2) What happens to the PRIOR overpayment to treasury?

What I think they may be angling for is this. The Treasury getting cheap shares now or by EOY that are certain to appreciate greatly in value in the future.....in exchange for the $20 billion back in the GSE coffers by year end.

If so, we might then be looking at $20 billion + Treasury credit due of $25 or$30 billion to start the recap process, for a total of about $50 billion in capital at 12/31/19. (Close to that stress test amount we talked about yesterday).

That might be the point where they free the GSE's from conservatorship, alongside the consent agreement. They would then need to raise about $75 billion (for total of $125 billion) in 2020, through future profits retained and public offering.

Looking at Fannie alone, that would require about $50 billion needed.

So if Fannie makes another $7 billion or so in profits by 6/30/20, the remaining offering requirement would be about $43 billion.

This would ramp up the interest on what happens at 9/30/19 even higher.

[Donotunderstand]

20B ----- the partial I expected - on the low side

But if its 20B a piece and not combined - this news takes the stock pps up 5% IMO without a date …. if it starts now ! then maybe 10% if 20B each

[observer21]

"The timing of the agreement and the precise amount of earnings the companies would be allowed to retain hasn’t been completed. The overall deal could slip to the end of the year, he said."