InvestorsHub Logo
Boards
News
Market Data
Markets
Discover
Discover
Subscribe Login/Register
S&P 500
5,304.72
(
0.70%
)
US TECH 100
18,318.00
(
0.95%
)
Dow Jones
39,069.59
(
0.01%
)
Brent Oil
81.97
(
0.00%
)
Bitcoin
69,125.69
(
-0.21%
)

Replies to post #773584 on Fannie Mae-No Politics (FNMA)

Replies to #773584 on Fannie Mae-No Politics (FNMA)

jog49

11/06/23 11:40 AM

#773587 RE: Patswil #773584

"The government is prohibited from making a profit off of stock transactions. Period"

That's the law. Problem is not a soul is upholding the law. Therefore, the law ain't worth the paper on which it is written. Welcome to the NEW U.S. of A., comrade!

The Man With No Name

11/06/23 11:46 AM

#773590 RE: Patswil #773584

The government is prohibited from making a profit off of stock transactions. Period



Nonsense. Nevertheless, when the SPS are converted, the government won't be making a profit. Period.

Wise Man

11/07/23 1:53 AM

#773667 RE: Patswil #773584

*** Calabria advocated a Taking at Book Value ***
The Book Value of a common stock is called Common Equity.
The Book Value of a JPS is called par value.
Navycmdr claims with the alias "Patswil":

The government is prohibited from making a profit off of stock transactions


This is true in the Charter's Fee Limitation of United States, except a rate similar to Treasuries on (c) any obligation of (b) redeemable obligations at the option of the issuer, which is the definition of a Preferred Stock (original UST backup of FnF), obligations in respect of Capital Stock (stated in the SPSPA), because the underlying security of a Preferred Stock is an obligation and they usually are redeemable at the option of the issuer.
So, you can sneak the SPS in the subsection (c).

Their stock valuations corroborate a Taking at BV because they should trade at PER 14 times, for instance, and it's much higher. Also the stock valuation of a JPS today, corresponds to its par value, as it's determined by the moment of resumption of dividend payments and it's been assumed that it should have been restated long time ago under the Separate Account plan.

But we are talking about a Taking, not about purchase of stocks and continuation of the business. So, it may or may not require the Charter revoked beforehand. As long as the Equity holders are offered a fair compensation for their stocks, required always by the Supreme Court, it's all fine. A fair compensation in a stock, is called "Fair Value" and, because it's the government, it's allowed the Book Value, otherwise we'd be talking about PER valuation. Book Value is consistent with the idea of Charter revoked, staging that a company ceases to operate with the Charter, although the business goes on without the Charter. A cut-off date.
This is Calabria, who helped to draft HERA, advocating a Taking at the stocks' book value, on the cut-off date when the Charter is revoked.

Notice that by "take the Assets/Liabilities", which refers to the Net Worth, doesn't mean that the shareholders take the Common Equity away. It's related to the stock valuation. The full Common Equity ($236 billion) remains in the enterprises.
Only the JPS holders take capital away, just what happens with any bondholder or holder of other obligations issued, when it's redeemed by the company. The obligations are a debenture and FnF have an obligation with their holders. That's where the name "obligation" comes from.

Other theme that the Treasury will have difficulties in defending a Taking with the concept of back-end Capital Rule, effective February 16, 2021. A rule that should have been approved within the normal 18-month time frame after being required by Law (18 months was given the FHFA/OFHEO director in the FHEFSSA, for the first Risk-Based Capital requirement in 1992. Now, the same law and same capital requirement, without a time frame. HERA simply struck the entire provision mandating the FHFA director to come out with a new one)
And the idea that the objective was to distance the Capital Rule Basel framework from the 2011 Privatized Housing Finance System as "recommendations on ending the Conservatorships, no later than January 31, 2011", because it meant Basel framework too and it would show that the 15 years in conservatorship was simply the typical Transition Period to build capital, given by a regulator when there are changes.
So, it's been a Poker game by the FHFA and the UST all along, which could hinder a Taking at BV for the resale to bigger players, and it would compel to allow the existing shareholders to capture the full takeover price PER 14 times (+ Deferred Income, also owned by the common shareholders)

A Taking + resale + JPS redeemed, would be very profitable for the Treasury, after a refund of the cash owed to FnF ($153B-$151B. Separate Account plan)