Rodney5
9 minutes ago
I apologize skeptic, I should have left the first part off. I’m tired of this prison sentence not anything personal towards you. Regards
Calabria did say, “stripping all net value from Fannie Mae and Freddie Mac long after Treasury has been repaid when HERA, and precedent, limit this recovery to the funding actually provided.”
Every person that has said the draw of funds from the Treasury could not be paid back canceling the SPS without Treasury approval (‘permission’) are wrong.
Former FHFA Director Calabria said so before he was appointed the position of director. The man caved in to the pressure of the Treasury Secretary. He helped write HERA he obviously knows the law.
Quote: “Congress consciously chose to vest with FHFA, not Treasury, the sole authority over invoking and conducting a conservator or receivership. The role of Treasury is exclusively that of a creditor” End of Quote
Director Calabria could have taken it to Congress who gave him Congressional Authority to put the enterprises in a safe and sound condition. The FHFA Director does not take marching orders from the Treasury Secretary.
'The Conservatorships of Fannie Mae and Freddie Mac: Actions Violate HERA and Established Insolvency Principles:' By Michael Krimminger and Mark Calabria
Link to Calabria writing; https://www.cato.org/sites/cato.org/files/pubs/pdf/working-paper-26_1.pdf
DaJester
49 minutes ago
Ackman's full writedown scenario has the legacy common getting 18% of the equity, and all of his senior conversion scenarios have them getting 0%. There is a lot of room in between to avoid lawsuits. For example, why would a common shareholder sue if a senior conversion at $8 per share happens?
In my opinion, the lawsuits will not be based on the resulting share price, but on what equity amount Treasury plans to steal and just how obscene that makes their overall return. If they try to take the entire $300B+ of LP, that's essentially taking the entire companies, and lawsuits will certainly ensue. I doubt that will be the plan. If they take say $191B, that would result in less than 95% being taken (roughly 86% by my calculations based on $222.3B market cap). Which is only slightly more than just exercising warrants for 80%. The question then is - is the juice worth the squeeze? Would the likelihood of lawsuits be diminished through the optics of retiring the SPS LP and just taking $177B through warrants? Can they use the retirement of the SPS as a bargaining chip? IMO - It's an easier path. The resolution will not be the one that tries to squeeze every possible dollar for Treasury, because that is not the current mission. It will be something that is expedient and receives as little resistance as possible. If they further reduce the warrants to less than 80%, that would further reduce the resistance. There will be a point that yields the best balance of financial gain vs friction, keeping in mind Treasury has already reaped double digit gains from its investment.
And are you really accusing my posts of not containing sufficient detail? If anything I go too far in that regard, and certainly do compared to the vast majority of posters on this board.
You are selectively detailed. You will go out of your way to provide a quote from a supposed expert, or statute that proves someone's point wrong. But when you can't provide a statute to support your own position ("DOJ advised it's illegal"), you just chalk it up to an unreasonable request. It's only unreasonable because it would require you to prove your point.
Post an example of this so I can have some idea of what you're talking about. Otherwise it's just another baseless accusation.
I won't have to dig very far now will I? Are you not saying your interpretation of Bessent's comments are the correct one, and my interpretation is incorrect? Or are you conceding that we just have two different opinions that are equally valid in the absence of further information? That would be a huge step in the right direction for you.
I once heard a successful negotiation defined as an agreement where everyone feels like they got a bit screwed.
Maybe it's more like when everyone feels like they did a little bit of the screwing? That's exactly what we need to happen here.
A hypocrite is someone who says one thing and does another. In the case of my accusations, it is arguing for one thing (that X, Y, Z are illegal) while demonstrating a lack of conviction in what is said (by not filing a lawsuit)
Ahh, I think I see now. I don't think you know what the word "conviction" means. It's a strongly held internal belief or opinion. You can have a strong conviction without taking any outward action. For example, I may have strong religious convictions, yet never set foot in a church. I may have strong convictions about ethics and upholding the law, yet never sue anyone. Does this help you understand?
Patswil
1 hour ago
Sheila Bair, former chair of the FDIC agrees, saying it's time for Fannie and Freddie to go private again.
"That is far too long for any financial institution or any institution to be in a government-run conservatorship," she said. "It hurts agility, it hurts decision-making, it hurts the ability to bring in top talent to get the tech that you need. So it does need to be privatized."
Bair, who was chair of the Fannie Mae board from 2020 to 2022, explained that one of the reasons she agreed to join the board was because she believed Fannie Mae would be going private again.
https://finance.yahoo.com/video/time-fannie-freddie-private-former-000006956.html
navycmdr
1 hour ago
It's time for Fannie & Freddie to go private: Former FDIC chair
Josh Lipton and Julie Hyman - Thu, January 23, 2025
https://finance.yahoo.com/video/time-fannie-freddie-private-former-000006956.html?contentType=VIDEO
"That is far too long for any financial institution or any institution
to be in a government-run conservatorship," she said.
"It hurts agility, it hurts decision-making, it hurts the ability to
bring in top talent to get the tech that you need.
So it does need to be privatized."
Bair, who was chair of the Fannie Mae board from 2020 to 2022,
explained that one of the reasons she agreed to join the board
was because she believed Fannie Mae would be going private again.
President Donald Trump made a lot of promises on the campaign trail, and now that his second term has begun, Wall Street is keeping a close eye on one in particular: the privatization of mortgage companies Fannie Mae (FNMA) and Freddie Mac (FMCC), which has been under government conservatorship since the 2008 financial crisis. Investors are bullish it could finally happen, with shares of Fannie quadrupling since his election. Sheila Bair, former chair of the FDIC agrees, saying it's time for Fannie and Freddie to go private again.
"That is far too long for any financial institution or any institution to be in a government-run conservatorship," she said. "It hurts agility, it hurts decision-making, it hurts the ability to bring in top talent to get the tech that you need. So it does need to be privatized."
Bair, who was chair of the Fannie Mae board from 2020 to 2022, explained that one of the reasons she agreed to join the board was because she believed Fannie Mae would be going private again.
"That was one of the reasons I joined the board and became chair because I thought we were gonna exit," Bair said, "Which I think needs to happen. And a lot of preparation work had already been done. And then of course, the (2020) election happened and there was a complete shift in priorities."
Now there's been another shift, and Trump has retaken the White House. Of course, the new administration has plenty of other things to focus on first, and the process to privatize Fannie and Freddie could take years, so it's anyone's guess as to whether President Trump will actually pull the trigger.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
This post was written by Conor White.
DaJester
1 hour ago
"Should be compensated" does directly imply that Treasury has not already been fully compensated.
I disagree. His answer directly implies that Treasury needs to be compensated for it's past support of the GSEs, and that he plans to evaluate the situation to ensure Treasury is/was/will be fairly compensated. If he wanted to say Treasury still needs to be compensated for the SPS specifically, he could have just said "yes" which would have directly answered the question. He didn't. So he is focused on the compensation, not necessarily the vehicle or method. The compensation could come from anywhere - e.g. Warrants or LP or some other method. Had he said "yes" to the question, you would have a valid argument. But you are just interpreting his response to fit your narrative.
My other post said that I will take his remark into account when updating my estimate of a senior conversion. Certainty is not necessary to make estimates.
You can adjust your percentages of probability all you want, your forecast is not any more valid than anyone else.
The majority of posters here will vote against me no matter who is on the other side or what was actually said. I have enough years of experience here to see that pattern.
So for years you have been aware of the perception others have of you and your "shut up or file a lawsuit" response. You claim to see that pattern, yet you persist. And somehow you think the problem is with everyone else, and not you? Ok then, the definition of insanity comes to mind.
JSmith5
4 hours ago
I appreciate the discussion. All sunshine and pumpers might feel good to some but it's no way to make decisions for significant amounts of money.
What makes these stocks so interesting is that reasonable arguments can be made to support a broad range of outcomes. Much more so than most other stocks because most forms of normal financial analysis used to predict the outcomes don't apply here. Anything from a complete wipeout for both common and preferred to a valuation in the low hundreds for common is possible. One thing that we would all agree on is that the disposition of the seniors will greatly influence the outcome.
The thing I have concluded about the GSEs is that if the law were relevant they would have been released years ago and if the facts were relevant they never would have been placed in conservatorship, ab initio. This is all about the relationship between money and politics - all out in the open and in its rawest, most in-your-face form. And nothing else.
The same John Paulson that expects Treasury to own 90-95% of FnF common, which can only happen via a senior-to-common conversion that Ackman's own presentation thinks would zero out legacy common shareholders (though it wouldn't necessarily have to).
Bill Ackman's absence was equally telling.
Back in the 80's it was easy to tell who was in and who was out in DC. Just watch the Redskins home games. If you were seated in the owner's suite (with "The Squire" Jack Kent Cooke) you were in. If you were seated next to him you were IN. People used to analyze (no joke) how far different politicians were seated from him as this would change from game to game. It was compared to the Soviet Union's air brushing their politicians in and out of pictures.
So I took Paulson's presence maybe more serious than most people did. Seating at the inauguration was at a premium. And I was not joking when I said members of Congress were confined to the bleachers while Paulson was in the owner's box. Not next to Trump, but close enough that the Russians are probably analyzing how close he was. All I could think when I saw him there and where he was seated was "PAR+". This does not mean that Ackman was kicked out of the Politburo - far from it. He is still in the picture because he was a major donor - so our commons will not be history and am not running to sell my commons at this point.
File your own lawsuit
I would, but I can't afford me.
or shut up
Actually, I get that told to me every day (at least once) by DC Grannie when I ask her to "increase my allowance - at least until I can make some money off this crap".
Nats
Fully Diluted
8 hours ago
Keyword “past”
Hello folks,
I want to point you to a specific word that Bessent gave in his written response to the pre-submitted questions from the US Senate Committee on Finance as part of his confirmation hearing.
Here is the question posed and the answer provided:
Question 80: Because of the federal government’s bailout of Fannie and Freddie, the federal government owns senior preferred shares in the GSEs. Should American taxpayers be compensated for any reduction in their senior preferred shares?
Answer: Treasury should be compensated for its past support of the GSEs, and if confirmed I look forward to exploring options for potentially dealing with this matter.
When I first read this, I jumped to thinking about the senior preferred stock liquidation preference. As I'm sure you know, this has been growing at the same proportion that Fannie and Freddie have been retaining earnings since the Fourth Amendment ended the Net Worth Sweep - on the balance sheet.
The word “past” initially made me think that Bessent might forgo this increase in liquidation preference.
But something inside me told me that's not it. On the one hand, it would make perfect sense for Bessent to refer to the liquidation preference because in the foreseeable future it would be higher than the companies are worth, and therefore he would be forced to give up a portion anyway. But why would he go into such specific detail? After all, the other answers were also formulated in very general terms.
And then I realized: this is a fundamental paradigm shift in the Treasury Department:
Perhaps you remember how Mnuchin was once asked by “little Bob” Corker whether the shareholders were entitled to any value at all, since the companies were bankrupt, and he replied that the companies were only making profits because the government had saved them and was providing them ongoing financial support - thereby suggesting that shareholders had no claims.
Against this background, I now see the word “past” in a different light. Bessent disagrees with Mnuchin's narrative. And as I understand it, this means nothing other than that the shareholders are also entitled to the profits that the companies make during conservatorship. Otherwise the word “past” would make no sense at all.
Consequently, one can assume that Bessent will waive the value of the senior preferred shares entirely. Otherwise he would be contradicting himself, because if he insisted on monetizing both the SPS and the warrants, he would dilute the shareholders to such an extent that they would have nothing of the retained earnings of the companies.
Sometimes a single word can say more than hours of questioning.
GLTA 🙂
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