navycmdr
18 minutes ago
$Booooom ! $5 Monday An official for the Biden administration,
speaking on condition of anonymity, said this new agreement
doesn't prevent administrative action in the future regarding
Fannie and Freddie but sets out clear expectations on the
process from market participants to Congress about when
conservatorship will end.
Treasury and FHFA unveil plan to end Fannie-Freddie conservatorship
Will Fannie Mae and Freddie Mac be free by 2026 ?
(well before that )
By Camille Joyce Lisay - 06 Jan 2025
The US Treasury Department and the Federal Housing Finance Agency have jointly issued new guidelines on releasing Fannie Mae and Freddie Mac from government supervision, restoring Treasury's authority to approve any release plan.
The move pushed the mortgage giants' common stock to its highest level since 2019.
The roadmap, published less than three weeks before Donald Trump's scheduled return to office, details Treasury's commitment to developing detailed plans for ending the conservatorship, including public comment periods and consultation with the Financial Stability Oversight Council and the US president.
"The agreement restores Treasury's previous right to consent to a release of the GSEs from conservatorship," stated the Treasury Department and FHFA in their announcement. "It will help ensure that the eventual release of the GSEs from conservatorship will be orderly and to reflect certain existing practices."
During the 2008 financial crisis, the federal government took over Fannie Mae and Freddie Mac. The bailout funds amount to around $187.5 billion.
In return, the Treasury acquired senior preferred shares in both of these entities. The new deal retains the current capital retention and dividend payment terms by GSEs on these senior preferred shares.
The market response was significant, with Freddie Mac shares going up to $3.96 and Fannie Mae's stock reaching about $4.07 in morning trading on Friday. Hedge fund manager Bill Ackman's recent recommendation to buy the entities' common stock has further influenced market sentiment.
An official for the Biden administration, speaking on condition of anonymity, said this new agreement doesn't prevent administrative action in the future regarding Fannie and Freddie but sets out clear expectations on the process from market participants to Congress about when conservatorship will end.
These two giants, although not direct mortgage lenders, are integral parts of the US housing market. They purchase loans and bundle them into securities sold to investors. Bloomberg Intelligence analyst Ben Elliott indicates that a full exit from government-owned or guaranteed MBS is at best a 2026-27 prospect, thereby indicating that an exit process would be lengthy.
DaJester
8 hours ago
Since you have a certain return target but don't seem to have all that much desire to exceed it, at least compared to most, I'm surprised that you're taking the risk of owning commons at all.
My algorithms say otherwise. There is more risk in common, yes. But the potential returns make it worth the effort in my case.
I trade a few % around between the juniors and commons because the swings have been pretty well defined in the past. Sure that could change, but that's why I keep that swapping portion small. It has more than paid for itself over the years.
I'm glad this is working for you. And I sincerely hope the JPS get full par/redemption value and your core investment pays off also. Everyone trades differently, and I hope everyone on this board gets an excellent return, especially those who have been stuck for years.
DaJester
8 hours ago
The hits keep getting dumber...
You don't get to decide what is and what isn't "overtly illegal"; that's the job of the judicial branch. And without involving the judicial branch, i.e. filing a lawsuit (and in this case winning it), you cannot claim that something is illegal.
Say what? So by your reasoning, I cannot know that someone who steals my car has done anything illegal until I file a lawsuit? The Judicial branch clarifies the intent of the laws, they do not decide what is legal or not, that is the Legislative branch. Believe it or not, outside of your little KThomp bubble, people do actually know when something illegal has occurred.
You are firmly into "first signature line" territory here. Without someone (such as yourself) filing a lawsuit claiming that the LP ratchets themselves were a breach of the implied covenant, no court will ever rule on that matter
Yep, here we go with futility again. No, I will not file a lawsuit, and no I will not shut up. Tell you what, I'll shut up when you shut up, deal? Again, believe it or not, this may be resolved without having to go to court. If any reasonable entity go sued and lost due to a breach of contract, a reasonable entity would probably want to mitigate for any future actions that would put them at similar risk. Especially with new Treasury leadership coming soon, not wanting to make the same mistakes that were made in the attempts to squash the GSEs. That purpose has died. There will be a new purpose, new direction unfolding.
I can see why my first signature line bothers you so much: it strikes directly at a nerve. You see perceived injustices happening and instead of trying to do something about it, you whine about how those things are illegal and the government should just "do the right thing"
No, this just makes me observant of the situation, which helps formulate the long term direction the GSEs are heading. You can be the oblivious ostrich with your head in the sand and talk about the past with AIG all you want. Seems I strike a nerve every time I call out your lopsided viewpoint.
FnF were already sued, and lost, based on the extinguishment of the LP and dividend rights of the shareholders by the cash NWS. Why would suing again for the same claim (implied covenant) over the LP ratchet not be double jeopardy?
You mean the cash NWS that caused the breach of the implied covenant with shareholders, right? Besides that, also because the cash NWS is no longer in place, the conservatorship is temporary, and shareholders will have their rights restored eventually.
Red Cloud
8 hours ago
May I add....
A) The U.S. Government has a long history of bad acting and outright lying - the internment of Japanese-Americans during WWII, the Gulf of Tonkin incident, WMD's in Iraq, and concealing the cognitive decline of President Biden - to cite a few examples.
B) The Federal Government in general and Congress in particular is filled with condescending self-righteous incompetent profligate bureaucrats, "Clowngress" as some on this board called them. This Bureaucracy is perpetually operating in the red, relying upon ever-increasing levels of debt - massive debt - subscribed to routinely and thoughtlessly. No sincere effort whatsoever is made to balance revenue and spending and / or reduce debt. The financial discipline and acumen of the Federal Government is non-existent.
C) The HERA law and Conservatorship were implemented with undue haste in the midst of a cataclysmic financial collapse by a panicked and terrified Federal Government, U.S. Treasury and Federal Reserve.
D) Fannie and Freddie never needed a bailout. They were forced to accept one (citation needed). Additionally - in response to the financial crisis the Federal Government forced some other financial entities who didn't need bailouts to take them - the TBTF banks which were solvent were forced to accept bailout money to obscure the TBTF banks that were failing and needed bailing out.
https://thehill.com/opinion/finance/421956-fannie-and-freddie-didnt-get-a-bailout-it-was-a-stick-up/
(Ben Bernanke was accused of strong-arming Bank of America over the Merrill Lynch deal -
https://en.wikipedia.org/wiki/Ben_Bernanke - see "controversies"
E) Immediately upon being placed into Conservatorship and being forced to take bailout money Fannie and Freddie were forced to begin buying up Alt-A and Subprime mortgages on the open market in order to support further the bailout of the Big Banks. Fannie and Freddie were used in this capacity because they weren't banks and as such posed a lesser systemic risk to the financial system.
F) The Federal Government has used every device available at its disposal to hinder frustrate delay and avoid full revelation of the facts of this matter - using Executive Privilege and claims of National Security to suppress discovery in numerous court cases. They simply don't want the truth to be told.
G) In this regard, ending the Conservatorship poses unique and thorny difficulties: how are the GSE's to be released without creating a scenario whereby the full extent of Government incompetence and deliberate fraud can become known? Answer: stick with the tried-and-true narrative that Fannie and Freddie caused the financial crisis by providing mortgages to unqualified minorities, they needed to be bailed out, they were lucky to be saved by the Government and now hedge fund fat-cats are trying to get rich of the Government's altruism. Thus the Government is honestly and legally entitled to 79.9% of the common shares.
Let's push back on this warrant bullshit. FHFA apparently is having some type of "public comment" platform soliciting input regarding ending the Conservatorship.
We should put together an organized statement with as many signatories or submissions as possible.
Hoping for another great day tomorrow. GLTA
NeoSunTzu
11 hours ago
I would like to caution and implore everyone to be as proactive and vocal as possible in fighting against the full execution of the warrants. Everyone is giddy and light-headed now with all the rosy financial scenarios and the fact that we have an ostensibly "pro-release, pro-shareholder" team coming into office, but I assure you NOTHING ever goes fully according to plan without significant complications, back steps, and other unforeseen pitfalls.
As a case in point think about the financial establishment and government's plan to kill the GSEs; THAT WAS THEIR PLAN! Do NOT believe for a second they will not try to extract more than their pound of flesh, both now and over future time periods, which will be virtually GUARANTEED if we cave on the full warrant execution. This WILL set in stone the lion's share of past, present, and a good portion of future profits to the government while we receive the smallest portion with an unknown and uncertain future full of corporate actions, varying economic scenarios, regulation, congressional actions and on and on with a virtual endless list of potential drawbacks. It is a give away to the very criminals which tried to destroy you, me, our shareholder rights, and our families' future wealth.
I am NOT against the whole concept of the "art of the deal," but full execution is beyond ridiculous in light of all this government has done to bleed or destroy shareholders - even explicitly stating they would NEVER allow these companies to be profitable again a la the Net Worth Sweep - INSTITUED THE VERY MOMENT THEY LEARNED THE GSEs would be wildly profitable well into the future!!!! Please Google and research the Congressional testimony regarding the Warrants. Congress drilled adminstration officials hard on those warrants - they were NEVER intended to be executed; the stated purpose was as a deterrence. The entire government narrative on the conservatorship blaming the GSEs for the 2008 financial crisis depends heavily on your historical, economic, housing and mortage market, and financial ignorance (as summarized below), and the full execution of the warrants depends heavily on your subservience to and belief in big daddy government as your savior - giving you back some of the property they stole in its entirety and allowing you some pittance of an allowance. We should fight hard for full restoration with a modest conciliation to allow the government to save face BUT FULL EXECUTION OF THE WARRANTS is a much much larger defeat than you can quantify at this point in time.
Allow me to reiterate a number of factors against the government narrative:
1.) Although the narrative is to blame the GSEs for the 2008 financial crisis it was in fact the GSEs who performed best of all the financial companies during that crisis
2.) It was the private label mortgage backed securities and sponsoring banks/mortgage companies which failed miserably during the crisis
3.) The MASSIVE IMPLOSION of the financial industry was NOT due to mortgages nor MBS - especially NOT the GSE products; it was due to the MASSIVE and UNPRECEDENTED leverage of unregulated financial derivatives and associated products that investment banks and Wall Street created - we all know Hank was brought in to save Wall Street and the most obvious way was to use the GSE piggy banks
4.) Wall Street, Investment banks, and U.S. Commerical banks WERE SAVED BY the $700B TARP program, then CONFISCATING ALL OF THE GSEs EQUITY (then "loaning" it back to us! what a farce!) and running the liquidity through the Treasury which allowed both the Fed and Treasury to in essence "refund" banks for all of their underwater mortgages and MBS, pay their executive bonuses, save them from their MASSIVE DERIVATIVE LOSSES and FINALLY, SAVE THEIR REPUTATIONS BY BLAMING THE GSEs ....
The above list is NOT even close to a full exposition of the corruption, fraud, deception, and thievery. Furthermore, full execution of the warrants and letting the government off the hook will set ugly precendents for the future on everything from warrant issue, pricing, and execution, to conservatorship law, well-functioning market theory, and shareholder rights and beyond. We will once again in the future rue the day we allowed this surreal ruse to have taken us all in. All of the above DEMANDS FULL REMUNERATION TO SHAREHOLDERS TO KEEP THE FUTURE GOVT THIEVES AT BAY!
trunkmonk
13 hours ago
Nah, Get Arnold back please.
This will happen quickly, SM stalled for 4 years and he wanted to fire Watt cause he didnt do anything for several years. This is the last, most greedy thing left from the crisis. As stated, and not well known, the plan WILL be together with the first 100 days in office. Trump wont let this linger. SM said it was in his top 10 things to do, was 1 and 2 priority bringing his F rated wife actress to the printing and engraving to hang out with 100 dollar sheets, cant remember if he brought her to Fed Reserve gold depository where the only thing the slippery snake said was that the "gold is safe". duh we all knew this, was there 1000 tons. 2, 3, 4, or anything near 8k tons or did they sell most of it in the crisis. Germany repatriated 5 tons of their gold back then, they didnt get a single bar that matched serial numbers of the bars they put in there. its a mess. Here is the list of best investments for 2025
Housing (via GSEs)
Gold (its going 5 to 10x)
Utility Tokens (my fav is XRP, its gonna move trillions across the world within a year)
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