SREZ
53 minutes ago
KThomp19, (if you feel differently, apologize)
Well said on Calabria, but I hope you are dead wrong. Calabria was a 'Pence Man' & therefore a misguided soul. Pence just did not understand that his personal lack of action, and thus his direct IN-action was the 'work of the devil'. LOL coming from a perceived Christian like Pence. Not doing EVERYTHING in one's power to prevent a POS like Biden & Team getting to power could directly lead to WW3, highlights how Pence shot himself in the foot. Could Pence have done EVERYTHING Right? No. But his passivity & ultimate perceived actions were unforgiveable.
Middle East, Taiwan, Ukraine IMHO could have all been avoided.....the Devil at work.
#1 - liked Calabria stating "Hank Paulson was borderline lawless" -- understatement of the Decade IMO.
#2 - 14:53, Calabria pushed back against Trump & Co in terms of exiting Conservatorship?!? That is NOT Calabria's job nor outlook...PERIOD. Who does Calabria think he is? Trump will NOT make this mistake again IMHO, so IMO Calabria has a small chance of getting back to head of FHFA or even being part of the Trump Admin. ONLY way for this to happen IMO is for a POS like Kudlow (on F&F) to have outsized influence. Could happen, but hopefully not.
#3 - 30:22, not as relevant IMO.
Query: IYHO What can Biden & Co do to really f-us up b4 he leaves in January, '25? Particularly from the JPS perspective. Please as much detail as you can provide. Biden is LAWLESS when it comes to Student Debt + many other things, so Biden & Co is willing to go 110% against the law. TIA. Enjoy your posts!
Wise Man
3 hours ago
The Supreme Court required the "rehabilitation of FnF", adding "in a way, although not in the interests of FnF (awful ERCF tables), it's beneficial to (the written text states "in the best interests of") the FHFA", with the add-on "...and the public it serves", for the utilization of FnF for public policies.
Corroborated by judge Willett in the prior ruling over the same case, with "any action within the enumerated powers", which refers to the power of Rehabilitation, without saying it. This is why it was a half-baked ruling, synced-in with Justice Alito that finally said it: "Rehabilitate FnF": (may) put FnF in a sound and solvent condition", were "may" doesn't mean that the conservator is excused from complying once the capital has been generated (Legal dictionary), but about activities that make them take on more credit risk or bear losses, as explained by Freddie Mac here.
This is what the Restriction on Capital Distributions is for. A statutory provision covered up by the parties from the onset, in a clear case of collusion.
Justice Alito saw more his desire to peddle the hedge funds' Govt theft story, rather than what he was required, read the text, because there is no "monetary benefit" possible, as someone might think of with his opinion, in a regulatory agency, with respect to the entities it oversees, by any stretch of the imagination.
It's the benefit of a Separate Account plan and enjoy the pleasure of watching their Equity holders saddled with losses with their stocks trading at rock bottom prices (the stocks' fair value), and fighting against the assault attempt on the ownership by the holders of Preferred Stocks.
MAKE NO MISTAKE, the rehabilitation of FnF and actions authorized by this section, in the best interests of the Agency, go together at the same time.
You cannot take actions in the best interests of the Agency (10% and NWS dividends, and nowadays SPS LP increased for free) and then, 15 years later, claim that it's when you will "rehabilitate FnF" with the write down of the SPS that show up on the balance sheet, and the conversion to common stocks of the ones increased for free that are illegally absent from the balance sheet, which is what the government attorney, Mr. khtomp19, says in the comment that I'm replying to.
that writedown really would increase CET1/Tier 1/core capital by $193B.
I do think this is a viable path forward because it would allow FnF's retained earnings account to accurately reflect the reality of the company's health.
...and convert the off balance sheet LP into just as many commons as if they had converted the whole lot.
The reality of the company's health must be restored on a daily basis, both building up capital and with the reduction of the SPS, obligations that must be redeemed for cash, not increased for free out of the blue, because you wouldn't be rehabilitating FnF, measured in financial companies with the capital levels, not with the Net Worth.
Finally, the attorney Hamish Hume has a lot of explaining to do, for the voluntary dismissal of the Wazee case on May 22nd, and thus, refusing to file the scheduled appeal on May 24th, as seen in this image:
A case that, for the first time, challenged the ongoing Common Equity Sweep with the SPS LP increased for free every quarter. You cannot rehabilitate a company increasing the SPS LP of the government for free, in the same amount as the Net Worth increase.
Another capital distribution, restricted.
Remember: rehabilitate FnF and in the best interests of FHFA has to happen at the same time, otherwise it's NOT authorized by this section once the capital was generated.
What Justice Alito authorized, is a Separate Account plan. Hence the "not in the best interests of FnF" on paper (ERCF tables).
Wise Man
5 hours ago
JPS are redeemed, like SPS, not converted to Commons.
This is the chart of a Non-Cumulative dividend JPS with the dividend suspended, assuming that Fannie Mae fetched the threshold 25% of Prescribed Capital Buffer for the dividend resumption (Table 8: Payout ratio), with the 3Q2022 Earnings report.
It's been estimated a 6% annual discount rate because this is what the market would have demanded.
Freddie Mac, one year earlier.
Nowadays, in overtime (Conservator Risk: "Take any action authorized by this section, in the best interests of the Agency". FHFA-C's Incidental Power) with the expulsion of the unwanted members (AT1 capital instruments holders -JPS), in time for the announcement of a Privatized Housing Finance System revamp chosen for the release by the UST in 2011, at the request of the Dodd-Frank law, which is only possible when CET1 > 2.5% of ATA, in accordance with the law and Finance (Separate Account plan).
Wise Man
1 day ago
Yikes! The "cash guy" that invented the concept "cash Equity", better known by the corrupt attorneys as "Hi Rum!" in private emails, strikes again.
He is happy that FnF get to keep the cash with the SPS LP increased for free, so they can make investments, notwithstanding that FnF have $8 Trillion in MBS (a MBS is called "investment in a mortgage") with the cash provided by the MBS investors.
They have also tonnes of cash for Liquidity in their Contingency Portfolios ($129B in Freddie Mac and $120B in Fannie Mae, as of end of March 2024), with investments in debt securities among their "Eligible Assets", like Treasuries, valued at fair value, not like the battered banks with their HTM portfolios, enabled by their imprudent Regulators.
Additionally, other Eligible Assets in their mortgage-related investments portfolios (investments in Agency MBSs).
All that matters is the effect in Equity or Net Worth. That's our wealth in a company.
And if you read "Common Equity Sweep", you should be worried, because "Common Equity" is the portion of the Net Worth that belongs to the common shareholders, and CET1 is what is required for the recapitalization (rehabilitation in a financial company: restore to a sound and solvent condition).
Only real difference is... the companies keep and are able to reinvest the earnings and in this interest rate environment is worth something.
This isn't about "greed". Each stock class has its role and risks, which has been exacerbated by Regulatory Risk, unrelated to the Conservatorship, with a capital requirement that has spiked from 0.45% of the MBS Trusts (off-balance sheet obligations) to 2.5%.
Conservator Risk in the last phase, when the FHFA sought to expel the unwanted members (AT1 Capital instruments like the JPS) like occurred with the FHLBanks in a 2016 Final Rule, and it's waiting for the release, not just with CET1 > 2.5% of ATA, but also it aims to comply with 25% of Capital Buffer for the resumption of dividend payments (Table 8) in time for the announcement of the Privatized Housing Finance System that the UST recommended for the release in a 2011 Report to Congress.
This is why we have waited for the 1Q2024 Earnings reports and the laggard Fannie Mae (Separate Account plan: illegal CRT expenses, net, and PLMBS settlement, included)
If you don't like it, like the UST backup of FnF as a last resort "at rates that take into consideration the Treasury yields as of the end of the month preceding the purchase", or investments in Non-Cumulative dividend JPS, the Charter is revoked and you don't buy JPS anymore in the future. But until then, don't try to change the current status with multiple cover-ups and abuse of court process, because that's a felony and we will request $4.8B in Punitive Damages, and everything will be unwound (The Lamberth rebate, etc.)
when greed got in the way
The Conservatorship cannot be extended just because there are investors that don't want to reckon the risks mentioned, and they rather see their dividend suspended in the hands of the Government, instead of being kept by FnF for the recapitalization, as always, and spending all day sending messages to the common shareholders: "Thanks for sharing", when that's impossible because each share class has its stock valuation, or "The government be appropriately compensated" (Mnuchin), when the Charter Act prohibits additional fees or charges, other than the rate on SPS mentioned before.
If you have been sent to the Freddie Mac board, take all your aliases with you.
Wise Man
1 day ago
This is why the UST recommended the Basel-framework for capital requirements, for the release from conservatorship, in its 2011 Report to Congress at the request of the Dodd-Frank law.
It required guarantee fee increases that reflect their risk, so that FnF can be held to the same capital standards as the banks. Thus, don't depend anymore on the UST backup of FnF in the Charter Act.
15 years in the making.
Don't worry about the release.
You should worry about the corrupt Plaintiffs and Co that want to deplete capital in FnF with the 10% and NWS dividends, the SPS LP increases for free, etc.
I think it would be more accurate to say that they cannot assess the economic consequences for the housing market and the economy in general if they release the twins.
stockanalyze
2 days ago
i have to agree with you. i do wonder paulson, corker, demarco, alito, calabria , mnuchin who foked this, belonged where? and if they just hate these two companies philosophically that has saved our economy over and over again and still making money hand and fist?
there is optimism here only because lael has already declared that current admin isn't doing anything, so that road is closed. so can't blame everyone to look on the other side, right or wrong. they are hoping, hoping that it will happen this time. may be proved wrong. interesting that he says courts, judges, cases are all rigged but when it comes to gse's , he doesn't? the politicians are adept in making money for themselves in stock market (pelosi, djt stock, buzzfeed, mnuchin on ny bank, crypto and so on...) but when it comes to taking away hard earned retirement and 529 that has all been taken away , $1500 down to $0.40 over last 16 years, with many dead without seeing a penny. nada.
Ace Trader
2 days ago
I was just thinking about the timing of all this the other day and it got me thinking. WHAT TIMING, how it all went down in 2008. It's pretty much a steel of private companies for the banks and greedy WEF to control the world in every aspect. Remember what they said ( YOU WILL OWN NOTHING AND BE HAPPY)
Those losses are just the beginning.
As shareholder capital gets wiped, the government will have no choice but to seize the company and
place it in conservatorship or receivership. Importantly, mortgage-backed security holders guaranteed
by Fannie Mae will see no losses.
Classic grab by those in power!!!! Turning the mortgage market into a Cartel just like the dollar, Banks, Car market, Food production, Medical. It's happening faster now across the board so if DJT does win the Whitehouse then what will 2025 to 2028 look like? Will there be changes in the mortgage companies Fannie and Freddie????
FOFreddie
2 days ago
HI Ace - it is not What IF - it is what was actually planned:
From the NEC to the UST on March 8, 2008
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
Government Bailout Is Necessary, Likely, And Potentially Helpful
Fannie Mae is demonstrably a failed social experiment. A realistic assessment of its balance sheet shows
its net worth to be overstated by tens of billions of dollars and the company to be already insolvent.
Even with all its accounting legerdemain, Fannie's losses are an accelerating horror show, with
shareholders losing $1.5 billion in 07Q3 and $3.7 billion in 07Q4. Those losses are just the beginning.
As shareholder capital gets wiped, the government will have no choice but to seize the company and
place it in conservatorship or receivership. Importantly, mortgage-backed security holders guaranteed
by Fannie Mae will see no losses. The government will likely allow debt holders to fare okay, with either
no or token losses, perhaps 1%.
Shareholders, both common and preferred, are likely to be left with nothing. However, these
shareholder losses have already been locked in by the company's credit decisions over the past few
years and cannot be helped. It must be remembered that Fannie is the biggest mortgage risk holder in
the biggest mortgage crisis.
A fully government-owned guarantor of mortgage debt might be exactly what is called for given the
current housing crisis. While various proposals have been floated to expand the FHA to meet this role, it
has neither the infrastructure nor the expertise to address the broader mortgage market. A nationalized
Fannie Mae would be refocused to directly address the various problems of illiquidity, affordability, and
sustainability in the mortgage market. Without the need to satisfy a fiduciary duty to shareholders,
Fannie might finally be able to perform its affordable housing mission in a helpful and proactive manner.
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