FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[Desert_Rat]

I don't naturally, but if this admin can't accomplish anything anyway I'd look at it as a vote for stonewalling warmongering. If I'd consider this stance you can bet others will as well. But even if not, everyone should be concerned about DJT's lacking poularity, and the midterms. If we lose the house I think we lose our edge.

[TwoCitiesCapital]

Gotta be before '19.

 

With DJT's admin unable to accomplish anything except bombing folks, even I'd think about voting the house back to Dem's @ midterms. That would be a vote for no congressional approval on warmongering. If the house is lost that means anything that hadn't been accomplished by then gets stonewalled until 2020 when our present edge may be lost.

 

There may be hope though: http://www.cnbc.com/2017/04/20/conservative-republicans-reportedly-pleased-with-changes-to-health-care-proposal.html

 

Are you kidding me? The Democrats right now vote no on every bill no matter what. Why would you want this kind of senseless people in Congress?

 

Unfortunately, there's no absolute bar for quality that politicians must meet to get votes. We'll vote idiots into office any day if we think they're a hair less idiotic then the prior person.

[rros]

http://video.cnbc.com.ln.is/mnafG

Stevens is simply being cautious navigating unfamiliar territory (new admin).

 

Note he said they were "agnostic" in regards to shareholders but later on he used the word "speculators" first thing referring to hedge funds. So in his mind -and possibly in off-the-record exchanges- he continues to view terms such as shareholders /speculators as synonyms. We still need to see if the combo Jared-Ivanka-Paulson is for real and will lead to any positive push as in "respecting shareholders' rights".

 

[investorG]

 

There may be hope though: http://www.cnbc.com/2017/04/20/conservative-republicans-reportedly-pleased-with-changes-to-health-care-proposal.html

 

imo the only way repealing and replacing Obamacare can happen concurrently is to sway public opinion.  otherwise the democratic senators would stand united and it's hard to reconcile what Murkowski/Collins/cotton/others in the senate want with the freedom caucus especially when a key reason is a tax break for medical corporations and investors that frees up flexibility on tax reform plans.

 

I believe there's a real chance that corsi's reporting on the GSE profits funding Ocare through the Treasury is somewhat accurate -- especially after reading the joint congressional report from last year.  If this view is right, then an aggressive but perhaps reasonable strategy for the admin would be to expose this, say they won't continue the CSR payments, drop the appeal of the House R's suit, and then leave it up to congress to either pony up 130bn over ten years or repeal and replace with more unity in the R party. 

 

watch sessions' interview on fox news yesterday at the end on the CSR payments, my take from that was he believes the appropriation should come from congress (even though he left open the door for it to possibly continue as is).

[Guest cherzeca]

i took a look at the executive summary for the mba gse reform plan, and it looks like what berkowitz/ackman have been recommending for gses, utility returns and higher cap, but with multiple guarantors and an explicit govt guarantee to pay in event of "catastrophic losses".

 

basically, why not do this for fnma and fmcc first since they are the housing finance market, and them say others can compete on same basis?  gses have all of the expertise in house and are managing Ts in gtee obligations, so why not start there first?

 

so interesting to note mbs has come all the way to the plaintiffs' proposed reform model, but cant see to it that they would want it to apply to fnma and fmcc, but only to successor guarantors

 

[Luke 532]

Treasury's Mnuchin: We're 'pretty close' to bringing forward 'major tax reform'

http://www.cnbc.com/2017/04/20/treasurys-mnuchin-were-pretty-close-to-bringing-forward-major-tax-reform.html

 

Julia La Roche‏ @SallyPancakes 6m6 minutes ago

Mnuchin says he's 'very focused' on housing reform, noting Fannie/Freddie still in govt. control. $FNMA $FMCC

 

Julia La Roche‏ @SallyPancakes 9m9 minutes ago

Mnuchin says tax reform will get done regardless of health care reform.

 

Julia La Roche‏ @SallyPancakes

Mnuchin says No. 1 priority is economic growth achieved through tax reform, regulatory reform, housing reform, and cyber security.

[rros]

basically, why not do this for fnma and fmcc first since they are the housing finance market, and them say others can compete on same basis?  gses have all of the expertise in house and are managing Ts in gtee obligations, so why not start there first?

 

I think that is what he is saying. Take a look:

Preserve where possible the existing infrastructure — for example, a rechartered Fannie Mae and Freddie Mac could be the first two Guarantors.

 

Rechartered successors to Fannie Mae and Freddie Mac would likely be the first two Guarantors. Preserving the existing human capital and operational processes at both GSEs and reasonably supporting their emergence as viable Guarantors. Transitioning to the new system over a multiyear period, with implementation occurring gradually to avoid market disruption and to build required capital.

 

Guarantors would be monoline, regulated utilities owned by private shareholders. (The monoline was also Millstein's idea).

Competition can come later and only if the regulator charters out to other institutions . And we know banks will kill for such charter.

 

I do not think Berkowitz wanted a gov. guarantee though. Maybe Ackman.

 

Stevens plan may gather consensus from many parties. As well as shareholders provided we are part of the transition.

[investorG]

Morgan Stanley's treasurer is leaving for FNMA.

[Luke 532]

Reuters Politics‏Verified account @ReutersPolitics 2m2 minutes ago

MORE: Trump to sign memoranda Friday for treasury secretary on orderly liquidation authority, financial oversight council - spokesman

 

CNBC Now‏Verified account @CNBCnow

NEW: Trump to make first visit to Treasury Dept. tomorrow to sign two financial-related executive orders (via @kaylatausche & @EamonJavers)

 

Orderly liquidation... of warrants?  Perhaps.

 

[stevevri]

Requires you to sign up and I've used my trial so I can't read but this explains the liquidation thing: https://www.americanbanker.com/news/mnuchin-targets-fdic-powers-volcker-as-top-reg-priorities

 

From the little bit available, It doesn't appear to be related.

[Luke 532]

Requires you to sign up and I've used my trial so I can't read but this explains the liquidation thing: https://www.americanbanker.com/news/mnuchin-targets-fdic-powers-volcker-as-top-reg-priorities

 

From the little bit available, It doesn't appear to be related.

 

Thanks for the info.

[Desert_Rat]

Joshua 10:25

[Desert_Rat]

basically, why not do this for fnma and fmcc first since they are the housing finance market, and them say others can compete on same basis?  gses have all of the expertise in house and are managing Ts in gtee obligations, so why not start there first?

 

I think that is what he is saying. Take a look:

Preserve where possible the existing infrastructure — for example, a rechartered Fannie Mae and Freddie Mac could be the first two Guarantors.

 

Rechartered successors to Fannie Mae and Freddie Mac would likely be the first two Guarantors. Preserving the existing human capital and operational processes at both GSEs and reasonably supporting their emergence as viable Guarantors. Transitioning to the new system over a multiyear period, with implementation occurring gradually to avoid market disruption and to build required capital.

 

Guarantors would be monoline, regulated utilities owned by private shareholders. (The monoline was also Millstein's idea).

Competition can come later and only if the regulator charters out to other institutions . And we know banks will kill for such charter.

 

I do not think Berkowitz wanted a gov. guarantee though. Maybe Ackman.

 

Stevens plan may gather consensus from many parties. As well as shareholders provided we are part of the transition.

 

Potentially more money for govt as well.

 

I recall from way back that FnF's CDO algo's could be sold to replacement vehicles. Since FnF do their job so well I'll assume they're pretty valuable.

[doughishere]

Joshua 10:25

 

hallelujah! Praise the one they call mnuchin!

[Desert_Rat]

NYT, fake news and all has got our back. Not sure what I think about all that but I'm not complaining at this exact moment: https://www.nytimes.com/2015/12/07/business/a-revolving-door-helps-big-banks-quiet-campaign-to-muscle-out-fannie-and-freddie.html?smid=tw-share

[Luke 532]

NYT, fake news and all has got our back. Not sure what I think about all that but I'm not complaining at this exact moment: https://www.nytimes.com/2015/12/07/business/a-revolving-door-helps-big-banks-quiet-campaign-to-muscle-out-fannie-and-freddie.html?smid=tw-share

 

Pulitzer Prize winning writer Gretchen Morgenson has written some good articles on the GSE's over the past couple years.  This particular article was great when written and is still great today.

[Spekulatius]

I believe there's a real chance that corsi's reporting on the GSE profits funding Ocare through the Treasury is somewhat accurate -- especially after reading the joint congressional report from last year

 

Money is fungible, how would you determine where the Dollars for a specific expense is coming from? The whole idea makes no sense to me, unless you talk about money laundry.

[investorG]

I believe there's a real chance that corsi's reporting on the GSE profits funding Ocare through the Treasury is somewhat accurate -- especially after reading the joint congressional report from last year

 

Money is fungible, how would you determine where the Dollars for a specific expense is coming from? The whole idea makes no sense to me, unless you talk about money laundry.

 

if you read all of corsi's reports, including a couple with govt data, and then the 200 page joint congressional report on the CSR payments, I think you too will think there's a real chance the GSE profits were used for the Ocare subsidies.

 

[rros]

I believe there's a real chance that corsi's reporting on the GSE profits funding Ocare through the Treasury is somewhat accurate -- especially after reading the joint congressional report from last year

 

Money is fungible, how would you determine where the Dollars for a specific expense is coming from? The whole idea makes no sense to me, unless you talk about money laundry.

 

if you read all of corsi's reports, including a couple with govt data, and then the 200 page joint congressional report on the CSR payments, I think you too will think there's a real chance the GSE profits were used for the Ocare subsidies.

I believe spekulatius is correct. HERA enables all payments to go to Treasury's general funds. It's in the law signed in 2008. Once in general funds the money gets lost. That money -whether dividends, legal settlements or DTAs- will be no different than any other money Treasury receives. This Ocare payments strategy should be abandoned, in my view. The more transparent theme regarding the NWS has always been "never to share a dime of profit with shareholders". There is even a Treasury memo about it.

[investorG]

I believe there's a real chance that corsi's reporting on the GSE profits funding Ocare through the Treasury is somewhat accurate -- especially after reading the joint congressional report from last year

 

Money is fungible, how would you determine where the Dollars for a specific expense is coming from? The whole idea makes no sense to me, unless you talk about money laundry.

 

if you read all of corsi's reports, including a couple with govt data, and then the 200 page joint congressional report on the CSR payments, I think you too will think there's a real chance the GSE profits were used for the Ocare subsidies.

I believe spekulatius is correct. HERA enables all payments to go to Treasury's general funds. It's in the law signed in 2008. Once in general funds the money gets lost. That money -whether dividends, legal settlements or DTAs- will be no different than any other money Treasury receives. This Ocare payments strategy should be abandoned, in my view. The more transparent theme regarding the NWS has always been "never to share a dime of profit with shareholders". There is even a Treasury memo about it.

 

it's possible you are right, that's why I say there's a chance it was directed to CSR payments.

 

but once again I would say if you read the 2 joint congressional reports and corsi's reports, including the mar13 one (can be found on gselinks.com), I think you'd have some suspicion over the timing of the congressional request, then withdrawal of the CSR funding at the same time of the GSE DTA windfall, combined with the ridiculous stonewalling of the congressional investigation by the prior admin.

 

it's also possible that the current admin knows this but doesn't want to hurt people if their plan is to eventually stop the sweep.  but maybe you're underestimating the power of the anti-gse opposition and thus anything that tilts opinion in favor of the GSEs needs to be used, imo.

[Sunrider]

I believe there's a real chance that corsi's reporting on the GSE profits funding Ocare through the Treasury is somewhat accurate -- especially after reading the joint congressional report from last year

 

Money is fungible, how would you determine where the Dollars for a specific expense is coming from? The whole idea makes no sense to me, unless you talk about money laundry.

 

if you read all of corsi's reports, including a couple with govt data, and then the 200 page joint congressional report on the CSR payments, I think you too will think there's a real chance the GSE profits were used for the Ocare subsidies.

I believe spekulatius is correct. HERA enables all payments to go to Treasury's general funds. It's in the law signed in 2008. Once in general funds the money gets lost. That money -whether dividends, legal settlements or DTAs- will be no different than any other money Treasury receives. This Ocare payments strategy should be abandoned, in my view. The more transparent theme regarding the NWS has always been "never to share a dime of profit with shareholders". There is even a Treasury memo about it.

 

I think I said it this way a few pages ago: A dollar is a dollar :)

[rros]

I believe there's a real chance that corsi's reporting on the GSE profits funding Ocare through the Treasury is somewhat accurate -- especially after reading the joint congressional report from last year

 

Money is fungible, how would you determine where the Dollars for a specific expense is coming from? The whole idea makes no sense to me, unless you talk about money laundry.

 

if you read all of corsi's reports, including a couple with govt data, and then the 200 page joint congressional report on the CSR payments, I think you too will think there's a real chance the GSE profits were used for the Ocare subsidies.

I believe spekulatius is correct. HERA enables all payments to go to Treasury's general funds. It's in the law signed in 2008. Once in general funds the money gets lost. That money -whether dividends, legal settlements or DTAs- will be no different than any other money Treasury receives. This Ocare payments strategy should be abandoned, in my view. The more transparent theme regarding the NWS has always been "never to share a dime of profit with shareholders". There is even a Treasury memo about it.

 

it's possible you are right, that's why I say there's a chance it was directed to CSR payments.

 

but once again I would say if you read the 2 joint congressional reports and corsi's reports, including the mar13 one (can be found on gselinks.com), I think you'd have some suspicion over the timing of the congressional request, then withdrawal of the CSR funding at the same time of the GSE DTA windfall, combined with the ridiculous stonewalling of the congressional investigation by the prior admin.

 

it's also possible that the current admin knows this but doesn't want to hurt people if their plan is to eventually stop the sweep.  but maybe you're underestimating the power of the anti-gse opposition and thus anything that tilts opinion in favor of the GSEs needs to be used, imo.

You are right. I did underestimate anti-gse oppo. But I also failed to assess correctly what a mess an investment tied to political outcomes could be. What's worse, I miserably missed the mark in assessing courts and would have never concluded that court outcomes are 50/50 (complete uncertainty). I guess the oracle had it right when he avoided such type of investments. But the point is "suspecting" something does no good to your investment. Neither it adds.

 

On another front, Stevens proposal is a shift in the right direction. The shareholders' piece, however, needs to be adequately plugged in to make the proposal wholesome. That is, the new owners of the successors of re-chartered Fannie and Freddie should be the legacy shareholders.

[Guest cherzeca]

@rros

 

I think the utility concept is a plus for shareholders. I don't think the mbs cat gtee will get much traction and I don't think the breakup of gses ever was viable or else it would have been done already. So net net I think the mba proposal is helpful

[DocSnowball]

Novice question- does it make sense to build half position now, and half after restructuring/release to average out gains/risks? They are reformed now with a solid business model, but struggling with the binary nature of this investment.What do those who have been watching this game longer think?

[rros]

Novice question- does it make sense to build half position now, and half after restructuring/release to average out gains/risks? They are reformed now with a solid business model, but struggling with the binary nature of this investment.What do those who have been watching this game longer think?

So far, and for many years, these stocks have run on lack of information and collapsed on hard facts such as court rulings or government press releases. Just like the old dot coms when there was no data to analyze stocks boomed only to collapse when first data became available. Following this line of thought you should accumulate now before the cold water splash.

 

Thank you, Chris.