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

[waynepolsonAtoZ]

We can't handle this [raging sociopath] determined to undermine our cushy (and ineffective) political system'

[merkhet]

https://www.bloomberg.com/news/articles/2017-05-16/fannie-freddie-won-t-be-freed-without-congress-regulator-says

 

The Federal Housing Finance Agency won’t release Fannie Mae and Freddie Mac from U.S. control without congressional approval even if the Trump administration asks that the mortgage-finance giants be freed, a key agency official said in an interview.

[muscleman]

https://www.bloomberg.com/news/articles/2017-05-16/fannie-freddie-won-t-be-freed-without-congress-regulator-says

 

The Federal Housing Finance Agency won’t release Fannie Mae and Freddie Mac from U.S. control without congressional approval even if the Trump administration asks that the mortgage-finance giants be freed, a key agency official said in an interview.

 

 

Joe Light again?

 

This statement is inline with Watt's statement when Crapo asked him to confirm that stopping payments to treasury is not the first step towards recap and release.

 

 

 

 

 

[investorG]

https://www.bloomberg.com/news/articles/2017-05-16/fannie-freddie-won-t-be-freed-without-congress-regulator-says

 

The Federal Housing Finance Agency won’t release Fannie Mae and Freddie Mac from U.S. control without congressional approval even if the Trump administration asks that the mortgage-finance giants be freed, a key agency official said in an interview.

 

people may very well sell on this but he taking them out of conservatorship - which is what he references - is likely many years away even in a favorable outcome.

 

imo better to focus on what's right in front us which is a) sweep b) court case miracle c) hints on priorities for future reform and d) anything else I'm missing.

[rros]

https://www.bloomberg.com/news/articles/2017-05-16/fannie-freddie-won-t-be-freed-without-congress-regulator-says

 

The Federal Housing Finance Agency won’t release Fannie Mae and Freddie Mac from U.S. control without congressional approval even if the Trump administration asks that the mortgage-finance giants be freed, a key agency official said in an interview.

 

people may very well sell on this but he taking them out of conservatorship - which is what he references - is likely many years away even in a favorable outcome.

 

imo better to focus on what's right in front us which is a) sweep b) court case miracle c) hints on priorities for future reform and d) anything else I'm missing.

The big one you are missing is January 1st, 2018.

 

Watt can say all he wants about not freeing the companies but if Treasury ends the commitment unilaterally the companies will be forced to recapitalize or be received. Once fully recapitalized he will have to follow the law and end the conservatorship. But he probably won't be around when that happens.

[hardincap]

its pretty clear now that mnuchin underestimated the political challenges of fixing f&f when he said it can be done reasonably quickly (mclean was right about that). signs point to it taking much longer than even he anticipated. watt implementing a cap buffer changed little; nws will remain above the "relatively small" buffer

[Guest cherzeca]

https://www.bloomberg.com/news/articles/2017-05-16/fannie-freddie-won-t-be-freed-without-congress-regulator-says

 

The Federal Housing Finance Agency won’t release Fannie Mae and Freddie Mac from U.S. control without congressional approval even if the Trump administration asks that the mortgage-finance giants be freed, a key agency official said in an interview.

 

i think watt and mnuchin have discussed matters to the point where they agree that some sort of reform (i think utility regulation) is necessary for gses and this type of regulation is best done on a bi-partisan basis with congressional approval.  if congress cant get its act together, then that stance might change.  i also think that both watt and mnuchin will tell congress that they want the litigation that they are defending to end in connection with any reform.  but having watt refrain from making distributions in the meantime would be a welcome result.

[Guest cherzeca]

its pretty clear now that mnuchin underestimated the political challenges of fixing f&f when he said it can be done reasonably quickly (mclean was right about that). signs point to it taking much longer than even he anticipated. watt implementing a cap buffer changed little; nws will remain above the "relatively small" buffer

 

"nws will remain above the "relatively small" buffer" 

 

any indication of this?  i havent seen watt say anything other than he might omit dividends. 

[hardincap]

its pretty clear now that mnuchin underestimated the political challenges of fixing f&f when he said it can be done reasonably quickly (mclean was right about that). signs point to it taking much longer than even he anticipated. watt implementing a cap buffer changed little; nws will remain above the "relatively small" buffer

 

"nws will remain above the "relatively small" buffer" 

 

any indication of this?  i havent seen watt say anything other than he might omit dividends.

 

"Ryan said he couldn’t specify how much capital would be needed, but that it would be a relatively small amount to deal with the risk of short-term losses."

 

Matt Scully‏ @scullymb  21h21 hours ago

More

FHFA's Bob Ryan emphasizes that capital buffer push for Fannie, Freddie is not meant to recapitalize the GSEs. Build buffer, then sweep.

 

 

[rros]

its pretty clear now that mnuchin underestimated the political challenges of fixing f&f when he said it can be done reasonably quickly (mclean was right about that). signs point to it taking much longer than even he anticipated. watt implementing a cap buffer changed little; nws will remain above the "relatively small" buffer

 

"nws will remain above the "relatively small" buffer" 

 

any indication of this?  i havent seen watt say anything other than he might omit dividends.

 

"Ryan said he couldn’t specify how much capital would be needed, but that it would be a relatively small amount to deal with the risk of short-term losses."

 

Matt Scully‏ @scullymb  21h21 hours ago

More

FHFA's Bob Ryan emphasizes that capital buffer push for Fannie, Freddie is not meant to recapitalize the GSEs. Build buffer, then sweep.

That can still be many billions. Not to mention that if tax reform gets accomplished that need may rise to tens of billions. Since retaining earnings appears to be a done deal the best we can hope for is an open-ended agreement due to the inability to determine a fix buffer. Which may require full earnings retention for the next 2 to 3 quarters. Then, January 1st, 2018 comes.

 

Like someone explained to me when I was first introduced to american football (I am a soccer guy) it's all about gaining yards.

[Desert_Rat]

Watt was specifically asked that last week. His response was that he wasn't sure but was aware that tax reform could equate to a $15-20b loss. If the man wants to insure no probability of draw I'd say his target is at least that much.

[Desert_Rat]

its pretty clear now that mnuchin underestimated the political challenges of fixing f&f when he said it can be done reasonably quickly (mclean was right about that). signs point to it taking much longer than even he anticipated. watt implementing a cap buffer changed little; nws will remain above the "relatively small" buffer

 

Plan is Watt will be gone soon. President Trump will soon have the right to fire him. Watt will not matter. One at a time. I also read that the FHFA deputy, Bob Ryan, was VP at Wells Fargo, WFC is out to steal GSE business. They think everyone is dumb.

 

I doubt that.

 

Watt seems to be doing a good job, great one if FnF success attributable to him and staff. No cause to remove him.

[SnarkyPuppy]

its pretty clear now that mnuchin underestimated the political challenges of fixing f&f when he said it can be done reasonably quickly (mclean was right about that). signs point to it taking much longer than even he anticipated. watt implementing a cap buffer changed little; nws will remain above the "relatively small" buffer

 

Plan is Watt will be gone soon. President Trump will soon have the right to fire him. Watt will not matter. One at a time. I also read that the FHFA deputy, Bob Ryan, was VP at Wells Fargo, WFC is out to steal GSE business. They think everyone is dumb.

 

Haven't seen anyone mention this, but I think it's pretty clear trump will just get rid of anyone that doesn't follow his plan (assuming his plan is to end conservatorship)

[rros]

its pretty clear now that mnuchin underestimated the political challenges of fixing f&f when he said it can be done reasonably quickly (mclean was right about that). signs point to it taking much longer than even he anticipated. watt implementing a cap buffer changed little; nws will remain above the "relatively small" buffer

 

Plan is Watt will be gone soon. President Trump will soon have the right to fire him. Watt will not matter. One at a time. I also read that the FHFA deputy, Bob Ryan, was VP at Wells Fargo, WFC is out to steal GSE business. They think everyone is dumb.

 

Haven't seen anyone mention this, but I think it's pretty clear trump will just get rid of anyone that doesn't follow his plan (assuming his plan is to end conservatorship)

I agree with this.

 

I am also thinking after Corker's admission that he has an open line with Watt, which seems to have been regularly used in the past, he most likely contacted "Mel" pressing for a stronger Congress involvement and some reassurance of no administrative actions. If this is correct it demonstrates further that Corker has no good standing with this WH, that he can only count on Watt and that this WH most likely will oppose him.  Pressing Watt behind the scenes may not succeed after all his badmouthing and Trump could try a renewed push at Dodd-Frank reform. Which includes the firing of the head of FHFA at will.

 

All total and complete filling-in-the-blanks speculation by me.

 

At a minimum, I cannot see all 3 parties (Watt, Mnuchin, Congress) being ever on the same plate. Two at least -Watt and Mnuchin- might.

[waynepolsonAtoZ]

Did you bother to read Watt's written testimony and listen to the hearing?

 

"Just know that no progress will be made as long as Watt is there. He is the roadblock to what Mnuchin wants. Getting rid of a politician in that seat and placing a finance person in the seat is the plan. If you heard the testimony last week, Watt said many times that he is clueless about housing finance reform. If so, I would say to him "then leave, as that is all is there left to do"."

 

Watt is not the problem. Note this Josh Rosner piece. https://www.scribd.com/document/348114356/05-11-17-GF-Co-GSE-Reform-FHFA-Watt-on-the-Hill

 

I would argue that the oligarchy is the problem. That means Mnuchin and the rest of the GS crew, etc.

 

Of these, Watt is by far the best of the bad pack of dogs.

[Flynnstone5]

Did you bother to read Watt's written testimony and listen to the hearing?

 

"Just know that no progress will be made as long as Watt is there. He is the roadblock to what Mnuchin wants. Getting rid of a politician in that seat and placing a finance person in the seat is the plan. If you heard the testimony last week, Watt said many times that he is clueless about housing finance reform. If so, I would say to him "then leave, as that is all is there left to do"."

 

Watt is not the problem. Note this Josh Rosner piece. https://www.scribd.com/document/348114356/05-11-17-GF-Co-GSE-Reform-FHFA-Watt-on-the-Hill

 

I would argue that the oligarchy is the problem. That means Mnuchin and the rest of the GS crew, etc.

 

Of these, Watt is by far the best of the bad pack of dogs.

 

So you think Watt is going it alone without having discussed with Mnuchin? I don't see it that way if that's the case. Mnuchin has said that he agrees with Yellen that FnF didn't cause the crisis, they serve a vital purpose, etc, etc. I don't think he's an enemy, but I think the writings on the wall that the capital buffer is going to be much larger than many expect. Certainly wouldn't touch common at this point. Thoughts appreciated.

[orthopa]

Did you bother to read Watt's written testimony and listen to the hearing?

 

"Just know that no progress will be made as long as Watt is there. He is the roadblock to what Mnuchin wants. Getting rid of a politician in that seat and placing a finance person in the seat is the plan. If you heard the testimony last week, Watt said many times that he is clueless about housing finance reform. If so, I would say to him "then leave, as that is all is there left to do"."

 

Watt is not the problem. Note this Josh Rosner piece. https://www.scribd.com/document/348114356/05-11-17-GF-Co-GSE-Reform-FHFA-Watt-on-the-Hill

 

I would argue that the oligarchy is the problem. That means Mnuchin and the rest of the GS crew, etc.

 

Of these, Watt is by far the best of the bad pack of dogs.

 

Mnuchin is the only reason we still post on this thread. Dont think I would keep riding him that hard. He maybe the only reason any of us make any $$$$ on this.

[orthopa]

Think about how far we have come, a year ago these entities were dead as could be and now there appears to be some in fighting between the admin and congress, mnuchin, watt etc. Just what we need. The more they disagree the less likely something drastic happens in regards to structure but the deadlines and DTA coming and very real.

 

The senate finance committee has not trusted mnuchin from the beginning. We are seeing why now. Mnuchin/Phillips are in the driver seat here. Have Mnuchin/Phillips consulted with congress on reform? Not likely. The senate finance committee doesnt know shit. If you watch the video you can tell they are lost. No clue. Corker does and I bet sees what happening. Congress at this point is there to pass the bill and I have every expectation that Mnuchin/Watt will do everything in their power to do as much as they can without congress's approval. Watt will defer everything to his duty as conservator but he will act based on Mnunchin's wishes.

 

Remember what Mnuchin said, he said out of govt control/ownership/protect the taxpayer before he said he hoped there could be a legislative decision. Who is Congress fooling, they wont pass a bill on their own. They have 7.5 months right now to overhaul something as huge as fannie/freddie. No fucking way. How do Corker/Mnuchin/Phillips come together. If Corker/Warner go rouge Trump wont sign the bill.

 

Mnuchin/Phillips are in the drivers seat, everyone else is along for the ride. Again this begs the question does Mnuchin fuck over Paulson/Berkowitz et al or does those guys finally get their pay back?

[Desert_Rat]

With all due respect, I don't think a single one of you saw that hearing last week. Watt is apolitical, in control, doing a good job, and he's going no where.  At least as long as the conservatorship exists, that is.

[muscleman]

With all due respect, I don't think a single one of you saw that hearing last week. Watt is apolitical, in control, doing a good job, and he's going no where.  At least as long as the conservatorship exists, that is.

 

Well, I did view that hearing a few times, though not for every single minute.

My impression is that Watt seems a bit scared of Corker and Crapo when he speaks.

 

[Desert_Rat]

My impression is the opposite; He was disturbed that Corker would bring up a topic they had already hashed out, and, at those times, Corker fully understanding the position Watt would take. In a word: getthefuckoutofherewiththatshit

 

 

 

 

[waynepolsonAtoZ]

If Mnuchin is the reason you post. Good luck!!!

[beaufort]

I watched much of the Watt hearing as well.

 

I thought he was in control. My memory is he made sensible distinctions between reform of the GSEs and housing finance reform.  He made several references to the statute and his defined role.  He also acknowledged that he has been in talks with Treasury re retaining capital.  Questions better answered by Mnuchin, he left for Mnuchin. 

 

I see no reason not to take him at his word.  As for the issue of why is he now proposing to end the NWS for buffer capital where before he went along with it, my view is that the facts have changed, and his views have changed.  The political winds have changed.  Conservatorship has worked in getting the GSEs to the point where they are well reformed and appropriate to the task of doing what they do well:  providing insurance on MBS for credit worthy borrowers in an efficient manner.  Now the next step is to make sure they don't pose a risk with their capital structure to taxpayers. 

 

 

[Desert_Rat]

I think we're correct, Beaufort. It's also refreshing to read genuine instead of influenced impressions.

 

IMO, no one watching that hearing could conclude that Watt is a partisan hack whose time is limited. the most obvious thing about it was that the man just wants to do his job, and damn you politicians for not doing yours.

[DocSnowball]

I think we're correct, Beaufort. It's also refreshing to read genuine instead of influenced impressions.

 

IMO, no one watching that hearing could conclude that Watt is a partisan hack whose time is limited. the most obvious thing about it was that the man just wants to do his job, and damn you politicians for not doing yours.

 

Could he be doing all this to avoid being fired for cause? Why wake up now to risk of capital depletion?

He's been driving this car without airbags all along?

 

Either way actions speak louder than words - looking to see how much capital will be held? Magic number would be enough to pay par in case of liquidation! Even for that we are in line behind senior preferreds which Mnuchin is in charge of.