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

[Eye4Valu]

Dismissal is a nonevent. That case was always a long shot. We'll know how this ends in 2018. Mnuchin already stated that he won't get rid of Fannie or Freddie. The Treasury is not likely to pass up on the 100 billion. Even RNC is advocating for this. You need private capital as a buffer, so a shareholder friendly solution is most likely. We'll know by end of January if SCOTUS grants cert. SCOTUS would hear the case by end of summer if so. Last but not least is U.S. Court of Federal Claims, where jurisdiction for a monetary claim against the U.S. is proper. One or more of the foregoing avenues are going to decide this once and for all. I'm still bullish and don't care about the intermediate price action. 

[Guest cherzeca]

Dismissal is a nonevent. That case was always a long shot. We'll know how this ends in 2018. Mnuchin already stated that he won't get rid of Fannie or Freddie. The Treasury is not likely to pass up on the 100 billion. Even RNC is advocating for this. You need private capital as a buffer, so a shareholder friendly solution is most likely. We'll know by end of January if SCOTUS grants cert. SCOTUS would hear the case by end of summer if so. Last but not least is U.S. Court of Federal Claims, where jurisdiction for a monetary claim against the U.S. is proper. One or more of the foregoing avenues are going to decide this once and for all. I'm still bullish and don't care about the intermediate price action.

 

while this decision makes me nauseous, it may be remembered that this is just another take on the claim that a HERA conservator did not have the conservatorship power to agree to NWS, and another invitation for a federal judge to take the HERA bait and happily say that the court has no power to enjoin this action, move along, nothing to see hear

 

the rop and bhatti cases raise the constitutional issue of fhfa's structure; we shall see whether this claim has any more resonance. 

[hardincap]

This just goes to show that the courts can find any reason to dismiss, however tortured and convoluted. I would hope SCOTUS is different but at this point how can we be sure?

 

Ginsburg found a way to affirm Lamberth's dismissal against all odds and logic. If this happens for one or two SCOTUS justices then all judicial avenues could be closed off.

 

have you considered the possibility that you're just wrong on the law?

[rros]

reread judge sleet's so-called opinion.

 

he distinguishes the o'melveney case (scotus) in a totally ignorant manner, by saying as opposed to the o'melveny plaintiffs in a contract/tort context, "Indeed, Plaintiffs do not have a private commercial contract with either Fannie Mae or Freddie Mac."

 

excuse me? dgcl makes it explicit that preferred shareholder plaintiffs have a contract with issuer.  it's their certificate of designation.

 

the guy took 4 months to write this?

once Ginsburg failed his moral compass test, only the supreme court could possibly save us in the courts.  all the other judges simply hide behind his reputation.  put simply, the 3rd amendment fails all tests of honor in our country.

 

fwiw, my thesis, ever since the February disappointment, was the court cases are important only as placeholders to drag this out to a legislative or administrative solution while providing shareholders some modest negotiating leverage.

 

tomorrow we'll gap down and then we'll see where we stand in the afternoon and the rest of this week.  the preferreds are down 20pct in a month, price level does matter. 

It is possible buyers may show up later in the afternoon. Perhaps later in the week. Those sitting on the sidelines that believe Mnuchin's words of keeping Fannie and Freddie and the 30YM while protecting taxpayers (with a capital cushion) may see this as a window of opportunity to build a stake.

[Sunrider]

Chris, Merkhet, Rros - perhaps a moot point, but is there not a different angle here? This case argued (at least that’s what the judge writes) that the agency exceeded its authority because it did something that is not permitted under Delaware law and it assumed all responsibilities, etc. when it stepped in as conservator/liquidator. The judge dismisses this with reference to some other case that says that contravention of other legal schemes is not grounds for equitable relief.

 

Is there not a more basic point that, i.e. could plaintiffs not simply argue that Delaware law was violated, independent of HERA/agency powers? I presume that would lead into a debate of primacy of federal vs. State law but it seems to me that this question can be settled without getting entangled with HERA, which seems all judges try to do their best to avoid (really odd for me as an outsider that they pretzel themselves to defer to congress, when they are meant to be a third leg of government).

 

Thanks.

 

 

[merkhet]

Chris, Merkhet, Rros - perhaps a moot point, but is there not a different angle here? This case argued (at least that’s what the judge writes) that the agency exceeded its authority because it did something that is not permitted under Delaware law and it assumed all responsibilities, etc. when it stepped in as conservator/liquidator. The judge dismisses this with reference to some other case that says that contravention of other legal schemes is not grounds for equitable relief.

 

Is there not a more basic point that, i.e. could plaintiffs not simply argue that Delaware law was violated, independent of HERA/agency powers? I presume that would lead into a debate of primacy of federal vs. State law but it seems to me that this question can be settled without getting entangled with HERA, which seems all judges try to do their best to avoid (really odd for me as an outsider that they pretzel themselves to defer to congress, when they are meant to be a third leg of government).

 

Thanks.

 

IMO, no. You can’t separate the violation of Delaware law from the exercise of HERA powers; the reason the law was violated was because they exercised powers under HERA.

[Guest cherzeca]

Chris, Merkhet, Rros - perhaps a moot point, but is there not a different angle here? This case argued (at least that’s what the judge writes) that the agency exceeded its authority because it did something that is not permitted under Delaware law and it assumed all responsibilities, etc. when it stepped in as conservator/liquidator. The judge dismisses this with reference to some other case that says that contravention of other legal schemes is not grounds for equitable relief.

 

Is there not a more basic point that, i.e. could plaintiffs not simply argue that Delaware law was violated, independent of HERA/agency powers? I presume that would lead into a debate of primacy of federal vs. State law but it seems to me that this question can be settled without getting entangled with HERA, which seems all judges try to do their best to avoid (really odd for me as an outsider that they pretzel themselves to defer to congress, when they are meant to be a third leg of government).

 

Thanks.

 

IMO, no. You can’t separate the violation of Delaware law from the exercise of HERA powers; the reason the law was violated was because they exercised powers under HERA.

 

judge sleet analyzed the delaware argument under two lens: can fhfa exercise its conservator powers in contravention of another law (ie dgcl)(he said yes and there is circuit court (not sleet's) authority for this); does fhfa have a conservator power to issue stock that the corporation itself doesnt have under dgcl(he said yes, distinguishing scotus o'melveny in a totally ignorant way).

 

when sleet says that o'melveny doesnt apply because preferred shareholders have no contractual relationship with the issuer, his opinion wheels come totally off. o'melveny said that a conservator is subject to the same contract/tort defenses that the corporation itself was subject to.  the notion that this limitation of conservator power likewise applies to corporate law when the security in question is a contract (preferred stock certificate of designation) is a simple and direct application of scotus law to the case, and sleet contorts himself ignorantly to avoid going there.  a total abdication of judicial responsibility.

[orthopa]

Not great news. I for one always saw this as a mnuchin driven investment once he was picked for treasury but losing court cases on the surface if anything do lower our potential negotiating power.

 

As kookie as it sounded origninally I think a large remaining part of this investment is the political aspect. Paulson and Mnuchins relationship, berkowitz and paulson via Trump etc. Mnuchin has made it clear about not getting rid of fannie/freddie, 30 year etc. As always what do the shareholders get? I think these relationships ie need for private capital will drive any further returns for shareholders. Legislatively Fannie will be changed but I think shareholders are treated based on Mnuchin and his relationships alone ie private capital, the warrants etc.

 

I think all of those still invested need to seriously look at what level of par if rewarded is still worth staying invested. 30%, 40%, 50% of par? Is mnuchin the last say in what preferred shareholders get? Does everyone stay invested if he comes to the table and says 30% of par, no dividend take it or leave it? I guess this has always been the risk but it seems we maybe slowly losing leverage.

 

As I questioned before any settlement will have to come with the end of lawsuits. How can the gov restructure FnF and screw shareholders/give them a raw deal if the Sweeney case is still going on?  You cant give shareholders say 40% of par in the middle of 2018 and have that case be a win for shareholders a year later with a decision at 100% of par.

 

Any lawsuit or question of shareholders right should be a bit of a freeze on private capital. Does anyone think this is not true? If so I think you have to be crazy to keep this investment as this a large part of the private capital argument. I get the argument about bankruptcies and secondary offerings with others have lost their investment but we are talking billions if not trillions of dollars eventually of private capital invested in a company with a lawsuit about shareholders rights. Should/will shareholders rights in this instance be decided before private capital steps up?

 

 

[Luke 532]

Senate Banking Committee Chairman Crapo says after reg relief clears the committee next week, housing finance reform will be his top priority for the remainder of the 115th Congress. #fanniemae #freddiemac #gsereform

https://www.facebook.com/TambalaStrategy/posts/2100399606667365

[Eye4Valu]

Mr. Market doesn't seem to think it's a big deal. Prefs are up on the news.

[rros]

Mr. Market doesn't seem to think it's a big deal. Prefs are up on the news.

It appears... on your face, Sleet! 

I actually see dismissals against share price resilience as encouraging news. It may mean participants have already made up their collective minds that the outcome lays squarely on Mnuchin. I can't see Crapo moving legislation that will not be in line with Admin.

[Guest cherzeca]

Mr. Market doesn't seem to think it's a big deal. Prefs are up on the news.

It appears... on your face, Sleet! 

I actually see dismissals against share price resilience as encouraging news. It may mean participants have already made up their collective minds that the outcome lays squarely on Mnuchin. I can't see Crapo moving legislation that will not be in line with Admin.

 

crapo will do whatever corker/warner tell him to do.  but getting bi-partisan committee support in this environment, much less passage of a bill that clears both chambers and is signed by trump (upon instruction from mnuchin) seems like a pipedream given the past 10 months

[rros]

Mr. Market doesn't seem to think it's a big deal. Prefs are up on the news.

It appears... on your face, Sleet! 

I actually see dismissals against share price resilience as encouraging news. It may mean participants have already made up their collective minds that the outcome lays squarely on Mnuchin. I can't see Crapo moving legislation that will not be in line with Admin.

 

crapo will do whatever corker/warner tell him to do.  but getting bi-partisan committee support in this environment, much less passage of a bill that clears both chambers and is signed by trump (upon instruction from mnuchin) seems like a pipedream given the past 10 months

Corker has /somewhat/ fallen into line:

 

-paid-for narrow guarantee.

-keep present infrastructure.

-capital cushion ahead of everybody else.

 

What are Warner's incentives being the second richest congressman, after all these years? There has to be some degree of worn-out_ness and we are all getting old. There is a 40 page bill making the rounds, according to Paolo. We should only hope that there is written language in that bill re legacy owners and that it is benevolent.

[investorG]

Not great news. I for one always saw this as a mnuchin driven investment once he was picked for treasury but losing court cases on the surface if anything do lower our potential negotiating power.

 

As kookie as it sounded origninally I think a large remaining part of this investment is the political aspect. Paulson and Mnuchins relationship, berkowitz and paulson via Trump etc. Mnuchin has made it clear about not getting rid of fannie/freddie, 30 year etc. As always what do the shareholders get? I think these relationships ie need for private capital will drive any further returns for shareholders. Legislatively Fannie will be changed but I think shareholders are treated based on Mnuchin and his relationships alone ie private capital, the warrants etc.

 

I think all of those still invested need to seriously look at what level of par if rewarded is still worth staying invested. 30%, 40%, 50% of par? Is mnuchin the last say in what preferred shareholders get? Does everyone stay invested if he comes to the table and says 30% of par, no dividend take it or leave it? I guess this has always been the risk but it seems we maybe slowly losing leverage.

 

As I questioned before any settlement will have to come with the end of lawsuits. How can the gov restructure FnF and screw shareholders/give them a raw deal if the Sweeney case is still going on?  You cant give shareholders say 40% of par in the middle of 2018 and have that case be a win for shareholders a year later with a decision at 100% of par.

 

Any lawsuit or question of shareholders right should be a bit of a freeze on private capital. Does anyone think this is not true? If so I think you have to be crazy to keep this investment as this a large part of the private capital argument. I get the argument about bankruptcies and secondary offerings with others have lost their investment but we are talking billions if not trillions of dollars eventually of private capital invested in a company with a lawsuit about shareholders rights. Should/will shareholders rights in this instance be decided before private capital steps up?

 

it is highly unlikely -- even in a positive scenario -- that jr preferred holders receive par.  if pressed, the moelis authors would likely admit the same -- they started at par for their request but know that the Congressmen will want some haircut in any potential deal.  somewhere around two-thirds of par seems reasonable.

 

I wouldn't dismiss the crapo news today.  there are a lot of forces coming together that suggest an aggressive attempt to make a deal in congress during 1h 2018 before things shut down for the midterms.  for those who think a strong attempt won't be made, that view suggests mnuchin is lying when he's said all along in 2017 that he wants to work with a bipartisan congress on housing reform.

[Eye4Valu]

Not great news. I for one always saw this as a mnuchin driven investment once he was picked for treasury but losing court cases on the surface if anything do lower our potential negotiating power.

 

As kookie as it sounded origninally I think a large remaining part of this investment is the political aspect. Paulson and Mnuchins relationship, berkowitz and paulson via Trump etc. Mnuchin has made it clear about not getting rid of fannie/freddie, 30 year etc. As always what do the shareholders get? I think these relationships ie need for private capital will drive any further returns for shareholders. Legislatively Fannie will be changed but I think shareholders are treated based on Mnuchin and his relationships alone ie private capital, the warrants etc.

 

I think all of those still invested need to seriously look at what level of par if rewarded is still worth staying invested. 30%, 40%, 50% of par? Is mnuchin the last say in what preferred shareholders get? Does everyone stay invested if he comes to the table and says 30% of par, no dividend take it or leave it? I guess this has always been the risk but it seems we maybe slowly losing leverage.

 

As I questioned before any settlement will have to come with the end of lawsuits. How can the gov restructure FnF and screw shareholders/give them a raw deal if the Sweeney case is still going on?  You cant give shareholders say 40% of par in the middle of 2018 and have that case be a win for shareholders a year later with a decision at 100% of par.

 

Any lawsuit or question of shareholders right should be a bit of a freeze on private capital. Does anyone think this is not true? If so I think you have to be crazy to keep this investment as this a large part of the private capital argument. I get the argument about bankruptcies and secondary offerings with others have lost their investment but we are talking billions if not trillions of dollars eventually of private capital invested in a company with a lawsuit about shareholders rights. Should/will shareholders rights in this instance be decided before private capital steps up?

 

it is highly unlikely -- even in a positive scenario -- that jr preferred holders receive par.  if pressed, the moelis authors would likely admit the same -- they started at par for their request but know that the Congressmen will want some haircut in any potential deal.  somewhere around two-thirds of par seems reasonable.

 

I wouldn't dismiss the crapo news today.  there are a lot of forces coming together that suggest an aggressive attempt to make a deal in congress during 1h 2018 before things shut down for the midterms.  for those who think a strong attempt won't be made, that view suggests mnuchin is lying when he's said all along in 2017 that he wants to work with a bipartisan congress on housing reform.

 

I think you're right and an attempt will and must be made, but Cherzeca is right on regarding the likelihood of passage, unless something very reasonable is worked out. One of the main reasons to be bullish here is that every single party is aligned on the solution, there is really no other way to resolve the situation without it working out for everyone. You need to preserve the 30 yr. and get them out of government control, but you need to protect the taxpayer, so you need private first loss capital. Treasury makes a big gain exercising the warrants and selling the shares back to the public. Shareholders recoup and can buy more. Win-Win. We share the same incentives for recap/release, reform/overhaul, or whatever you want to call it. The old us versus them mentality no longer applies IMO.

[rros]

Not great news. I for one always saw this as a mnuchin driven investment once he was picked for treasury but losing court cases on the surface if anything do lower our potential negotiating power.

 

As kookie as it sounded origninally I think a large remaining part of this investment is the political aspect. Paulson and Mnuchins relationship, berkowitz and paulson via Trump etc. Mnuchin has made it clear about not getting rid of fannie/freddie, 30 year etc. As always what do the shareholders get? I think these relationships ie need for private capital will drive any further returns for shareholders. Legislatively Fannie will be changed but I think shareholders are treated based on Mnuchin and his relationships alone ie private capital, the warrants etc.

 

I think all of those still invested need to seriously look at what level of par if rewarded is still worth staying invested. 30%, 40%, 50% of par? Is mnuchin the last say in what preferred shareholders get? Does everyone stay invested if he comes to the table and says 30% of par, no dividend take it or leave it? I guess this has always been the risk but it seems we maybe slowly losing leverage.

 

As I questioned before any settlement will have to come with the end of lawsuits. How can the gov restructure FnF and screw shareholders/give them a raw deal if the Sweeney case is still going on?  You cant give shareholders say 40% of par in the middle of 2018 and have that case be a win for shareholders a year later with a decision at 100% of par.

 

Any lawsuit or question of shareholders right should be a bit of a freeze on private capital. Does anyone think this is not true? If so I think you have to be crazy to keep this investment as this a large part of the private capital argument. I get the argument about bankruptcies and secondary offerings with others have lost their investment but we are talking billions if not trillions of dollars eventually of private capital invested in a company with a lawsuit about shareholders rights. Should/will shareholders rights in this instance be decided before private capital steps up?

 

it is highly unlikely -- even in a positive scenario -- that jr preferred holders receive par.  if pressed, the moelis authors would likely admit the same -- they started at par for their request but know that the Congressmen will want some haircut in any potential deal.  somewhere around two-thirds of par seems reasonable.

 

I wouldn't dismiss the crapo news today.  there are a lot of forces coming together that suggest an aggressive attempt to make a deal in congress during 1h 2018 before things shut down for the midterms.  for those who think a strong attempt won't be made, that view suggests mnuchin is lying when he's said all along in 2017 that he wants to work with a bipartisan congress on housing reform.

 

I think you're right and an attempt will and must be made, but Cherzeca is right on regarding the likelihood of passage, unless something very reasonable is worked out. One of the main reasons to be bullish here is that every single party is aligned on the solution, there is really no other way to resolve the situation without it working out for everyone. You need to preserve the 30 yr. and get them out of government control, but you need to protect the taxpayer, so you need private first loss capital. Treasury makes a big gain exercising the warrants and selling the shares back to the public. Shareholders recoup and can buy more. Win-Win. We share the same incentives for recap/release, reform/overhaul, or whatever you want to call it. The old us versus them mentality no longer applies IMO.

I do not think Powell will go for this and he will have a strong influence on reform. The above is akin to a simple recap. At least, on his eyes. Most likely, the push will involve making FF smaller guarantors that will compete against other participants. I am fine with this (Millstein original plan) as long as we remain owners.

 

https://www.c-span.org/video/?437193-1/federal-reserve-nominee-pressed-national-debt-deregulation-confirmation-hearing

 

Starts at minute 28:20

[Guest cherzeca]

i dont see the fed as having a strong influence on GSE reform.  I think this is all up to how deferential mnuchin wants to be to congress, assuming congress can coalesce around a single proposal, which i doubt

[rros]

i dont see the fed as having a strong influence on GSE reform.  I think this is all up to how deferential mnuchin wants to be to congress, assuming congress can coalesce around a single proposal, which i doubt

Let's hope you are right.

[investorG]

Poor Sleet. He woke up early with lots of sugar in his coffee and staring at the ticker symbol flanked with fellow travelers.

 

Mr. Market doesn't seem to think it's a big deal. Prefs are up on the news.

It appears... on your face, Sleet! 

I actually see dismissals against share price resilience as encouraging news. It may mean participants have already made up their collective minds that the outcome lays squarely on Mnuchin. I can't see Crapo moving legislation that will not be in line with Admin.

 

the scoreboard isn't in our favor currently

[investorG]

i dont see the fed as having a strong influence on GSE reform.  I think this is all up to how deferential mnuchin wants to be to congress, assuming congress can coalesce around a single proposal, which i doubt

 

mnuchin has laid the groundwork that he's the boss in this area.  he's currently however in a year-long quiet period on the matter. 

 

crapo merely reads some lines given to him by his junior aide which jives with the lobbyists who buy the aide's dinners and wine.

 

the key question, for me, is what does mnuchin really want, besides the 2 standard lines he's given to date.  I liked the response of not agreeing to dismantle FnF a couple weeks ago.

[rros]

i dont see the fed as having a strong influence on GSE reform.  I think this is all up to how deferential mnuchin wants to be to congress, assuming congress can coalesce around a single proposal, which i doubt

 

mnuchin has laid the groundwork that he's the boss in this area.  he's currently however in a year-long quiet period on the matter. 

 

crapo merely reads some lines given to him by his junior aide which jives with the lobbyists who buy the aide's dinners and wine.

 

the key question, for me, is what does mnuchin really want, besides the 2 standard lines he's given to date.  I liked the response of not agreeing to dismantle FnF a couple weeks ago.

At 2 standard lines per year we should be able to have a full paragraph by the time Trump's term is over. Not bad.

[orthopa]

Since Powell talked today https://www.housingwire.com/articles/40615-fed-governor-powell-here-are-5-principles-for-housing-finance-reform. Old though

[DocSnowball]

i dont see the fed as having a strong influence on GSE reform.  I think this is all up to how deferential mnuchin wants to be to congress, assuming congress can coalesce around a single proposal, which i doubt

 

mnuchin has laid the groundwork that he's the boss in this area.  he's currently however in a year-long quiet period on the matter. 

 

crapo merely reads some lines given to him by his junior aide which jives with the lobbyists who buy the aide's dinners and wine.

 

the key question, for me, is what does mnuchin really want, besides the 2 standard lines he's given to date.  I liked the response of not agreeing to dismantle FnF a couple weeks ago.

At 2 standard lines per year we should be able to have a full paragraph by the time Trump's term is over. Not bad.

 

The legal thesis was already weakened considerably after the February sixth circuit ruling - those banking on the legal thesis should have bailed already. I certainly considered it but hung on because of the administrative thesis odds working out being much better than the share prices reflect, I'd say 50% plus in a 4 year timeframe vs 20% suggested by the price. The one comfort the law still provides is if further action like liquidation is taken, it may bring with it more meritorious lawsuits. Plus the remand to Lamberth for pre-2008 shareholders, and the contract argument still up in the air from Fairholme about contract rights being transferred with the sale of stock to new stockholders even after 2008 (at least it has not been dismissed so far). Still, unless the Supreme court takes up the issue of whether HERA is itself unconstitutional by violating the 5th amendment, it is hard to see how the legal aspect will bring investment rewards just on its own merit.

 

imo catalysts still there are tax reform if it passes and the draw it will threaten to bring with tax cuts, coupled with the administration's consistency bias with its repeated statements to address housing and GSEs and the enticing 100 bn plus that recap will bring that is desperately needed by the Treasury. If they want that recap money, they will have a hard time doing so without aligning it with shareholders interests in some way. Any alternative plan, including maintaining status quo, will need to bring similar benefit to the Treasury to be competitive. Also, I am not aware of any instance so far of this administration trampling upon Trump supporters, which cannot hurt our cause.

 

[orthopa]

Not great news. I for one always saw this as a mnuchin driven investment once he was picked for treasury but losing court cases on the surface if anything do lower our potential negotiating power.

 

As kookie as it sounded origninally I think a large remaining part of this investment is the political aspect. Paulson and Mnuchins relationship, berkowitz and paulson via Trump etc. Mnuchin has made it clear about not getting rid of fannie/freddie, 30 year etc. As always what do the shareholders get? I think these relationships ie need for private capital will drive any further returns for shareholders. Legislatively Fannie will be changed but I think shareholders are treated based on Mnuchin and his relationships alone ie private capital, the warrants etc.

 

I think all of those still invested need to seriously look at what level of par if rewarded is still worth staying invested. 30%, 40%, 50% of par? Is mnuchin the last say in what preferred shareholders get? Does everyone stay invested if he comes to the table and says 30% of par, no dividend take it or leave it? I guess this has always been the risk but it seems we maybe slowly losing leverage.

 

As I questioned before any settlement will have to come with the end of lawsuits. How can the gov restructure FnF and screw shareholders/give them a raw deal if the Sweeney case is still going on?  You cant give shareholders say 40% of par in the middle of 2018 and have that case be a win for shareholders a year later with a decision at 100% of par.

 

Any lawsuit or question of shareholders right should be a bit of a freeze on private capital. Does anyone think this is not true? If so I think you have to be crazy to keep this investment as this a large part of the private capital argument. I get the argument about bankruptcies and secondary offerings with others have lost their investment but we are talking billions if not trillions of dollars eventually of private capital invested in a company with a lawsuit about shareholders rights. Should/will shareholders rights in this instance be decided before private capital steps up?

 

it is highly unlikely -- even in a positive scenario -- that jr preferred holders receive par.  if pressed, the moelis authors would likely admit the same -- they started at par for their request but know that the Congressmen will want some haircut in any potential deal.  somewhere around two-thirds of par seems reasonable.

 

I wouldn't dismiss the crapo news today.  there are a lot of forces coming together that suggest an aggressive attempt to make a deal in congress during 1h 2018 before things shut down for the midterms.  for those who think a strong attempt won't be made, that view suggests mnuchin is lying when he's said all along in 2017 that he wants to work with a bipartisan congress on housing reform.

 

Agree that 100% unlikely but many have invested because that thought is its was going to be high if not close.  I guess my point is do you bail now if you think 30-40% of par is possible at best?  Why cant it be? Many have talked about whether or not shareholders are treated fairly, thats step one. Step 2 is how fairly, ie what % of par +/- div etc.

 

Who sticks around for 30-50% of par as we have little leverage at this time and FNMAS trading at 24% now. Is this worth the risk with that upside in what could be another year plus after holding for 2,3,4 already?

[Guest cherzeca]

i dont see the fed as having a strong influence on GSE reform.  I think this is all up to how deferential mnuchin wants to be to congress, assuming congress can coalesce around a single proposal, which i doubt

 

mnuchin has laid the groundwork that he's the boss in this area.  he's currently however in a year-long quiet period on the matter. 

 

crapo merely reads some lines given to him by his junior aide which jives with the lobbyists who buy the aide's dinners and wine.

 

the key question, for me, is what does mnuchin really want, besides the 2 standard lines he's given to date.  I liked the response of not agreeing to dismantle FnF a couple weeks ago.

 

i dont think he has changed his views, but he has gotten advice to tone down his comments and move it to the back burner until tax is done.  why pick a fight with congress before the other legislation gets done