TightCoil
5 hours ago
Mar 24
Go Fannie Mae - All The Way
Recap of our PPS since Mar 7 which was Day 39 of over $5 when we were at $5.84. Then the next trading Day (Mar 10)) we went BELOW $5 to $4.91, but rebounded swimmingly the next Day (Mar 11) to $5.19 and hit $6.11 on Mar 14...
Mar 24 - $7.0879 - 16,707,951 - Today - up 71 cents
Mar 21 - $6.38 - 8,510,618
Mar 20 - $6.25 - 8,037,839
Mar 19 - $6.03 - 8,071,667
Mar 18 - $5.65 - 10,339,547
Mar 17 - $5.82 - 9,309,100
Mar 14 - $6.11 - 16,518,200
Mar 13 - $5.50 - 5,951,400
Mar 12 - $5.65 - 9,589,600
Mar 11 - $5.19 - 10,480,900
Mar 10 - $4.91 - 16,783,700
Mar 7 -- $5.84 - 23,007,600
BREAKER098
5 hours ago
I hear that often. Admittedly, I haven’t done the research into that. I was involved in the Lehman Trusts play (LEHNQ) which is now at $.0003.
So I asked ChatGTP what you said…and here’s what it had to say….
You’re touching on a deep and often misunderstood aspect of the 2008 financial crisis—the role of derivatives, specifically credit default swaps (CDS), and how “Too Big to Fail” (TBTF) institutions absorbed losses from asset-backed securities (ABS) and residential mortgage-backed securities (RMBS).
Breaking It Down:
1. Derivative Market & 2008 Crash
• The meltdown was fueled by synthetic leverage in the CDS market, where firms like AIG sold insurance (CDS contracts) on RMBS and ABS without fully capitalizing for potential defaults.
• When mortgage defaults spiked, counterparties (big banks) faced massive losses, forcing the government to step in to prevent total systemic collapse.
2. TBTF Banks & Their Role
• Major banks (JPMorgan, Citi, BofA, Goldman, etc.) had written or held derivative contracts tied to failing mortgage securities.
• As firms like Lehman Brothers and Washington Mutual collapsed, their exposure didn’t just vanish—it was absorbed by counterparties, many of which were TBTF institutions.
3. Obligations to Trust Creators (Fannie, Freddie, etc.)
• Fannie & Freddie played a huge role in the MBS market, and while they weren’t the main derivative players, their mortgage guarantees backed a significant portion of the market.
• The government essentially bailed out TBTF institutions and took control of Fannie & Freddie, using taxpayer funds to cover systemic losses.
• The losses from ABS/MBS defaults didn’t just disappear—they still exist, often absorbed through modifications, write-downs, and settlements.
4. Trillions in ABS & the 11.9% Losses
• If you’re referring to the estimated 11.9% loss coverage obligation, that likely stems from outstanding RMBS losses that TBTF institutions and counterparties are still slowly absorbing.
• While many believe these obligations were settled in past years, there is an argument that unrecognized liabilities still linger in the financial system—either hidden, deferred, or shifted onto government-backed entities like Fannie & Freddie.
The Bigger Question: Unresolved Liabilities?
Are TBTF institutions still on the hook for losses they absorbed in 2008-2010? Possibly—especially if structured settlements, litigation, or quiet bailout mechanisms (like Federal Reserve interventions) are still at play. Some believe certain financial players never fully settled their exposure, and the system is still propped up by continuous government support.
navycmdr
6 hours ago
Trump admin once again lays groundwork for Fannie Mae, Freddie Mac privatization
Proposal could see Donald Trump’s proposed sovereign wealth fund step in
Mar 24, 2025 - By TRD Staff
https://therealdeal.com/national/2025/03/24/privatization-of-fannie-mae-freddie-mac-back-on-the-table/
The upheaval in recent days at Fannie Mae and Freddie Mac hints at bigger plans from the Trump administration.
The federal government is entertaining proposals to release the two enterprises from its control, the Wall Street Journal reported. This time, the effort is being linked to one of Donald Trump’s novel ideas for the country: a sovereign wealth fund.
Last week, the administration reportedly entertained a proposal to transfer the Treasury Department’s ownership of the mortgage companies to a sovereign wealth fund. Trump announced the idea of such a fund in February, but it does not yet exist. Treasury Secretary Scott Bessent brought up a similar idea on a podcast last week.
According to one proposal reportedly making the government rounds, the enterprises could raise between $20 billion to $30 billion from investors, estimating the companies could be valued at more than $330 billion combined. That would value the government’s stake in the enterprises at more than $250 billion, creating a potential windfall for the government.
Privatization has been discussed since essentially the day the mortgage giants fell into government control in 2008. During Trump’s first administration, there was an effort to take the enterprises private, but that attempt was dropped in the waning days of his presidency.
Freddie and Fannie bundle and sell mortgages, backstopped by the government. Putting them back in private control is a delicate dance, as one wrong move could lead investors to demand higher premiums on the market, which could, in turn, cause mortgage rates to spike.
Fannie Mae and Freddie Mac support approximately 70 percent of the country’s mortgage market, according to the National Association of Realtors.
Whether or not they go private, Federal Housing Finance Agency head Bill Pulte is already destroying the status quo at the agency. In his first week, Pulte ousted more than a dozen board members at the two companies and installed himself as the chair of both boards. He also placed dozens of agency employees on administrative leave.
The Trump administration is considering issuing an executive order that, among other housing items, would direct departments to study the privatization matter.
— Holden Walter-Warner
Treasury quits bid to privatize Fannie Mae, Freddie Mac
navycmdr
6 hours ago
The US Treasury holds warrants to purchase 79.9% of the common stock in both Fannie Mae and Freddie Mac, but as of 2025, they have not exercised these warrants.
Here's a more detailed explanation:
Warrant Details:
As part of the 2008 financial crisis bailout, the Treasury received warrants allowing it to purchase up to 79.9% of the common stock in both Fannie Mae and Freddie Mac.
Warrant Exercise:
The Treasury has not yet exercised these warrants, meaning the government does not currently own 79.9% of either company's stock.
Current Ownership:
The Treasury's stake in Fannie Mae and Freddie Mac currently consists of preferred stock and dividend accruals, not common stock ownership.
Warrant Expiration:
The warrants expire in 2028.
Purpose of Warrants:
The warrants were intended to give the government a potential path to full ownership of the GSEs, but they have not been exercised.
RickNagra
6 hours ago
Rule of Law Guy. Millstein has changed his tune. Fifteen minute conversation well worth listening to IMO.
With a hat tip to Doc Cartoon, I recommend listening to Jim Millstein discussing GSE recap/release on Bloomberg Odd Lots. Listen from 45:10 to 1.06:30 for the GSE discussion.
Millstein is a long time GSE commentator who seems to have followed the “GSE Vibe Shift” towards a position more conducive to GSE recap/release than his commentary years ago.
Millstein says that the ERCF is too conservative and restrictive, and that the credit rating of the GSEs’ MBS “should” not be adversely affected by GSE recap/release if Treasury maintains a paid-for backstop.
Millstein assumes that the outstanding balance of the SPS gets converted into common stock, even as he acknowledges that Treasury has received over $300 billion in payments in respect of its $192 billion investment. Unlike Ackman, Millstein doesn’t argue for SPS cancellation, even as he acknowledges that, economically, Treasury has been fully paid back with an IRR in excess of the SPS’s contracted interest rate.
In this difference in opinion between Ackman and Millstein lies a significant question as to the future valuation of GSE common stock, given the additional dilution represented by SPS conversion if it is not cancelled.
I expect Treasury Secretary Bessent orders a study of the question, perhaps prompted by a Trump 47 executive order that has been recently rumored, and will eventually approve SPS cancellation in connection with GSE recap/release.
But that certainly is not a safe bet.
navycmdr
6 hours ago
Mortgage Giant Fannie Mae Bends The Knee In Fear Of Being DOGE’d
Andi Shae Napier - March 24, 2025
https://dailycaller.com/2025/03/24/fannie-mae-in-person-work-doge/
Mortgage company Fannie Mae is bringing workers back to their Washington, D.C., Reston, Va. and Plano, Texas offices Monday in an attempt to avoid Federal Housing Finance Agency (FHFA) director Bill Pulte’s executive cuts following layoffs at its sister company, Freddie Mac.
Pulte, nominated by President Donald Trump to lead the FHFA and confirmed by the Senate on March 13, wasted no time laying off executives at the mortgage associations the FHFA oversees. Pulte fired Freddie Mac’s head of human resources Dionne Wallace Oakley, Executive Vice President of Corporate Strategy and External Affairs Craig Phillips and the chief operating officer on Thursday while also replacing CEO Diana Reid with interim CEO Mike Hutchins, according to a Semafor report.
Freddie Mac workers were reportedly told to return to offices May 1, but following the executive cuts at the corporation, one Fannie Mae employee told Semafor, “I think the hope is if we appease [Pulte] with this then he won’t look to ‘DOGE’ us as much.”
Soon after entering office, Trump established the Department of Government Efficiency (DOGE) which he tasked with rooting out waste, fraud and abuse of taxpayer funds within the federal government. The initiative has thus far led to thousands of employees being placed on leave, the reevaluation of federal contracts, foreign aid, federally-funded research and more. Several agencies have had their workforce and authority gutted by the administration. (RELATED: Obama-Appointed Judge Decides DOGE Can’t Access Social Security Data To Uncover Fraud)
Despite Fannie Mae’s employee count reaching 7,700, there are only 5,300 available office seats for employees when they return to in-person work, according to a Semafor report. It’s unclear if staff cuts will be made following the return to offices.
Fannie Mae did not respond to the Daily Caller News Foundation’s request for comment.
The same day Pulte fired Freddie Mac executives, he also placed FHFA Chief Operating Officer Gina Cross and Human Resources Director Monica Matthews on administrative leave, according to Politico. Moreover, over a dozen employees have been placed on administrative leave at the agency, The Wall Street Journal reported.
Pulte also appointed himself to chair of both Fannie Mae and Freddie Mac’s boards after firing 14 members earlier this week, Politico reported. The move comes as the administration is reportedly weighing an executive order on housing that would direct departments to look into privatization options for Fannie Mae and Freddie Mac, according to an official who spoke with the WSJ. The step to evaluate different methods for privatization is intended to protect borrowers, as privatization risks investors demanding higher premiums which would increase borrowers’ mortgage rates. The administration sees the reprivatization of the corporations as a potential strategy to reduce the country’s deficit and return funds to taxpayers.
The move to consider reprivatization, however, has received some opposition from Democratic lawmakers. The Secretary of Housing and Urban Development Scott Turner was recently sent a letter signed by 11 Democratic Senators raising concerns regarding his plan to re-privatize the two firms, stating that if the process were “mismanaged” it could make mortgages more expensive for Americans.
“Changes to the ownership of Fannie Mae and Freddie Mac would be a monumental undertaking that would affect our entire housing system and touch the lives of homeowners and renters across the country,” the Senators wrote. “If mismanaged, ending the conservatorships and Treasury’s role with Fannie Mae and Freddie Mac could make mortgages more expensive, cut off access to mortgage credit, destroy many of the important reforms made over the past 16 years, and compromise our entire housing market and the broader U.S. economy.”
Turner previously said he would work alongside the Treasury Department and Congress to privatize the mortgage-finance firms in a February interview with the Wall Street Journal. “There are partners that will be at the table and obviously we’ll be one of them,” said Turner, a former NFL player and Texas lawmaker. “When you’re a quarterback, you’ve got to work with the entire huddle.”
Although Turner hasn’t expanded much on the origin of his desire to free Fannie and Freddie from their government hold, it’s clear the process will take significant collaboration between the Treasury Department, Congress and FHFA.
Freddie and Fannie were previously privately owned but came under government conservatorship during the 2008 financial crisis after the U.S. Treasury Department got warrants to purchase roughly 80% of the corporation’s common shares. Now, the two mortgage giants stand behind about half of the U.S. residential mortgage market.
Freddie Mac and the FHFA did not respond to the DCNF’s request for comment.
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