nagoya1
4 hours ago
The most recent GSE stress test: now that's an oxymoron, can't wait to look at more FHFA govrat number salad.
The real stress has been felt by GSE shareholders, it's "only" been since 2008 that shareholders expect release from rubber chicken eating luncheon policy makers.
16 years and counting, when the f will this clusterf ever end.
If that financial stress wasn't enough, let me not get going on the Porky Pig drag my lard azz show going on judicially...
8-0 jury verdict, Chevron win, and still no answer from the huntin for wabbit clown. Nothing left honorable going on there.
FNMA
1 a day
Wise Man
5 hours ago
The two falsehoods from Bill Ackman appear in the Pershing Square Holdings, Ltd. 2022 Annual Report.
The first one is the one that I post regularly on this board, because it appears also in the GSE slides.
They continue to build capital through retained earnings.
This is false, as we see in this image with Freddie Mac. It's concealed by the enterprises, when the SPS LP increased for free and its offset, are missing on the CONSOLIDATED Balance Sheets.
The adjusted table shows that the Retained Earnings account just built, is wiped out (Held in escrow, as per the exception to the Restriction on Capital Distributions, CFR1237.12, in order to legalize the capital distribution restricted).
The other was commented in my prior post,
"approaching a fortress-level of capital"
Calling the Net Worth "capital", which comes from the "Capital Reserve" in the SPSPA, that was first necessary to know the "Capital Deficiency" (negative Net Worth) to tap the UST for funds (1:1 SPS) so that it's $0 NW as a result, but later it deviated to "Applicable Capital Reserve", a minimum Net Worth, the rest swept to UST (NWS dividend). Then, it was cut short for "Capital Reserve".
It sounded like this:
Applicable Capital Reserve, UP. ($3B)
Applicable Capital Reserve, DOWN ($600 million per year. 3rd PA amendment).
Turn around, Applicable Capital Reserve, UP. Big jump to $3B (December 2017. Watt), but $3B SPS LP increased for free.
A big jump backwards due to the $3B offset.
Applicable Capital Reserve ticks UP. (Sept 2019 PA amendment)
Here comes the offset for the SPS LP increased for free, one step backwards.
Then, Applicable Capital Reserve, two steps forward (Jan 2021 PA amendment).
Each time, there is the same offset, two steps backwards.
Aaaaah, Macarena!!!! 🎶
Wise Man
13 hours ago
The Critical Capital level is missing in the ERCF.
The Enterprise Regulatory Capital Framework posted by FnF every quarter, was commented last Sunday in the post that I'm replying to.
It's the reason why the Mnuchin's Treasury Department recommended Congress to repeal these statutory definitions of capital that bother them, because they include which capital metric has to meet each capital requirement (The Core Capital for the Minimum Capital Leverage requirement and for the Critical Capital level, etc.), so they make up their own "capital framework", like meeting the capital requirements with the Net Worth, renamed Capital Reserve (SPSPA).
Internal emails would say this: "Now, they are met with Net Worth, so I force them to give me SPS LP for each dollar of Comprehensive Income they gain in the quarter. Beat that!"
What about the Critical Capital level? They are 3, not 2 capital requirements. It's missing in the ERCF tables.
As of June 30, 2024, FnF have a whopping adjusted $218B core capital shortfall over Critical Capital level combined.
FHFA doesn't have authority to repeal it. It just declared it "irrelevant" in 2008, arguing that it's the threshold that triggers a Conservatorship during a Conservatorship. It doesn't mean that you don't have to post it anymore.
Irrelevant? It depends on whom you ask. It's necessary to measure the financial condition as seen on their Balance Sheets (financial rehabilitation): Put FnF in a sound and solvent condition (statutory mission of the conservator).
Not meeting a threshold called "critical" bothers them for the slogan "FnF have been rehabilitated" by the FNMA CEO, or "FnF are approaching a fortress-level of capital" by Bill Ackman, because he is one of those peddling the "capital reserve" (Net Worth) as a valid capital metric in FnF or in any other financial company.
This isn't Chevron deference. We are talking about outright violations of statutory provisions, unless the Separate Account is unveiled, carried out in the best interests of the FHFA (FHFA-C's Incidental Power): "Zing!".