navycmdr
46 minutes ago
Fannie / Freddie words to "invest" "trade" & "live" by ...
" If " - by RUDYARD KIPLING ... written 1895
“If” is a poem written by the English poet and novelist Rudyard Kipling in 1895. The poem is a set of moral instructions addressed to the poet’s son, and it offers advice on how to live a virtuous and fulfilling life.
The poem is written in the form of a series of conditional statements, with each stanza beginning with the word “If.” The poem’s central theme is the importance of self-discipline, perseverance, and humility in the face of life’s challenges.
The poem emphasizes the need for the reader to remain calm, focused, and resolute in the face of adversity. Kipling emphasizes the importance of self-control, urging the reader to keep their head “when all about you / Are losing theirs and blaming it on you.”
The poem also emphasizes the importance of taking responsibility for one’s actions and accepting the consequences of one’s choices. Kipling urges the reader to “meet with triumph and disaster / And treat those two impostors just the same.”
Ultimately, the poem offers a vision of what it means to be a true and honorable person, emphasizing the importance of character, integrity, and moral courage. The poem’s final stanza offers a vision of a life well-lived, in which the reader has become “a Man, my son.”
kthomp19
1 hour ago
No - I don't believe it does - that's why some are pushing for it to help with any capital raise - but could be wrong there.
It depends on what type of regulatory capital you're talking about.
A junior-to-common conversion doesn't change core or Tier 1 capital, but it does add to CET1 capital. $19B for Fannie, $14B for Freddie.
But I do expect the Ps to be converted to make any cap raise easier
I agree. Not only does a junior-to-common conversion add to CET1 capital at no cost to the companies, it also allows them to issue new preferred shares later on if they want to raise capital quickly. It will be much easier to do that with new preferred shares than new common shares. I'm not sure if this is coincidence or not, but the ERCF allows for around $33B worth of non-cumulative preferred shares in the capital stack, which is exactly the amount FnF have combined right now in the form of the junior prefs.
I expect the new, post-restructuring common shares to do quite well. Owning the juniors now is a much cheaper way to own the post-restructuring common compared to just buying the pre-restructuring common now.
kthomp19
1 hour ago
The SPSPA is an illegal contract between two government agencies, illegal by reason of the commitment fee attached to the Senior Preferred Stock.
It isn't illegal until and unless a court overturns it. That hasn't happened, thus your characterization of the SPSPAs as "illegal" is merely your opinion, not a fact.
The NWS was a clear violation of one of the FHFA director's core duties, which was maintenance of adequate capital for FnF (12 USC 4513(a)(1)(B)(i)), and yet the Supreme Court said it was fine. It's not what you know (and certainly not what you say on a message board), it's what you can prove in court.
File your own lawsuit, shut up, or be exposed as a hypocrite.
Safety and Soundness still exists just as the Charter Act still exists.
And the Supreme Court allowed FHFA to ignore its safety and soundness mandate due to 12 USC 4617(b)(2)(J)(ii). Keep that in mind.
kthomp19
1 hour ago
Were they actually even challenged?
The NWS dividends? Of course. That was the entire purpose of the lawsuit, that the FHFA signing the NWS on behalf of the companies and paying the NWS dividends despite FnF's complete lack of regulatory capital was ultra vires. The Fifth Circuit en banc panel found in the plaintiffs' favor on that count, but the Supreme Court overturned that verdict.
Are you suggesting that the Director can pay jr pref and common dividends right now if they wanted to?
Yes, though Treasury would have to agree to it per the terms of the SPSPAs.
I didn't say anything about regulatory capital.
There is no other kind. Net worth and capital are not the same thing.
Tell me what does the payment of dividends out of 'funds legally available' mean? That is a clause implicit or explicit in dividend paying stock.
I always saw it as a boilerplate phrase, though in the case of FnF's conservatorships it could have more teeth. I had thought that the FHFA director's core duty of maintenance of adequate capital at FnF would have prevented them from paying the NWS dividends, but the Supreme Court truly did find an elephant in the mousehole when they ruled that FHFA's incidental powers clause (allowing them to act in their own best interest) overrode that core duty.
That's also why I think FHFA can direct FnF to pay junior pref and common dividends no matter their regulatory capital levels, though again per the terms of the SPSPAs, Treasury would have to approve any such dividends.
The contracts were amended to an 'unlimited' amount in 2012?
No. This page on FHFA's website with links to all the agreements and amendments has links to:
1) The original SPSPAs that established the funding commitment of $100B per company
2) The first amendment that increased the total funding commitment to $200B per company
3) The second amendment that increased the total funding commitment to "$200,000,000,000 plus the cumulative total of Deficiency Amounts determined for calendar quarters in calendar years 2010, 2011, and 2012, less any Surplus Amount determined as of December 31, 2012, and in the case of either (a) or (b), less the aggregate amount of funding under the Commitment prior to such date."
Rodney is correct on several matters and not way out there like others.
He is utterly wrong about many things, like the SPSPAs being illegal, his idea that the FHFA director can tell FnF to pay down the seniors without Treasury's approval
kthomp19
1 hour ago
Why would he be opposed to us? Sounds like he likes utility model which is probably fine by us.
The MBA, along with many other vested interests, only want FnF released if it's via legislation that also establishes an explicit government guarantee on GSE MBS.
By contrast, the release that Calabria and Mnuchin were working toward, and the one contemplated by John Paulson, doesn't involve Congress (and by extension that explicit guarantee) at all.
You can tell from the article how desperately the MBA wants that explicit guarantee. I think it's the primary reason they have been opposed to recap and release in the past: they have been wanting FnF held hostage with the explicit guarantee as a condition of release. But their power is not absolute, fortunately.
Just means we should anticipate 1/3 of earnings going back to us in dividends and overall expect high single digit total returns.
You keep forgetting the most important thing: the post-restructuring share count. Without an estimate of that, any future share price estimate is worthless.
kthomp19
1 hour ago
Actually $FNMA~ went up to $4.50 + after he said that and didn't see $1 until Covid crashed the world markets over two years later.
In other words, Bose George was right. FNMA closed at $1.06 on December 31 2018, well before Covid and quite close to the $1 target.
And far, far better than the thousands of posts here that predicted share prices in the upper single digits, teens, 20s, 30s, 100s, 300s, etc.
Any time Guido insults someone it means the recipient is on to something. I have found few other indicators as reliable as that.
kthomp19
1 hour ago
Kt keeps preaching the Shareholders owes the Treasury. No, it’s the other way around.
Wrong. The courts have said Treasury doesn't owe the shareholders a penny, as shown by Treasury's perfect record in the NWS cases.
With a 8-0 jury verdict and former FHFA Director saying the Treasury has been paid in full.
1) The verdict was against Fannie and Freddie, not against Treasury. Fannie and Freddie will be paying the damages, not Treasury.
2) Which former FHFA director? Calabria said in his book that he thinks a senior-to-common conversion is the best way to resolve the senior pref overhang.
Federal Statutes do not allow the Treasury to attach a commitment fee onto the Senior Preferred Stock. THEREFORE, by reason of Federal Statute, the Treasury owes the companies the overage payment on $191.4 billion total draws from Treasury, plus compounded interest
Quite the legal theory you have there! No plaintiff has tried that one in court to my knowledge.
You know the drill: file your own lawsuit, shut up, or be shown to be a hypocrite. You have consistently chosen door #3.
With the amount of time and effort you have put into researching your posts you could have filed several lawsuits by now. Why haven't you?
kthomp19
1 hour ago
You keep repeating the SCOTUS validating the Net Worth Sweep. That’s not what happened.
Wrong. The Supreme Court said that the NWS was a valid act of a conservator and thus not ultra vires, reversing the Fifth Circuit en banc panel's decision.
The Court dismissed the lawsuit.
The lawsuit claimed that the NWS was illegal and the lawsuit was dismissed, thus it was not found to have been illegal. The NWS survived a direct challenge, which makes it as legal as it's possible to be.
The Supreme Court basically said we will not rule or give Judgment are act as an arbitrator on the contract the SPSPA. So, the NWS was not validated as legal or illegal by the Court:
Wrong on both counts, see above.
Three more strikes for you and another out. Shameful.
JSmith5
1 hour ago
As a stockholder, no warrant exercise would work for me. As taxpayer, now even more with DOGE on the loose - they will. As an investor, it would not be prudent to ignore them. Clearly the seniors are the wildcard here.
As a common holder, I would have to see what kind of a conversion deal the Ps would get before I pass judgement. The choices are turn on the 6% $2B in dividends, cash them in (up to $33B) or convert them. As a P holder any of the 3 is a win. Maybe not as big a win as commons, but a win.
I think, all things considered, I would expect that conversion would increase the likely hood of a speedier and successful exit.
Nats
JSmith5
2 hours ago
No - I don't believe it does - that's why some are pushing for it to help with any capital raise - but could be wrong there.
No, but may add to the commons I have if I can get them cheap enough. Right now I average $1.60 per common. My belief is that, for every 1% of the company that the commons ends up with, it would be worth $2-2.50 a share. I am still of the opinion that they will exercise the warrants, but cancel the seniors in order to make this happen.
As I have been saying - its reasonable for these to become utility stocks with a 2/3s payout. If they make $30B a year and you turn on the Ps dividend of about $2B a year that would leave $18B for about 1.8B shares if they had 100 percent ownership. Hopefully would have a 4-5% dividend. Also, this would allow the GSEs to keep about $10B per year to keep up with the cap requirements as their MBS grows. But I do expect the Ps to be converted to make any cap raise easier and hopefully quicker as we have all waited long enough.
Nats
Rodney5
2 hours ago
Congressional Law, Consent Decree that's fine, BUT including a government guarantee will take Congressional approval.
When the companies are out of conservatorship the illegal Senior Preferred Stock Purchase Agreement will have been terminated. The FHFA / Treasury would have to have Congressional approval for any future US government guarantees. The Treasury cannot change Congressional Law by deciding to loan out taxpayers' money. The $200 billion afforded Treasury to purchase obligations of the company (MBS Obligations) up to the point in time it expired December 31, 2009. Page 18 charter act.
https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf
Explained: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=175470038
The Congressional Charter is Fannie and Freddie's enabling statutes to conduct business in the secondary mortgage market. FHEFSSA and HERA are regulatory statutes, governing the companies' regulators, FHFA Regulator.
The Senior Preferred Stock Purchase Agreement (SPSPA) did not amend anything. The SPSPA is an illegal contract between two government agencies, illegal by reason of the commitment fee attached to the Senior Preferred Stock. FHFA did not amend HERA providing unlimited funding, Only Congress can amend Federal Statue.
Federal Housing Enterprises Financial Safety and Soundness Act of 1992 was amended to establish the Federal Housing Finance Agency. HERA amended certain parts of both FHEFSSA and the Charter Act. AMENDED not to do away with. Safety and Soundness still exists just as the Charter Act still exists.
trunkmonk
2 hours ago
U must have missed all the posts, almost every post on capital stack, they focus on it as if it means anything to profitable companies, right now it means absolutely nothing other than when in BK Receivership or other distribution requirement on illiquid companies. GSEs are the farthest away from this then almost any person or company in the world (acceptations include Apple, Microsoft, and other companies that have hundreds of billions in cash), if you strip the illegal takings and Mafia style capital requirements. yeah Senior debt holds priority, then Mezzanine Debt when applicable, sure Preferred Equity next then Commons last. Its so simple even a caveman P can understand this. Again, they can pretend GSEs are not in good condition, and scare off morons all day, but those thar remain understand resolve is coming, with next Admin or Next class action that will be worth hundreds of billions for Commons, their choice and the know it. Only Cat man do types think they know everything and condescend to everyone else, completely stupid assumptions they will regret in the end.
KTCarneyClowns can tell lemmings all day long they are illiquid, that fake front is just a facade made up by the crowd trying to drain profits from conserve, which is completely illegal in HERA.