Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3435231 times)

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12970 on: July 15, 2019, 02:20:07 PM »
privatize means= 🤔
reform means= 🤔
follow gaspo=😱



orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12971 on: July 15, 2019, 02:54:15 PM »

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12972 on: July 15, 2019, 03:29:01 PM »
Seems like this isn't such a big deal. If you listen to his Fox Interview, it sounded like government doesn't want to "TOTALLY" privatize the GSEs, as in there will always be some sort of government backing of some kind. Which has always been the assumption here. I don't believe many people thought they would be fully privatized with ZERO government backing. The Trump memo even asked for ways for the government to be compensated for their support whether implicit or explicit. Non-story.

He also mentioned plan still coming but timing unknown.

https://twitter.com/CGasparino/status/1150849333383835648
SCOOP: @USTreasury unlikely to advocate privatization as a viable option in @FannieMae @FreddieMac reform-sources; Treasury complaining lack of personnel w GSE skills slowing reform, timetable uncertain-sources more 345pm @FoxBusiness @LizClaman $FNMA $FMCC

Thanks.  Here's the clip: https://video.foxbusiness.com/v/6059461043001/#sp=show-clips

So we know first part of the plan. A guarantee, seemingly explicit and most likely paid for. The details may conveniently leak from here on out. 

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12973 on: July 15, 2019, 03:46:18 PM »
So we know first part of the plan. A guarantee, seemingly explicit and most likely paid for. The details may conveniently leak from here on out.

Explicit guarantee means Congress. If the administration is counting on that then I'm selling everything tomorrow.

What I think is more likely is a continuance of the existing implicit guarantee and Treasury line of credit, with FnF paying a commitment fee. This lines up with what was in the presidential memo.

The difference is that right now Treasury is only contractually responsible for around $200B of losses, which represents the undrawn money from the PSPA funding commitment. I'm not sure if FHFA and Treasury can legally increase this amount, but it shouldn't be necessary. As I said in my post on Tim Howard's blog (and first said by cherzeca on Twitter), right now we have $6B of capital in front of the $200B line of credit, and after recap and release it would be $150B (or whatever Calabria decides on) ahead of that same line of credit. It's a good enough arrangement now and will be better than good after recap and release. That should be plenty to reassure MBS investors while technically not potentially putting Treaury on the hook for all $5.5T of FnF's liabilities as an explicit guarantee would do.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12974 on: July 15, 2019, 04:20:31 PM »
So we know first part of the plan. A guarantee, seemingly explicit and most likely paid for. The details may conveniently leak from here on out.

Explicit guarantee means Congress. If the administration is counting on that then I'm selling everything tomorrow.

What I think is more likely is a continuance of the existing implicit guarantee and Treasury line of credit, with FnF paying a commitment fee. This lines up with what was in the presidential memo.

The difference is that right now Treasury is only contractually responsible for around $200B of losses, which represents the undrawn money from the PSPA funding commitment. I'm not sure if FHFA and Treasury can legally increase this amount, but it shouldn't be necessary. As I said in my post on Tim Howard's blog (and first said by cherzeca on Twitter), right now we have $6B of capital in front of the $200B line of credit, and after recap and release it would be $150B (or whatever Calabria decides on) ahead of that same line of credit. It's a good enough arrangement now and will be better than good after recap and release. That should be plenty to reassure MBS investors while technically not potentially putting Treaury on the hook for all $5.5T of FnF's liabilities as an explicit guarantee would do.

the key point here is that the treasury line has been appropriated by congress as per HERA.  so that is a big deal...there is $200B of backstop, which GSEs should start paying for, which is an important credit support until recap is done.  this is conveniently ignored by chris whalen and the MBA crowd

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12975 on: July 15, 2019, 04:24:59 PM »
So we know first part of the plan. A guarantee, seemingly explicit and most likely paid for. The details may conveniently leak from here on out.

Explicit guarantee means Congress. If the administration is counting on that then I'm selling everything tomorrow.

What I think is more likely is a continuance of the existing implicit guarantee and Treasury line of credit, with FnF paying a commitment fee. This lines up with what was in the presidential memo.

The difference is that right now Treasury is only contractually responsible for around $200B of losses, which represents the undrawn money from the PSPA funding commitment. I'm not sure if FHFA and Treasury can legally increase this amount, but it shouldn't be necessary. As I said in my post on Tim Howard's blog (and first said by cherzeca on Twitter), right now we have $6B of capital in front of the $200B line of credit, and after recap and release it would be $150B (or whatever Calabria decides on) ahead of that same line of credit. It's a good enough arrangement now and will be better than good after recap and release. That should be plenty to reassure MBS investors while technically not potentially putting Treaury on the hook for all $5.5T of FnF's liabilities as an explicit guarantee would do.

True, I guess what I was suggesting that Treasury would prefer that as part of their working with congress on reform as recommendation. I think that honestly would be Mnuchins preference in the end as he has repeated the working with congress multiple times. We could see both options as the mandate calls for both in its directions.

"(A)  The Federal Government is fully compensated for the explicit and implicit guarantees provided by it to the GSEs or any successor entities in the form of an ongoing payment to the United States;"

Implicit as it is now to get the wheels turning as an admin reform and an Explicit as part of an ongoing reform effort with congress.

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12976 on: July 15, 2019, 08:05:14 PM »
the key point here is that the treasury line has been appropriated by congress as per HERA.  so that is a big deal...there is $200B of backstop, which GSEs should start paying for, which is an important credit support until recap is done.  this is conveniently ignored by chris whalen and the MBA crowd

If Treasury cancels the seniors, does the line of credit go back up to $400B, as in $200B for each company? If so, that means even more protection for MBS holders, but even if not then adding capital to FnF only makes them safer than they are today, which is evidently safe enough for MBS investors to not be jittery.

And just to be clear, is the following the section of HERA you are referring to?

Quote
(3) FUNDING- For the purpose of the authorities granted in this subsection, the Secretary of the Treasury may use the proceeds of the sale of any securities issued under chapter 31 of Title 31, and the purposes for which securities may be issued under chapter 31 of Title 31 are extended to include such purchases and the exercise of any rights in connection with such purchases. Any funds expended for the purchase of, or modifications to, obligations and securities, or the exercise of any rights received in connection with such purchases under this subsection shall be deemed appropriated at the time of such purchase, modification, or exercise.

muscleman

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12977 on: July 15, 2019, 10:34:56 PM »
https://twitter.com/PaulMuolo/status/1150855958060576769
The Treasury plan to reform FanFred is at the White House, has been for weeks. Will it see the light of day? Yes. but who gets to see it first? And will it be set in motion?

This is getting interesting...... I wonder when did the treasury plan get to the white house? Is that early June? I was ultra bullish and even predicted an accelerated run up back in the end of May, but then in early June I started to see very suspicious technicals to the point where I had to sell out the whole position. I wonder if someone already knows the details of the treasury plan and started selling heavily since early to mid June.
I am muslceman. I have more muscle than brain!

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12978 on: July 16, 2019, 08:58:48 AM »
@MM. well Phillips certainly knows the details of the treasury plan, and he is now "on the loose" where information means money.  I dont know that you can frame an investment strategy around whether and who spills the beans

muscleman

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12979 on: July 16, 2019, 09:11:39 AM »
@MM. well Phillips certainly knows the details of the treasury plan, and he is now "on the loose" where information means money.  I dont know that you can frame an investment strategy around whether and who spills the beans

It is part of my technical indicator actually. As I said before, when Gaspirino bashed hard and GSE shares didn't move much in May or maybe April, I was ultra bullish. Later when Maloni lied about "coming Collins on Friday", I turned bearish.
This time, if the treasury plan comes to the White House in early June, right around when the stock topped and started steady declining, that's what I would turn ultra bearish.
You said this is an event driven stock. Yes it is. That's why I focus on these events.
I am muslceman. I have more muscle than brain!