Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 2796040 times)

emily

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9180 on: January 18, 2018, 04:53:11 PM »
Did the goal post move to August? Great. Then it will move to a date after elections? Feb 2019? Then move another 8 years? It is a joke. Craig Phillips says shareholders don't exist "There actually aren't shareholders...." Great. We expected a lot.
« Last Edit: January 18, 2018, 04:57:49 PM by emily »


SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9181 on: January 18, 2018, 05:09:26 PM »
"Treasury's Craig Phillips also told a group today that Fannie Mae and Freddie Mac will require a draw from Treasury as a result of tax reform which reduced the value of deferred tax assets. This is despite a deal with FHFA to allow each to retain $3 billion in capital"

Doesn't make any sense.  Only conclusive is they are saying one thing and doing another.

Their writedowns are going to be much bigger than $3B, roughly $12.4B and $5.9B.

https://www.housingwire.com/articles/41727-republican-tax-plan-will-trigger-another-fannie-freddie-bailout

Precisely what doesn't make any sense to me.   They entered into an agreement to hold $3bn.  It was very obvious at the time that $3bn would not be enough to prevent a draw.   What gives?

The retained capital agreement wasn't intended to prevent a Treasury draw, it was really just political theater.

Here's what they said: "While it is apparent that a draw will be necessary for each enterprise if tax legislation results in a reduction to the corporate tax rate, FHFA considers the $3 billion capital reserve sufficient to cover other fluctuations in income in the normal course of each Enterprise’s business.”

Correct.   And why do you think they are playing political theater?   Just for fun?   I'm growing increasingly confident that there is a coordinated PR attempt to incrementally transition to an inevitable and agreed upon win-win-win legislative outcome.

The optics and resulting psychological difference between incrementally releasing independent tidbits of the end result vs. having one massive release with shares soaring 300% in a day is important.   Imagine 1 year ago we learned all of the following on the same day (in addition to Mnuchin's initial comments after nomination):    a) RNC proposed a resolution to respect shareholders rights b) Ben Carson hinted on TV that he has been talking to Blackstone and is not opposed to shareholders "getting their money back" c) the FHFA director coming out w/ a Berkowitz/Millstein proposal & the treasury responding the next day by not in any way, shape, or form criticizing it d) $3bn capital buffer buildup e) ackman supportive of a plan about to be released by corker f) mnuchin stating that he will not consider getting rid of fannie/freddie g) mnuchin saying that it is "absolutely true" that obama used profits from fannie/freddie to fund other parts of the government

Berkowitz has been silent.  Ackman has been bullish.   Paulson continues to write about the high-probability of a favorable outcome after being personally invited to Mnuchin's wedding.

Oh and by the way-  it is the rational and simplest end to conservatorship along with $120bn of financial incentives tagged along.

I've tried to play devils advocate in this thread for the sake of questioning the thesis.   But COME ON.    This is day 1 corporate politics/PR and anyone who has seen it before can recognize this.   
« Last Edit: January 18, 2018, 05:12:57 PM by SnarkyPuppy »

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9182 on: January 18, 2018, 05:11:59 PM »
"Treasury's Craig Phillips also told a group today that Fannie Mae and Freddie Mac will require a draw from Treasury as a result of tax reform which reduced the value of deferred tax assets. This is despite a deal with FHFA to allow each to retain $3 billion in capital"

Doesn't make any sense.  Only conclusive is they are saying one thing and doing another.

Their writedowns are going to be much bigger than $3B, roughly $12.4B and $5.9B.

https://www.housingwire.com/articles/41727-republican-tax-plan-will-trigger-another-fannie-freddie-bailout

Precisely what doesn't make any sense to me.   They entered into an agreement to hold $3bn.  It was very obvious at the time that $3bn would not be enough to prevent a draw.   What gives?

that was likely done to help block jumpstart 2.0 --- the buffer was announced the day after tax reform and it negated re-jumpstart's proposal to withhold funding for a program that conservatives didn't like if the Tsy didn't take in the full amount of sweep each q.

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9183 on: January 18, 2018, 05:19:12 PM »
"Treasury's Craig Phillips also told a group today that Fannie Mae and Freddie Mac will require a draw from Treasury as a result of tax reform which reduced the value of deferred tax assets. This is despite a deal with FHFA to allow each to retain $3 billion in capital"

Doesn't make any sense.  Only conclusive is they are saying one thing and doing another.

Their writedowns are going to be much bigger than $3B, roughly $12.4B and $5.9B.

https://www.housingwire.com/articles/41727-republican-tax-plan-will-trigger-another-fannie-freddie-bailout

Precisely what doesn't make any sense to me.   They entered into an agreement to hold $3bn.  It was very obvious at the time that $3bn would not be enough to prevent a draw.   What gives?

The retained capital agreement wasn't intended to prevent a Treasury draw, it was really just political theater.

Here's what they said: "While it is apparent that a draw will be necessary for each enterprise if tax legislation results in a reduction to the corporate tax rate, FHFA considers the $3 billion capital reserve sufficient to cover other fluctuations in income in the normal course of each Enterprise’s business.”

Correct.   And why do you think they are playing political theater?   Just for fun?   I'm growing increasingly confident that there is a coordinated PR attempt to incrementally transition to an inevitable and agreed upon win-win-win legislative outcome.

The optics and resulting psychological difference between incrementally releasing independent tidbits of the end result vs. having one massive release with shares soaring 300% in a day is important.   Imagine 1 year ago we learned all of the following on the same day (in addition to Mnuchin's initial comments after nomination):    a) RNC proposed a resolution to respect shareholders rights b) Ben Carson hinted on TV that he has been talking to Blackstone and is not opposed to shareholders "getting their money back" c) the FHFA director coming out w/ a Berkowitz/Millstein proposal & the treasury responding the next day by not in any way, shape, or form criticizing it d) $3bn capital buffer buildup e) ackman supportive of a plan about to be released by corker f) mnuchin stating that he will not consider getting rid of fannie/freddie g) mnuchin saying that it is "absolutely true" that obama used profits from fannie/freddie to fund other parts of the government

Berkowitz has been silent.  Ackman has been bullish.   Paulson continues to write about the high-probability of a favorable outcome after being personally invited to Mnuchin's wedding.

Oh and by the way-  it is the rational and simplest end to conservatorship along with $120bn of financial incentives tagged along.

I've tried to play devils advocate in this thread for the sake of questioning the thesis.   But COME ON.    This is day 1 corporate politics/PR and anyone who has seen it before can recognize this.

your scenario is why we're all here.  and I wish it good fortune.

but it's a delicate dance -- trump doesn't need any new republican enemies, especially in the senate where he potentially faces an impeachment trial at some point.

it's strange that the warrants have been off limits in congressional hearings and administrative q&a.  for instance, today, it seems reasonable that phillips would have been asked this question.


SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9184 on: January 18, 2018, 05:45:09 PM »
"Treasury's Craig Phillips also told a group today that Fannie Mae and Freddie Mac will require a draw from Treasury as a result of tax reform which reduced the value of deferred tax assets. This is despite a deal with FHFA to allow each to retain $3 billion in capital"

Doesn't make any sense.  Only conclusive is they are saying one thing and doing another.

Their writedowns are going to be much bigger than $3B, roughly $12.4B and $5.9B.

https://www.housingwire.com/articles/41727-republican-tax-plan-will-trigger-another-fannie-freddie-bailout

Precisely what doesn't make any sense to me.   They entered into an agreement to hold $3bn.  It was very obvious at the time that $3bn would not be enough to prevent a draw.   What gives?

The retained capital agreement wasn't intended to prevent a Treasury draw, it was really just political theater.

Here's what they said: "While it is apparent that a draw will be necessary for each enterprise if tax legislation results in a reduction to the corporate tax rate, FHFA considers the $3 billion capital reserve sufficient to cover other fluctuations in income in the normal course of each Enterprise’s business.”

Correct.   And why do you think they are playing political theater?   Just for fun?   I'm growing increasingly confident that there is a coordinated PR attempt to incrementally transition to an inevitable and agreed upon win-win-win legislative outcome.

The optics and resulting psychological difference between incrementally releasing independent tidbits of the end result vs. having one massive release with shares soaring 300% in a day is important.   Imagine 1 year ago we learned all of the following on the same day (in addition to Mnuchin's initial comments after nomination):    a) RNC proposed a resolution to respect shareholders rights b) Ben Carson hinted on TV that he has been talking to Blackstone and is not opposed to shareholders "getting their money back" c) the FHFA director coming out w/ a Berkowitz/Millstein proposal & the treasury responding the next day by not in any way, shape, or form criticizing it d) $3bn capital buffer buildup e) ackman supportive of a plan about to be released by corker f) mnuchin stating that he will not consider getting rid of fannie/freddie g) mnuchin saying that it is "absolutely true" that obama used profits from fannie/freddie to fund other parts of the government

Berkowitz has been silent.  Ackman has been bullish.   Paulson continues to write about the high-probability of a favorable outcome after being personally invited to Mnuchin's wedding.

Oh and by the way-  it is the rational and simplest end to conservatorship along with $120bn of financial incentives tagged along.

I've tried to play devils advocate in this thread for the sake of questioning the thesis.   But COME ON.    This is day 1 corporate politics/PR and anyone who has seen it before can recognize this.

your scenario is why we're all here.  and I wish it good fortune.

but it's a delicate dance -- trump doesn't need any new republican enemies, especially in the senate where he potentially faces an impeachment trial at some point.

it's strange that the warrants have been off limits in congressional hearings and administrative q&a.  for instance, today, it seems reasonable that phillips would have been asked this question.

The only downside scenario which I think is legitimate and is concerning is the Bright/DeMarco mutualization model - http://assets1b.milkeninstitute.org/assets/Publication/Viewpoint/PDF/Toward-a-New-Secondary-Mortgage-Market.pdf for those not familiar.

This model is largely consistent with the actions/statements made by treasury/fhfa etc.   The list of arguments against this model is a much shorter list.  Primarily:  warrants, jr liquidation preference, and contingent litigation risk



TonyG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9187 on: January 18, 2018, 07:07:25 PM »
just gonna post that Luke. This process has to fail and then Mnuchin will hopefully step in.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9188 on: January 18, 2018, 11:54:27 PM »
just gonna post that Luke. This process has to fail and then Mnuchin will hopefully step in.

I guess we now know why watt sent his letter over. Also I don’t see this as senate going it’s own way as some senate Rs going their own way. Doesn’t sound like something brown would be in favor of.

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9189 on: January 19, 2018, 04:17:38 AM »
It could be a negotiating tool ("extreme" view) with the real objective of meeting dems in the middle with some form of mutualization requiring a national footprint/utility roe.   

Having trouble reconciling some of Ackman's statements about Corker