FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[cherzeca]

Today's WSJ article confirms (to me) the accuracy of the July12 Bloomberg article (admin wary of moving before the election) and explains why Calabria has been instructed to delay.

I expect the SC to take the APA case.  Despite the technical reasons why they wouldn't, it's big, ripe, and split regional court views.

In the event we lose the APA case (or I'm wrong and the SC doesn't take the case) and also if Trump does not win in 2020:  how confident could we be that any actions -- potential 4th amendment and potential consent decree plan -- that Mnuchin could possibly take in his final 2 months and Calabria perhaps a tad longer (maybe through his deputies until a new FHFA person confirmed) would stick?

here is link:  https://www.wsj.com/articles/firms-warn-of-risks-in-plan-to-take-fannie-mae-freddie-mac-private-11574591423?mod=hp_lead_pos4

I am not surprised this meeting was held in the summer and these mbs buyers want a direct government guaranty.  it is now fall entering winter and the administrative process is proceeding albeit slowly.  this market has existed some 50 years without a guaranty on far less capital (and a wink/nod implicit guarantee), and it will be proceeding with far more capital and a direct paid for back stop line (which of course is far more than there has been in terms of credit in that 50 year period).  when I see a leak to a reporter of a meeting held some 6 months ago, I see desperation.

[allnatural]

If a direct treasury credit line of $250b (backstopping $150b+ of potential first loss equity) isn't considered "explicit" i'm not sure what is. Especially considering gses have been operating under that model with no market issues since conservatorship began with no equity infront of it, and pre 2008 with no explicit credit line. This straw man argument has been beaten to death at this point.

[SnarkyPuppy]

If a direct treasury credit line of $250b (backstopping $150b+ of potential first loss equity) isn't considered "explicit" i'm not sure what is. Especially considering gses have been operating under that model with no market issues since conservatorship began with no equity infront of it, and pre 2008 with no explicit credit line. This straw man argument has been beaten to death at this point.

Well the article doesn't necessarily say that it's insufficient - it says that it is fundamentally vulnerable to future administrations (i.e. a future administration can say no more credit line).  From a practical perspective, this logic is silly as if there would be disruption to the market (as the article states), the cause of the disruption would be directly the result of the future administration that unwinds the credit line - creating a natural disincentive to ever touch it.

This also ignores the fact that these companies will be sitting on $150bn+ of capital, far more than they lost in a severe housing crisis and far more than they've ever historically had explicitly.   

To be honest, the only thing that gives me pause at all is why these lobbyists/journalists are still trying if the final outcome can't be stopped (as we believe).  Makes me think that they believe they can still influence the outcome.   

[allnatural]

That vulnerable to future administrations argument is just as bad. Congressional action is not permenant and also equally vulnerable to future congress coming in and changing the status quo. That risk will always be there (in all industries not just housing).

[cherzeca]

good points allnatural. as to snarky, this is all just desperation by some dweeb institutional investor.  Ackerman is a hack at WSJ and needs stories, and a leak of a 6 month old meeting apparently will just have to do.  after Ackerman got the leak he followed up seeking confirmation and quotes, and what could these guys say other than what they did.  WSJ has good reporters but they seem to keep them away from GSE stories.

[emily]

“ GSE’s surrounded by  gag order, fake news, corrupt politicians, fraud reporters, fellow travelers, perjurers, politically biased judges. 

Scotus will take the case, plaintiffs will file supplements to void illegal NWS, to void warrants, pay for lost dividends on Junior preferred, refund of excess taken above and over 10% interest plus principal, treasury to pay 10% interest on excess money held so far, release 11000 docs, release PWC settlement docs to see the accounting fraud, cannot just settle with few investors for accounting fraud in 5 trillion companies.  Some will also file to get perjurers out from hiding and fellow travelers out in open who worked on illegal NWS surreptitiously  in the evening hours and disclose their affiliations and payouts. Justice all over is but guaranteed in time to come.  Kudos to who worked hard to expose the largest corruption ever”

[emily]

"
Click on 4th tab “Profit” and toggle , to see who is the hero that the mob is against?

https://projects.propublica.org/bailout/list/simple

"

[Luke 5:32]

Judge Sweeney transcript attached...

[Luke 5:32]

Judge Sweeney transcript attached...

Not only is the government schizophrenic (Judge Sweeney's words previously), they have also acted like the mob (again, according to Sweeney).  According to this transcript, she has already completed a rough draft of her ruling.  Seems to me like this case won't be dismissed: "I want the parties to have their day -- well, we’ll have many days in court, but I mean, for this initial oral argument. Let me just -- we’re going to go off the record just for 10 minutes so we can just..."

 

[cherzeca]

Mammoth argument. My take is that motion to dismiss will be denied. Some question as to whether just some or all plaintiffs will have standing. But this will be another case the govt must settle

Edit:  Sweeney also seemed receptive to the Wash Fed claim challenging the manner in which the conservatorship was initiated