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David Sims

 
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  • Fannie And Freddie Did Not Need A Bailout [View article]
    I think it could sound like I am quoting the book of revelation. I wouldn't even know where to start.
    Oct 16, 2014. 06:49 PM | Likes Like |Link to Comment
  • Fannie And Freddie Did Not Need A Bailout [View article]
    Joe,
    Good to hear from you. The comparison to FHA is a great idea. I think you are onto something. FHA's performance should not be any better than the GSEs on a cash basis either. I remember buying a home a few years into the crisis and could only qualify for an FHA loan.
    Oct 16, 2014. 06:48 PM | Likes Like |Link to Comment
  • Fannie And Freddie Did Not Need A Bailout [View article]
    Who knows what it is, or if it really is damaging. I can't imagine that a judge would want to make an order to hide something that doesn't exist. But yeah, settlement through proper restructuring seems prudent.
    Oct 16, 2014. 01:50 PM | 4 Likes Like |Link to Comment
  • Fannie And Freddie Did Not Need A Bailout [View article]
    Maybe we will all be permanently silenced and thrown in Gitmo.
    Oct 16, 2014. 01:48 PM | 9 Likes Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    They didn't need a bailout of $187 billion. $161 billion was non-cash accounting charges. $26 billion was interest on the loan.
    Oct 15, 2014. 08:09 AM | 1 Like Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    You sound like someone from Treasury.

    Who borrows $189.5 Billion at 10% interest and pays it back in 3.5 years? Someone who didn't need it in the first place!
    http://bit.ly/ZDuM5u
    Oct 15, 2014. 08:07 AM | 2 Likes Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    Keep in mind. Taxpayers have been paid back. If they are going to recapitalize the system, the main goal should be to keep taxpayers in a +$1 situation. In other words, any recapitalization plan where taxpayers commit $X should return $X+$1 to taxpayers at the minimum.

    With the GSEs being cash cows at the moment, a $30 strike price on the warrants satisfies this requirement. These are solid companies with solid earnings.

    FHFA has really turned them around operationally. All that's left is recap.
    Oct 14, 2014. 09:27 AM | Likes Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    Ackman is a smart guy. His timing with the purchases and $3 billion IPO is impeccable.
    Oct 13, 2014. 07:18 AM | Likes Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    CNBC was literally showing footage of people playing golf a few days ago. I turned it off immediately. Vote with the remote.
    Oct 13, 2014. 07:17 AM | Likes Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    Congratulations on being on the right side of history. Please don't refer to the stocks as lottery tickets. The people that bought this stock for $2 in 2009 don't have some windfall to brag about right now. The people that have held since before 2008 are not cheering either.
    Oct 13, 2014. 07:16 AM | 2 Likes Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    You said, "I could come up with a 30% IRR with no difficulty. "

    I'm not sure if you are being sarcastic or not. So, I will leave it to my last comment to explain my position.

    Government should not take 30% IRR profits from private sector enterprises. This is why we have taxes.
    Oct 12, 2014. 04:44 PM | Likes Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    "What would you regard as a "fair" return on the government's rescue conservatorship of the GSE's in 2008?"

    Purely from a theoretical perspective, I'd say a fair return is one that offsets costs. So, in this case, and in all other bailouts, I'd say the return should be limited to the borrowing cost of Treasury on the 30 year bond. Currently, 3.04%. (Even better, 0% or no profit.)

    Otherwise, Treasury could become one big leveraged investment fund, borrowing at the US government's rates and having perverse incentives to take debt-like positions in multitudes of companies. Positions where they have the power to extract maximum value by also taking the greatest amount of equity as well. In fact, a crisis could actually be created by our leaders to profit from the private sector without placing limits on their power. And in hindsight, after a company has been used and abused, who can prove that the government did not destroy the company simply by taking it over?

    In the case of Fannie and Freddie, let's say 10% is fair enough, even if it is a higher rate of return than required from the banks. Well, they will soon reach the threshold where principal and interest can be paid in full. FHFA and Treasury should then have their interests fully aligned with shareholders as partners.
    Oct 12, 2014. 04:39 PM | Likes Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    "What happens to your numbers if you forget the warrants?"

    Multiply earnings per share by 5 to get the effect of the warrants being invalidated. However, core capital is still a concern.

    "the government isn't supposed to be operating in the markets with a profit motive."

    EXACTLY. This is the result of the 2008 crisis. Government is now expected to make profits.
    Oct 12, 2014. 04:28 PM | Likes Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    Even better reasons to issue the warrants with a strike price.
    Oct 12, 2014. 04:24 PM | Likes Like |Link to Comment
  • Fannie And Freddie: Elegant Solutions After Imprudent Actions [View article]
    "David do you see a rainbow for FF? "

    Several people with more respectable backgrounds than my own think that there is a win-win opportunity here. Since the government has been paid back, this unlocks lots of possibilities for restructuring.
    Oct 12, 2014. 04:22 PM | 2 Likes Like |Link to Comment
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