Fannie Mae: The Government's Most Recent Motion To Dismiss And Fairholme's Motion To Stay
Charlie Harrison • 55 Comments
Charlie Harrison • 55 Comments
Mon, Dec. 5, 12:27 PM
- Yes, incoming Treasury Secretary Steven Mnuchin wants to get the GSEs out of the government's hands, but it's still not clear how any privatization would work, say KBW's Bose George and Eric Hagen.
- Even in a best case scenario - with the stock being privatized with a 2.5% capital requirement - the capital need would "meaningfully dilute" the common shares' value, they say.
- They still believe the most likely scenario is one in which the common has no value, and reiterate Underperform ratings and $1 price targets for both.
- Fannie Mae (OTCQB:FNMA -6.4%) and Freddie Mac (OTCQB:FMCC -6%) are pulling back further from their monster post-election rally, now down about 25% in the last three sessions.
Fri, Dec. 2, 12:17 PM
- Corporate tax cuts would produce negative net worths for Fannie Mae (OTCQB:FNMA -6.6%) and Freddie Mac (OTCQB:FMCC -5.9%) as it would reduce the value of their DTAs, says Rafferty Capital's Dick Bove. Thus, incoming Treasury Secretary Steven Mnuchin will need to hammer out a deal with investors prior to any tax bill.
- Mnuchin, says Bove, understands the GSEs as well as anyone thanks to his experience turning around IndyMac. "If there's anyone in the U.S. who can do it, it’s the guy who solved IndyMac."
- He believes it's possible Mnuchin has already held talks with Trump supporter and Fannie investor John Paulson, and that other prominent investors like Bruce Berkowitz and Bill Ackman would prefer a quick deal vs. spending years and millions in court.
- On Jan. 20, all the material Democrats have withheld from the courts becomes available to the Trump administration, says Bove. This gives Mnuchin "staggering leverage" against potential Democratic opposition.
- Source: Bloomberg
Thu, Dec. 1, 8:36 AM
- Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) each blasted off by more than 45% following yesterday's selection of Steven Mnuchin to be Treasury Secretary, and his promise to get the government out of the companies.
- With Mnuchin at Treasury, Jeb Hensarling chairing the House Financial Services Committee, and a new Senate Banking chairman supporting GSE reform, Cowan's Jaret Seiberg puts the odds of something getting done in the next two years at 65%.
- Seiberg notes Mnuchin "knows" investors who are suing the government over the profit sweep, and understands the debates "subtleties" better than most.
- There will be the usual media hysterics about enriching supporters, but the new president is less concerned than most with answering to that crowd, says Seiberg.
- There are, however, "serious obstacles," including conservatives who view the GSEs as "an abomination," and would have them liquidated.
- Source: Bloomberg
Wed, Nov. 30, 8:30 AM
- Confirming that he's Trump's pick to be Treasury Secretary, Steven Mnuchin (appearing with Trump's Commerce pick Wilbur Ross) tells CNBC his first priority will be tax reform. There will be a middle-class tax cut, he says. As for the corporate rate, Mnuchin and team feel 15% is the right level.
- On bank regulation: "We have to kill many aspects of Dodd-Frank." KRE +1%, KBE +0.4% premarket
- On the GSEs: Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) cannot be government-owned. FNMA +7.15%, FMCC +7.6% premarket
Wed, Nov. 23, 3:11 PM
- For much of the country, the limit on single-family mortgages to be acquired by Fannie Mae (OTCQB:FNMA +1.6%) or Freddie Mac (OTCQB:FMCC +0.3%) has remained at $417K since 2006, but that's headed up to $424K next year.
- The move comes as the FHFA's Home Price Index shows average home prices finally moving their level from Q3 of 2007 (which the agency designates as the pre-crash level).
- Loan limits will also head higher in "high-cost areas" - to $636K, or 150% of the $424K level.
Fri, Nov. 11, 12:02 PM
- Fannie Mae (OTCQB:FNMA +7.9%) and Freddie Mac (OTCQB:FMCC +9.2%) are now both doubles since the election results on hopes the "profit sweep" may soon be history.
- Picked to lead the domestic transition team, Ken Blackwell two years ago called the arrangement with Treasury "theft of private property."
- John Paulson has reportedly been tapped as an advisor, and he's known to be a fan of releasing government sponsored enterprises from their shackles.
- Former Goldmanite Steven Mnuchin was Trump's campaign finance chief and apparently on the short list for Treasury Secretary. While he's not been explicit about his views on Frannie, he does serve on the Sears board with Fairholme's Bruce Berkowitz and is seen as likely sympathetic to shareholder interests.
- Bill Ackman: "I think Fannie and Freddie are going to get resolved within the first 12 months of this new administration, and I’m looking forward to having my second meeting with Donald Trump and negotiating a deal."
Thu, Nov. 3, 11:16 AM
- With this payment, Fannie (OTCQB:FNMA -1.8%) will have paid Treasury a cumulative $154.4B versus draws of $116.1B.
- Q3 net interest income of $5.435B was up a bit from Q2. Investment gains of $467M rose from $398M. Fair value losses of $491M vs. losses of $1.667B.
- Full report
- Previously: Fannie Mae EPS of $0.04 (Nov. 3)
Thu, Nov. 3, 7:37 AM
Mon, Sep. 19, 3:43 AM
- Global bond issuance is running at its fastest pace in nearly a decade as companies, countries and U.S. agencies such as Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) binge on debt in an era of historically low interest rates.
- According to Dealogic, a total of $4.88T of debt has been sold since the year began as issuers take advantage of rock-bottom borrowing costs.
- The figure is a hair below that of 2007, when $4.91T of bonds were issued during the same period.
Fri, Sep. 9, 3:57 PM
- A federal judge dismissed a case brought by an investor against the FHFA and Treasury over the 2012 change to the bailout agreement which resulted in the infamous profit sweep.
- The investor had argued her investments in Fannie Mae (OTCQB:FNMA -2.2%) and Freddie Mac (OTCQB:FMCC -1.2%) were damaged by the move. Similar lawsuits have been tossed by other federal courts, reports John Carney in the WSJ.
- In this case, the judge said the Housing and Economic Recovery Act (HERA) barred courts from interfering in the FHFA's authority as conservator of the GSEs.
- There remain, of course, a number of other suits brought by investors in Fannie Mae and Freddie Mac.
Thu, Aug. 11, 7:44 AM
- Last month's abrupt firing of Fifth Third Bancorp (NASDAQ:FITB) general counsel Heather Russell was due to a romantic relationship she was having with Fannie Mae (OTCQB:FNMA) CEO Timothy Mayopoulos.
- Source: WSJ
- Interestingly, both Russell and Mayopoulos disclosed the relationship to their respective companies, and while Fifth Third fired her for it, Fannie Mae had no issues with Mayopoulos.
- The two companies, of course, do plenty of business together, with Fannie Mae buying and securitizing Fifth Third mortgages. When mortgages go bad, the two negotiate over just how many the bank must repurchase.
- The two worked together previously when Mayopoulos was general counsel at Bank of America from 2004-2008, and Russell an associate general counsel from 2006-2011.
- Fifth Third’s code of ethics says “we all must avoid actual or apparent conflict of interest with Fifth Third or its customers, suppliers and vendors.”
Thu, Aug. 4, 8:06 AM
- That's the amount of comprehensive income the company earned in Q2, and compares to $936M of income in Q1.
- The increase in income last quarter is mostly thanks to a smaller decline in interest rates, higher credit-related income , and an increase in mortgage prepayments.
- After writing a check to Treasury for $2.9B, Fannie Mae (OTCQB:FNMA) will have paid a a total of $151.4B versus draws of $117B.
- Full earnings release
- Previously: Fannie Mae misses by $0.44, beats on revenue (Aug. 4)
Thu, Aug. 4, 7:36 AM
Tue, Jun. 21, 4:09 PM
- The class action plaintiffs have been ordered to submit supplemental briefs over a number of questions about the role of sovereign immunity, writes John Carney.
- While the questions don't necessarily mean the court is leaning towards the government in its verdict, he says, there are hints. Most notably, the requests were directed at the class action plaintiffs, not the individual ones. This could mean the court is not inclined to accept demands for injunctive relief over the 20112 change to the bailout terms for OTCQB:FNMA and OTCQB:FMCC.
- The questions may also suggest the court hasn't found any claims for jurisdiction persuasive (agreeing with the 2008 trial court).
- New briefs are due on July 1, and the government has until the 8th to respond.
Thu, Jun. 16, 4:19 PM
- The so-called Midtown Center in D.C. with spiral staircases, rooftop decks, and three glass-enclosed walkways, aren't exactly appropriate for an agency in conservatorship, reads an inspector general's report from the FHFA.
- Meanwhile, the cost for Fannie Mae's (OTCQB:FNMA) new 679K square-foot gleaming HQ has risen to $151M, up from $115M in January 2015 (when the FHFA approved the move). In all, the 15-year cost of relocation, the new building, and the lease now tops $770M.
- A Fannie spokesman figures the move will save taxpayers about $330M over the next 15 years thanks to space consolidation and energy efficiency.
- Fannie Mae will sell its current HQ on what could be primo residential property on Wisconsin Avenue.
Fri, May 20, 10:36 AM
- The unsealing of documents as part of the lawsuit filed by private investors against the government shows the decision about the 2012 profit sweep was not necessarily out of concern with protecting taxpayers from future losses.
- The change, according to an email from Jim Parrott, then a top White House official on housing finance, was structured to ensure Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) couldn't "repay their debt and escape as it were."
- Documents show the government moving quickly to put the sweep in place after the FHFA learned the GSEs were about to enter "the golden years" of profitability.
- The sweep, said Parrott, eliminated "the possibility that they ever go (pretend) private again."
- The significance of the documents, writes Gretchen Morgenson, goes well beyond the future of housing finance. "They demonstrate the perils of allowing the government to act in secrecy."