Tue, Feb. 17, 10:15 AM
- A weekend piece in the NYT brings to light the extraordinary secrecy claims the government is making to prevent it from having to produce documents concerning the decision to expropriate all profits of Fannie Mae (OTCQB:FNMA +12%) and Freddie Mac (OTCQB:FMCC +13.6%) in late-summer 2012.
- At issue is exactly what the Obama administration - in the midst of an election battle and eyeing surprise profits at the GSEs - had in mind when it altered the bailout agreement and ordered the sweep.
- More fuel: Hank Greenberg's suit against the government over the AIG could be tilting in his favor. The "Greenberg Trade," says Charlie Gasparino, is a favorite of money managers betting that if Greenberg wins, it bodes well for those fighting the government over Frannie.
- The two stocks are higher by more than 30% over the past couple of sessions.
Dec. 17, 2014, 11:30 AM
Nov. 19, 2014, 11:50 AM
- "Everyone agrees that conservatorship cannot continue forever," says Senator Tim Johnson in prepared remarks for a Senate Banking Committee hearing on the GSEs. "If Congress cannot agree on a smooth, more certain path forward, I urge you, (FHFA) Director Watt, to engage the Treasury Department in talks to end the conservatorship.”
- Watt: "Conservatorship cannot, should not be a permanent state."
- Fannie Mae (OTCQB:FNMA +10.6%), Freddie Mac (OTCQB:FMCC +9%)
Oct. 3, 2014, 1:09 PM
- "The district court's decision overlooks important points of law and improperly resolved key questions of fact based on the government's cherry-picked record," says Perry Capital attorney Ted Olson. "The merits of this case deserve to be heard in court."
- Previously: Carney: Don't buy the dip in Frannie
- Fannie Mae (OTCQB:FNMA +20.2%), Freddie Mac (OTCQB:FMCC +20.3%)
Oct. 2, 2014, 9:59 AM
- The 52-page ruling from U.S. District Judge Royce Lamberth "meticulously demolishes" every argument made by investors claiming Treasury and the FHFA acted illegally when altering Fannie Mae's (OTCQB:FNMA -10%) and Freddie Mac's (OTCQB:FMCC -7.3%) bailout agreement in 2012.
- The new agreement, says Lamberth, is clearly within the bounds of authority Congress granted in 2008 when passing a law overhauling oversight of the GSEs.
- Yes, Lamberth's ruling doesn't directly affect the dozens of other pending lawsuits, but now plaintiff's attorneys will have to start out explaining how Lamberth got things wrong.
- Previously: Fannie and Freddie plunge after investor lawsuit dismissed
Oct. 1, 2014, 9:46 AM| 15 Comments
Aug. 27, 2014, 10:27 AM| 10 Comments
Aug. 14, 2014, 3:50 PM
- The GSEs have their tails in the air on a report shareholders - led by Bill Ackman's Pershing Square - plan tomorrow to file the latest in a string of lawsuits against the government for requisitioning the profits of the two, reports The Street's Dan Freed.
- Pershing Square is by far the largest non-government owner of common stock of Fannie Mae (OTCQB:FNMA +3.8%) and Freddie Mac (OTCQB:FMCC +4.5%), and numerous individual investors will join the suit. Another large holder - Bruce Berkowitz's Fairholme Capital - has much of its stake tied up in the preferred shares of the companies.
Jul. 11, 2014, 7:15 AM
- A check of the mortgage insurers the morning after the FHFA released the proposed Private Mortgage Insurer Eligibility Requirements (PMIERs) finds Radian (RDN) lower by 2.8%, MGIC (MTG) by 2.6%, and no action in Genworth (GNW), Essent Group (ESNT), and NMI Holdings (NMIH). The revised PMIERs would require higher capital standards on the mortgage insurers Fannie Mae (FNMA) and Freddie Mac (FMCC) do business with.
- The new rules are open for comment until September 8, and Radian expects to give the FHFA an earful, including noting the new capital requirements "are more onerous than the company's historical default experience suggests would be needed to withstand a severe stress event." The proposed PMIERs, says Radian, are also not consistent with the FHFA's goal of expanding access to mortgage credit by boosting the role of private capital in the mortgage market.
- Radian also notes it is likely to be January 2017 before compliance with any new rules would be required.
Mar. 18, 2014, 1:13 PM
- Fannie Mae (FNMA -15.7%) and Freddie Mac (FMCC -15.5%) get just a little sell-side love, with KBW's Bose George boosting his price targets on both to $2 from $0, though he keeps an Underperform rating on the duo.
- The PT change "incorporate(s) the possibility of a combination of a legal victory for shareholders combined with a lack of action on both the regulatory and legislative fronts that hurts the value of the GSEs," says George, who may be the only sell-sider still covering the GSEs after they were put into conservatorship in 2008.
Mar. 13, 2014, 11:20 AM
- “It’s hard to find any reasonable outcome that’s really terrible for the preferreds, given what I perceive to be the value of the business that’s already there," says portfolio manager Jeffrey Lewis, an owner of the shares. Investors in the common stock, however, are making a bet Fannie Mae (FNMA +12.4%) and Freddie Mac (FMCC +13.4%) will be allowed to become dominating private companies again and keep their profits.
- It's up to the courts to decide how investors will be treated, says Sen. Mike Crapo, who co-wrote the bill to wind the GSEs down. "We are not necessarily going to dictate the outcome."
- As for whether a bill actually becomes law anytime soon, former Senate banking panel aide Mark Calabria gives it maybe a 10% chance of getting to the president's desk this year. The dim prospects look to be giving a boost to the common shares today.
Mar. 12, 2014, 11:09 AM
- Fannie Mae (FNMA -11.7%) and Freddie Mac (FMCC -12.1%) are lower again in volatile action one day after a the release of a Senate proposal to wind the two down. Both stocks earlier took out the panicky lows made yesterday, but have bounced since.
- SA contributor Achilles Research reminds yesterday's news was completely expected and provided zero new information. The bill is the prototypical DOA legislation, especially with upcoming elections.
- The selloff, says Achilles, is a classic market panic in a couple of highly speculative and overextended names. Congress will do what it likes, but the fate of shareholders will ultimately be decided in the courts.
Mar. 11, 2014, 3:52 PM
- "While I strongly support GSE reform that protects taxpayers, such efforts should also be mindful of investors," says Senator Pat Toomey, sticking up for preferred and common stockholders of Fannie Mae (FNMA -30.6%) and Freddie Mac (FMCC -27.5%) in wake of a proposed bill to wind down the GSEs.
- "Taxpayers should be fully compensated, but once they are, investors ... should not be denied their fair share of any remaining value."
- "The government¹s actions with respect to the GSEs' profits raise serious concerns, including whether these actions lawfully respect the rights and interests of all Americans."
- Previous: Fannie and Freddie plunge on wind-down proposal.
Mar. 11, 2014, 3:06 PM
- In one of the great delayed reactions of recent times, Fannie Mae (FNMA -39%) and Freddie Mac (FMCC -36.4%) plunge in wake of the proposed bipartisan Senate bill calling for their wind-down. Like Wile E. Coyote after running off the edge of a cliff, the stocks hung around in positive territory for a couple of hours after the news hit ... then they looked down.
- The Fannie "S" series preferred is off 9.9%, Freddie's is down 18.5%.
Mar. 11, 2014, 12:57 PM
- Buying low and selling high in the GSEs continues unabated as a long-awaited bipartisan Senate bill is introduced to continue government backing of mortgages, but wind down Fannie Mae (FNMA +4.5%) and Freddie Mac (FMCC +4.7%).
- The White House: “We support this effort and believe it is a workable bipartisan approach to complete the biggest remaining piece of post-recession financial reform.”
- A bill in the more conservative House would more or less cut the government out of housing finance. With elections months away, the chance of any sort of reform becoming law this year are probably slim.
Feb. 26, 2014, 2:49 PM
- It doesn't take much to get these names moving, and Fannie Mae (FNMA +10.1%) and Freddie Mac (FMCC +10.3%) rocket higher, with Dick Bove appearing on Fox Business saying both are $18 stocks appearing to be today's catalyst.
- Bove has been bullish on the companies for awhile, but the $18 price target is a new item.
- Last week: Fannie reports big profit; Treasury paid back and more
FNMA vs. ETF Alternatives
Fannie Mae is a government-sponsored enterprise that was chartered by Congress in 1938 to support liquidity, stability and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold.
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