Entering text into the input field will update the search result below

Time To Get Reform Done With Fannie And Freddie

Glen Bradford profile picture
Glen Bradford


  • Treasury's point man on housing reform says it's time to get reform done.
  • The en banc Collins v. Mnuchin oral argument went well, and it sounds like plaintiffs expect to win that in 4-6 months (if admin doesn't settle lawsuits first).
  • I own preferred shares, but commons may have more upside for those willing to accept more risk.

Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) [often referred to as the government sponsored enterprises (GSEs)] are two companies in conservatorship because an agreement between their regulator, the Federal Housing Finance Agency (FHFA), and the United States Treasury has been taking all of their money since they were placed into conservatorship. Craig Phillips, the point man at Treasury for GSE reform, tweeted on housing reform, "Challenge accepted. Time to get reform done!!!!" Two weeks ago, FHFA's new director, Joseph Otting, was quoted by Politico saying that in the next two to four weeks FHFA employees should expect to see some communication coming out of the White House and Treasury that sets the direction for the future of housing and FHFA's part in setting the course.

Investment Thesis

On the recent Investors Unite conference call, lead plaintiff lawyer David Thompson talked about how reversing the effects of the net worth sweep would put junior preferred ($34 billion between Fannie and Freddie) at the top of the capital structure and then commons would participate on top of that. I own junior preferred but figure in any scenario where commons are not diluted before the warrants are exercised, there is upside there, perhaps more upside than in the junior preferred. Preferred trade at 40 cents on the dollar or less, and that's enough upside for me.

Craig Phillips: Challenge Accepted

This kind of reminds me of the Leeroy Jenkins video that went viral a few years back. What you have here is the #1 person in charge of housing finance reform from the Treasury side coming out enthusiastically saying it's time to get reform done:

One of the next major steps in the process of recapitalization would be for Treasury to announce that it has hired an investment banking firm to explore the

This article was written by

Glen Bradford profile picture
Glen Bradford MBA contributes to Seeking Alpha primarily to read people's negative feedback so that he can avoid generating unnecessary losses. "Uncertainty will certainly work for me." - Glen Bradford March 2009.Glen wishes you a bright sunny warm day filled with smiles, laughter, and love.The Supreme Court got it wrong, which is sad, but it's not over yet.

Analyst’s Disclosure: I am/we are long FMCCH, FMCCI, FMCCL, FMCCN, FMCCP, FMCCS, FMCCT, FMCKP, FNMAM, FNMFN, FNMFO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.