How will the public respond to the movie "The Big Short"? Probably much in the same way they responded to "The Wolf of Wall Street"... more people will want to become wealthy Wall Street financial ad hedge fund players. Hamptons, anyone?
I am really looking forward to this expose that will reveal how Fannie Mae and Freddie Mac, the world's two largest players in the housing market, failed to discern and react to a coming crisis in housing and credit markets until it was too late to save them without an enormously expensive, taxpayer-funded bailout. What others clearly saw coming and responded to in a hugely profitable "short" play, the GSs fiddled around looking for ways to increase executive bonuses. In fact, the year after conservatorship was imposed, the GSEs were still attempting to payout enormous bonuses to themselves for their bailout.
Whatever anyone says about Fannie or Freddie, Cheese tries to twist and turn it into some positive for the common stock long. I'm very surprised he hasn't had to try and repackage the earlier discussion about the Freddie CFO committing suicide into some sick braggadocio about what an excellent advantage it was for FMCC shareholders to have a "well hung" CFO. Bet the discussion got Sue excited, however.
I'm just saying...
Quite simple, really. The government is being backed into a corner where litigation is going to push it into a liquidation scenario which is, under HERA, the only legal way they can wind down the GSEs... via an insolvency and liquidation. FMCC already hit the brakes on profits in Q3, and FNMA reported much narrower profitability and Mayopolous cited an illiquid position upcoming by 2018 in the conference call. If the GSEs begin taking further draws from Treasury... that is tantamount to another bailout which would surely justify closure and an asset sell down.
Preferreds have a liquidation value of $25.00 which has priority before any common settlement is even considered. The dividends... 8.25% on FNMAS series pfds... is immaterial, cumulative, or not. You buy for $4-5, cash out for $20-25 in a few years; nice play. And if the GSEs turn based on some unforeseen court ruling and survive without a liquidation response from Uncle, that 8.25% divvy still looks juicy enough to drive S/P back up to$10 or more, must the quarterly cash out.
There is a reason why both Perry and Berkowitz primarily hold preferred shares.
I am passionate about the failed corporate culture at the GSEs because the claim that the government is the party responsible for ruining the common equity of the GSEs. The fact is, as I have pointed out for YEARS, that the GSEs wounds were substantially self-inflicted. Yes, the banks played a role in the deal. But the other part nobody likes to talk about is that the GSEs, themselves, were the most notorious example of which part of the economy really was "TOO BIG TO FAIL".
We had the Christmas Massacre at Fannie in 2004. Then we had the Freddie CFO committing suicide in 2009 under a cloud of issues.
Why would the GSEs have planned to spend $210 million on executive bonuses, just a year after being placed in conservatorship? Disgraceful. No accountability. Failed enterprises. No wonder the government decided to want to wind them down.
You need to learn the difference between a short and a basher. A short investor is playing the downside. It's like the craps player in Vegas that plays the "Don't Pass" or "Don't Come" lines; the difference is that at the table, nobody rants and screams about someone having an alternative view on how to make money. That is was happens HERE. There is NOBODY I see trolling as a basher on this board, with only rare exceptions noted over the YEARS I have followed Fannie, here. I can't same about the pumpers. Especially the losers that run the gamut from the insane ones like sam and cheese, to the more clever fruitcakes like Sue or chessmaster315 that mostly just keep posting the same rubbish, over and over again, with rare exceptions to add something new to the conversation.
The one thing I have not had any oversight problems with identifying the #$%$ that want to insult, put down and attack with vile sexual, political and/or racial innuendo (or worse) to try and win the argument for their "side" by extreme cyber-bullying and shock rhetoric of sometimes so disgusting and low content that it sickens my stomach and sense of human dignity, concurrently.
DISGRACEFUL. This board has even had the EXTREME of death threats made against the President and many, other government officials because they weren't "playing ball" with the greed-driven agenda's of "investors" in Fannie Mae & Freddie Mac stock. To those sick individuals... I hope you die in penury.
Oh, no, there's much more to this message board. It's also to run down anyone who isn't a committed long investor. It's there to claim every wisp of news as some huge indicator of imminent victory. And it's there to blame any setback as the result of criminal activity by government and a panoply of wrongdoing by officials spanning like 15 years in Washington. It's the oratory pulpit for anonymous "experts" campaigning under the purloined identity of former Fannie executives. And it is the Broadway stage for extolling "Sue" as the oracle of cut-and-paste of worthless drivel. And, of course, it remains the broadcast microphone for chessmaster315 to unleash his sophomoric views on Fannie, politics and the boringly repetitive expression of the same lies, over and over again.
Sounds like jail time if that one is ever proven to be true.
Ordinary investors lack the capital to invest in hedge funds.
It's all a game for big money to make more big money.
Very true, and very well stated. Anyone wanting background can read the link I posted, last week, on investorshub, or put "Paulson Fannie Russia China" into Bing or Google.
If given full access to sealed information I would guess this adds another 6 months to the process.
The writer clearly identifies the gambits being played out by hedge fund investors rewriting history to justify huge gains for themselves.
Very interesting that this article is being touted so aggressively by longs when a chunk of its focus is highly unflattering to these shareholder actions playing out in a courtroom near almost everybody.
Hindes' comments are laughable. His last gambit against FDIC took TWENTY YEARS before he netted a juicy settlement for himself.
First they threw anchovies and stinky cheese on Old Julius, then they made a salad out of him and ate him alive.
More croutons, anyone?
"Tim Howard" is having another seizure.
Fannie Mae made enough money to pay back its bailout funds. Why did it also not owe income tax on those gains? How much of what Fannie repaid was just normal tax liability that does not retire any reimbursement obligation?
This is a serious question!
The answer is important because taxes deferred under "loss" conditions that get reversed after asset revaluations that result in subsequent gains are NOT classed as normal income under GAAP accounting principles, meaning they would NOT be ascribable to common shareholders as a source of dividend income.
If Fannie & Freddie are 100% shareholder owned private enterprise firms, then how come they pay almost zero corporate income tax?
Please explain how this is possible, or even legal.
Drop dead, doofus. I own a lot more stock in Fannie than most that post on this board. The GSE business model DID fail. It failed in the period leading up to The Christmas Massacre in 2004 amid huge losses and all kinds of histrionics. Problems existed at Fannie in that era, as well. Then there was the bailout period in 2007/2008... an utter breakdown. Now we fast forward to today and the line-up of PIGS demanding money, money and more money, all of which would come at someone else's expense.
The sad reality is that your pumper cronies like chessmaster315 devote hours, weekly, to screaming about how here is no government guarantee, or that the government is entitled to nothing because there is no backstop to which they are entitled to compensation, or that there is no risk because borrowers are all privately insured, or that default data proves the mortgage business is riskless.... all total rubbish. In this thread we were discussing the minority support platform that seeks to redirect FnF to a primary function of serving the minority community. That is NOT what the GSEs were chartered to do. And, if you are a shareholder, here, you should have concerns about proposals like the Shapiro study that include a 50%+ dilution of common shares so housing can be jumpstarted in a redistribution of wealth from shareholders to poor people.
Maybe you are just one of the many that seem to come here to argue with somebody else. If so, don't waste my time with your childish drivel, junior, because you aren't worth my time.