stockanalyze
3 hours ago
jtimothyhoward February 1, 2025
"The MBA should have a legend on the bottom of its letterhead saying “Official trade group of the Financial Establishment.”
As I and others have said repeatedly, making an explicit government guaranty on Fannie and Freddie MBS the sine qua non for their release from conservatorship is the best strategy the Financial Establishment has for trying to prevent release from happening–since there is no chance Congress would approve it–so that’s what it’s going with.
But I’m also struck by the FE’s depiction of the federal agency status of Fannie and Freddie’s securities as some incredibly fragile perception that any change in the status quo could upset. There actually was a “stress test” of that perception, more than 20 years ago, and the companies’ agency status passed it with ease.
This occurred shortly after the anti-Fannie and Freddie lobbying group, FM Watch, was formed in the spring of 1999. Less than year later, a Louisiana congressman named Richard Baker–who was chair of the Capital Markets Subcommittee of the House Banking and Financial Services Committee, and had fully embraced the FM Watch cause–introduced a bill with provisions that were highly unfavorable to Fannie and Freddie. Then-Treasury Secretary Larry Summers sent his undersecretary for domestic finance, Gary Gensler, to testify at the hearing for Baker’s bill (which had little support even in his subcommittee), at which he dropped two bombshells: that Treasury was in favor of a provision in the Baker bill that would have repealed its $2.25 billion “line of credit” with the companies, and that Treasury also thought “Congress should seriously consider the best way to repeal” the exemptions Fannie and Freddie securities had from banks’ investment securities limits.
There was an immediate and violent market reaction to these statements–with the prices of Fannie and Freddie debt and MBS plummeting, and their spreads to Treasuries soaring. Treasury quickly backed off. Almost certainly at Summers’ direction, Gensler put out a statement the following afternoon saying that his testimony “was consistent with longstanding principles in this area,” and that “it does not represent a change in the government’s relationship with the GSEs.” But of course, Treasury WAS trying to change the government’s relationship with Fannie and Freddie; it just backed off when it got the market blowback. And the fact that market participants had taken Treasury’s word that its policy toward the companies hadn’t changed even when that wasn’t true strongly supports the notion that if Treasury were to release them with their federal indicia (including the two Gensler had proposed removing) intact AND with a paid-for backstop under the SPSPA–and coupled that by saying this “does not represent a change in the government’s relationship with the GSEs”–the market certainly would believe THAT."
https://howardonmortgagefinance.com/2024/12/09/release-2-0/#comments
stockanalyze
3 hours ago
Shane , February 1, 2025
On Thursday, MBA held a briefing at the U.S. Capitol for House and Senate staffers to discuss the potential for a release from conservatorship for the GSEs. The included a link to their presentation deck, where they demanded a Explicit Backstop that should be on MBS only. They say that this backstop should cover tail risk only: After PMI coverage, After Credit Risk Transfer, and after GSE Reserves and Capital, and that this backstop should be paid for by GSEs. To do this, they suggest utilizing existing commitments under the PSPAs (charging a commitment fee), creating an FDIC-style insurance fund (ala Johnson-Crapo) or similar, paid-for explicit guarantee, and utilizing Ginnie Mae to provide an explicit guarantee on GSE MBS and charge current or other guarantee fee.
There seems to be a “vibe-shift” towards inevitable release, but with all the focus now on the demand for this kind of Backstop. I guess my two questions are: 1) Is it necessary, and 2) Will it happen?
https://newslink.mba.org/mba-newslinks/2025/january/mba-advocacy-update-mba-holds-gse-briefing-on-capitol-hill-fhfa-nominee-pulte-support-letter-bessent-confirmed-as-treasury-secretary-more/
https://howardonmortgagefinance.com/2024/12/09/release-2-0/#comments
Fanatical Infidel
9 hours ago
SCOTUS stated the POTUS and hire and fire the head of the FHFA anytime he/she wants ??? so why does Bill Pulte need a conformation from the Senate ??? Can’t DJT just hire Bill ????
Section 1312(b)(1), of HERA states:
"(b) Director.—
(1) APPOINTMENT.—The Director shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a demonstrated understanding of capital markets, including the mortgage securities markets and housing finance."
NeoSunTzu
10 hours ago
Sandra Thompson may be eligible for and possibly trying to get "deferred resignation." First, any press version of resignation is ONLY a media story - it is is in NO WAY a formal official resignation. Second, there's an official process for resignation including formal notification in writing to and recognition by I think the OPM. Last, with all of the cuts Trump is instituting, the OPM has introduced a "deferred resignation" program which includes some option for 8 months of pay and benefits. There's a lot of info out there on it now and maybe something Thompson latched on to after announcing her "resignation."
Last, at this point, do NOT listen to ANYBODY repeating Calabria's nonsense about Pulte's confirmation needing to wait until May (March should be the latest, but this is only really a scheduling issue). There is NOTHING official corroborating NOR EVEN suggesting this! In fact, even the MBA is pushing to move Pulte's confirmation along.
Patswil
12 hours ago
PALM BEACH, Fla. (AP) — President Donald Trump has fired the director of the Consumer Financial Protection Bureau, Rohit Chopra, in the latest purge of a Biden administration holdover.Associated Press Economics Writer Joshua Boak. (AP Photo/J. David Ake)
By JOSH BOAK
Updated 12:16 PM EST, February 1, 2025
https://apnews.com/article/trump-chopra-consumer-financial-protection-bureau-47b6b39d0eff05ea0c9bca4eacf55b79?utm_source=twitter&utm_medium=share
navycmdr
13 hours ago
$Booom ! - Trump fires the director of the Consumer Financial Protection Bureau
Updated 9:16 AM PST, February 1, 2025
PALM BEACH, Fla. (AP) — President Donald Trump has fired the director of the Consumer Financial
Protection Bureau, Rohit Chopra, in the latest purge of a Biden administration holdover.
Chopra was one of the more important regulators from the previous Democratic administration who
was still on the job since Trump took office on Jan. 20. Chopra’s tenure saw the removal of medical
debt from credit reports and limits on overdrafts penalties, all based on the premise that the financial
system could be fairer and more competitive in ways that helped consumers. But many in the financial
industry viewed his actions as regulatory overreach.
In a social media post Saturday about his departure, Chopra thanked people across the country who
“shared their ideas and experiences” with the government’s consumer financial watchdog agency.
“You helped us hold powerful companies & their executives accountable for breaking the law, and you
made our work better,” Chopra posted above on X above pictures of his letter announcing that he
would no longer lead the bureau.
During Trump’s first term, the Republican had picked Chopra as a Democratic member of the
Federal Trade Commission.
In his letter, Chopra noted that the bureau was ready to work with the Trump administration. He said
the agency had prepared rules to block Russia, China and others from using data brokers to surveil
Americans, and had put forth policies intended to prevent people from losing access to banking
services for exercising their constitutional right to express their political or religious views.
The letter noted the CFPB has also analyzed Trump’s campaign proposal to cap credit card
interest rates.
Chopra was notified of his firing in an email, according to a person familiar with the notice who
was not authorized to discuss the matter publicly and spoke on condition of anonymity.
Under the law, Chopra was to serve a five-year term, which meant he could have stayed on
as the CFPB director. But he had publicly stated that he would leave his post if the
new president asked.
In many ways, Chopra exemplified some of the tensions between Trump’s promises to curb
regulations for businesses and his populist appeals to voters. When The Associated Press
reported on Jan. 22 that Chopra remained in his job after Trump took the oath of office,
his critics in the financial sector quickly said the president needed to dismiss him.
“The longer Director Chopra stays, the harder it will be for this pro-growth administration to
undo the politically-driven, government-price setting agenda that former President Biden’s
appointee has engaged in over the last several years at the Bureau,” emailed Weston Loyd,
press secretary at the Consumer Bankers Association.
Richard Hunt, executive chairman of the Electronic Payments Coalition, said Chopra’s tenure
“was marked by witch-hunts and political weaponization” of the bureau, arguing that Chopra’s
policies reduced the access that “vulnerable consumers” had to financial credit.
But many liberal groups stressed that Chopra’s work helped to return billions of dollars
to consumers.
Kitty Richards, a former Treasury Department official and senior strategic adviser at the
liberal think tank Groundwork Collaborative, said Chopra had been a “tireless watchdog”
who held “predatory corporations accountable.”
“Trump was always more interested in serving his billionaire boys club than delivering
change for working people,” Richards said.
Chopra is an ally of Sen. Elizabeth Warren, one of Trump’s favorite targets who same
with the idea of the CFPB. The Massachusetts Democrat said in a statement that the
bureau under Chopra had held “Wall Street accountable “for cheating hard-working
families and preventing the de-banking of Americans across the country.”
California Rep. Maxine Waters, the top Democrat on the House Financial Services
Committee, said in a statement that Chopra’s dismissal “marks the end of an era of
strong consumer protection and the beginning of a plan to end this important agency.”
The bureau was created after the 2008 financial crisis to regulate mortgages, car loans
and other consumer finance. It has long been opposed by Republicans and their
financial backers.
Last year, the Supreme Court rejected a challenged that could have undermined the
bureau, ruling that the way it is is funded does not violate the Constitution. Unlike
most federal agencies, the bureau does not rely on the annual budget process in
Congress, but is funded directly by the Federal Reserve.
Rodney5
14 hours ago
Nico
@nicosintichakis
Open Letter to Bill Pulte: Addressing FHFA’s Bloated Salaries and Workforce with respect to Fannie Mae & Freddie Mac $fnma $fmcc
Mr. Pulte
@pulte
As you step into the Federal Housing Finance Agency (FHFA), we urge you to take a hard look at the excessive salaries and redundant positions that burden American taxpayers.
Employees such as John Mullaney ($272,258), Suzanne Burk ($274,130), Kelly Siobhan ($266,051), and Tami Smith ($270,830) are just a few examples of individuals receiving outsized compensation—not including bonuses, pensions, and additional expenses.
Furthermore and upon closer examination, it becomes clear that many of these roles are either unnecessary or duplicative, with taxpayer funds and employees of Fannie Mae and Freddie Mac effectively paying for the same work twice. A reduction in the FHFA's workforce, which currently hovers around 2,000 employees, would be a step toward greater efficiency, accountability, and fiscal responsibility. Moreover it would ensure a healthier Fannie Mae and Freddie Mac as unnecessary expenses would be reduced drastically allowing the companies to maintain their mission in safety and soundness.
The American people deserve an agency that operates with transparency and prudence, ensuring that resources are directed where they are truly needed.
We urge you to take action to reform this system and bring real change to the FHFA. No more waste.
Do not be afraid to Make America Great Again 🇺🇸 during this Golden Age of opportunity. Now is the time to reduce the role of the FHFA by 90% or more as President Trump has earlier said a much smaller oversight committee of 8-10 people would be adequate post Conservatorship.
God Bless and good luck in your upcoming endeavor at the FHFA. I’m sure you will put Fannie / Freddie first, two of the most important companies in the world.
9:17 PM · Jan 31, 2025
·
2,024
Views
JSmith5
14 hours ago
Video Interview with Calabria - In the spirit of "what you see if what you get" this is the same Calabria we have seen all along. He has been, near as I can tell, always honest and transparent re his position on the GSEs. He is, in the classical sense, a Libertarian economist. If you would ask him to describe himself in two words, this is exactly what he would say. This means less Government and more private ownership - and more competition. His job as FHFA Director was to prepare them for exit, while ensuring that they were safe and sound and that there was no disruption to the MBS market. And so, one the the first things he did was to suspend the NWS to build capital. The capital requirements were set high for 2 reasons - one stated, and one unstated (at least this is the way I see it): (1) Safety and soundness and (2) encourage competition with the private MBS market when they exited. The second was no secret because, his whole human existence is based on being a Libertarian economist. So he hasn't been hiding - anywhere or anything. And his comments in the video were largely nothing new except for one important thing:
The studies. Yeah - what ever happened to all these exit studies that we paid for? They were supposed to provide choices and options for our path to exit. I even emailed FHFA at the time and requested a copy and got no response. Then I considered the FOIA route - and yes, despite what he said, they were subject to FOIA even though you could argue that anything FHFA does is funded with non-appropriated funds. And I know they cost a lot. But when they were never mentioned again I thought maybe FHFA dropped the whole idea. BUT THEY DID NOT. So our options are laid out and a lot has been going on behind the scenes with Wall Street over the last 4 years. I don't know about anyone else on this Board - but, to me its a BIG DEAL. Of course there is always a few people that will say this study stuff was a Commie conspiracy or something like that.
One other thought on the video where I thought he was off base and has always been off base. I know everyone was waiting and waiting for him to respond with questions from the shareholders - like "Hey what about us!!" "When do we go to PAR?" "When do I get my $300 a share?" Yeah, right! And he responded with, "I take the 5th!" which is the response you could expect. However, he again stressed the fact that although he considers such folks as the EMBA and other lobby groups "Stakeholders," he considers the stockholders "Bagholders". And, as a stockholder, I consider myself a little biased, and maybe even a little offended, in this regard. However, we are still the owners of these companies ("Beneficial Ownership" is not legal ownership). And he does not, and never did, consider us Stakeholders. Who has a bigger stake?? But he is a Libertarian, through and through, and, like I said in regards to Mark - what you see is what you get.
Nats
JSmith5
18 hours ago
Katherine Thompson is available, just have to put up with shareholder and GSE hate
She is not anti-GSE or anti-shareholder - much the opposite. I think what upsets some of the board is that she seems to be advocating more for the juniors. Or it could be just because she likes to refute some of the more "out there" pps claims of some of the common shareholders. (Hey - at his point, anything is possible - say cancel Seniors, Warrants, turn on dividends, relist - and you are definitely off to the races - works for me - but I would agree that the perfect scenario is very unlikely).
I am not on this board for validation of my opinion (which is basically, as a holder of juniors and common, is PAR/ballpark Ackman's target price). Just because a poster may not tell you what you want to hear - its helpful to fully read the post and try to understand the reasoning. It may not change your mind on anything, but it may get you to thinking. I find her posts interesting and thought provoking. And the fact that they may be pissing off a lot of folks on this Board is an indication to me that she may be right on a lot of points. Because, again, as the last 16 years have proved - anything goes.
I just wanted to add another thought. I was watching a video the other day where one of the commentors said that, to predict what Trump is going to do next is very hard in that his basic negotiation tactic is to say and/or do things that are totally unexpected. (This is sort of like what Reagan did in dealing with the Soviets). We have certainly seen elements of that 2 weeks in. So in terms of the GSEs we could wake up tomorrow released or a complete and final Government takeover. Seems the more outrageous the better. I just don't see him screwing over Ackman and Paulson (but, of course, that would be the unexpected thing to do). I thought we would get some kind of EO in the first few months or so. But did not anticipate it may take so long to get Pulte confirmed - so it may be longer as you want to wait to get both the main players onboard. But - he may do the unexpected and we may see some action sooner. Wow - as I said before, this may not be the most profitable investment I ever made, but it is certainly the most interesting.
Nats
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