Monday, January 20, 2014

Berkowitz & Associates have preemptively thwarted robbing of F&F.


Berkowitz & Associates have preemptively thwarted robbing of F&F.

By making an offer to buy just the insurance part of F&F for $50B, Berkowitz & Associates have proved the existence of a significant value in F&F equity. This challenges the short-sellers and their allied politicians/experts/lobbyists who had been spreading misinformation about worthlessness of F&F equity and pursuing for winding down of F&F to loot F&F stakeholders including taxpayers.

The short-sellers were counting that they did not have to cover their short interest on F&F equity as their allied lawmakers/experts/lobbyists pursued for winding down of F&F. They had almost succeeded with President Obama chiming along and their top expert rising to head the Federal Reserve.

But, alas!, President Obama and Democrats realized that the 100% F&F Profit Sweep Agreement foisted by these short-sellers and their experts/lobbyists amounted to a massive transfer of wealth from borrowers to the Treasury amounting to an effective reduction in taxes of the wealthy. In addition, the winding down of F&F would impose an enormously high interest burden on the borrowers. The President and Democratic leaders had to make a U-turn as they saw huge F&F profits.

The offer of Berkowitz & Associates has preemptively thwarted robbing of F&F stakeholders by the short-sellers and their allied lawmakers/experts/lobbyists. It will galvanize President Obama and Treasury to muzzle any remaining murmur for F&F wind-down, then void the illegitimate Profit Sweep Agreement, and release F&F from Conservatorship. President Obama and Democrats will not agree to sell any part of F&F equity. They would rather have F&F facilitate private investment in GSE debt. This will effectively serve the goal of Berkowitz & Associates and financially destroy those who had schemed to rob F&F and their stakeholders (including taxpayers)


The proposal, is both highly significant and lowball. This company is worth 200 billion and his offer of 52 billion for "the good parts" is lowball, and should never be accepted by shareholders even if we were not in conservatorship and could do so. The proposal is still very positive for common and preferred shareholders, however, on several levels. 
First, it refutes government position that fannie shares have no value so they may as well confiscate that value, which they maintain is zero. This is probably the best thing for shareholders. Since there is a real 52 billion offer on the table for parts of fannie, how can the government justify that shares are worthless??
It is also a very positive media injection for fannie, after having been beaten up badly with fannie being blamed for the housing mess. While the settlements from banks are great, and Elizabeth Warren statements that fannie did not cause the mess, this offer "cements" and solidifies that position, that is, that fannie shareholders have been robbed by the government of their dividends and share value. 
Finally, people often act like sheep. No one wants to be first, but when one goes they all follow. This offer could well spark other offers, or even a possible bidding war, on a highly profitable company, forcing the share price back in line with what it was before the government intervened in 2008

Absolutely! President Obama, his Treasury Secretary as well as the Congress will have to counter. It is a free capitalist economy. They cannot say "we will keep F&F under government control" all the time. $30B offer for a small part of F&F business amounts to about $28 per share now, given that government warrants cannot be exercised. Short-sellers are taking advantage of government silence now.

hitting the nail on the head. Bruce placed fannies value at 30 billion and freddie at 20 billion with this offer. He does not want a govt backstop. he will pay this for these two services. this puts their fair market value at what someone would pay for it. fannie is at a market cap of less than 3 billion. this makes it worth 30 billion. he has made politicians dismiss a legitimate offer, which would only prove fannie has more value than the 30 billion offered. he also shut corker up with the purchase offer with no backstop. if Fannie was worthless, sell it to bruce. but they cant, they know better. but to regular people you would sell it. this is seen as a sign of true value. bruce made the commons worth 10x as much overnight.

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