Saturday, November 29, 2014

Both Fannie and Freddie have DTA still = $61 Billion dollars

Freddie: 2014 Q3

Deferred Tax Assets and Liabilities
We had a net deferred tax asset of $ 18.5 billion and $ 22.7 billion as of September 30, 2014 and December 31, 2013 , respectively.
We determined that a valuation allowance against our net deferred tax asset was not necessary at September 30, 2014 . See "NOTE 12: INCOME TAXES" in our 2013 Annual Report for additional information.
======================================================================
Fannie: 2014 Q3

Deferred tax assets, net  42,757
======================================================================

So for the record,
Freddie has $18.5 billion in DTA left,
And
Fannie has $42.7 billion in DTA left.

Now the real question is why hasn't the FHFA taken this money from these two if they intend to close them down? This is an additional $61 billion dollars that could be taken from the two.

It appears the FHFA has chosen NOT to take this money, when it is apparent they could. I suspect the FHFA and Treasury did not want to seem greedy, Or they left them this to use for recapitalizing the firms.

From 2008, Fannies minimum capital:
Our core capital as of June 30, 2008 was $47.0 billion, $14.3 billion above our statutory minimum capital requirement and $9.4 billion above our regulator-directed 15% surplus requirement. We currently expect that we will remain above our regulatory capital requirement for the remainder of 2008.

So by law, Fannie needs $38 billion to be fully capitalized, and what do you know? Fannie has $42 billion sitting in their DTA. Coincidence? I dont think so. 



Thursday, November 27, 2014

Duress

www.nytimes.com/2008/09/08/business/08takeover.html?_r=2&hp=&pagewanted=all&oref=slogin

Unknown to either company, however, the decision for a takeover had already been made. Mr. Lockhart last week started interviewing potential candidates to replace the top executives. On Thursday, the last day of the Republican convention, Mr. Paulson met with President Bush in the Oval Office. Mr. Bush said the Treasury plan had his support. The next day, Mr. Paulson called Mr. Syron and Mr. Mudd to separate meetings at the offices of Mr. Lockhart without saying why. Freddie was still looking for fresh capital and interviewing people for senior positions. But in his meetings, Mr. Paulson said he intended to put both companies into conservatorship. As part of that plan, Mr. Syron and Mr. Mudd would both be required to step down. Mr. Mudd pleaded with Mr. Paulson to spare Fannie Mae, people with knowledge of the meeting said. He said that he abided last spring with regulators’ demands to raise more capital, adding that the company was in better financial health than Freddie. Mr. Paulson responded that Freddie was nearing a crisis and that, in the eyes of the markets, the companies were joined at the hip. He would not treat them differently for fear that similar problems, over time, would engulf Fannie Mae, but that time closer to the election. Mr. Paulson told both companies that they had no choice. President Bush returned from Camp David, the presidential retreat, on Saturday morning. The Treasury secretary told him that the companies had reluctantly agreed to the plan. Shortly before 11 a.m. on Sunday, in a conference room across the hall from Mr. Paulson’s office, the Treasury secretary and Mr. Lockhart signed the documents that give each company access to up to $100 billion in taxpayer money to cover future losses — but also put Fannie and Freddie directly under government control. Edmund L. Andrews and Gretchen Morgenson contributed reporting.

Truth on paulson takeover of gse's

www.peri.umass.edu/fileadmin/pdf/conference_papers/SAFER/Ferguson_Johnson_Too_Big_PartII.pdf

Too Big to Bail: The “Paulson Put,” Presidential Politics, and the Global Financial Meltdown 

The Shadow Bailout, however, had two additional components. One was dicey indeed: large-scale purchases by the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, of home mortgages and mortgage bonds to stem declines in those markets and alleviate pressures on the balance sheets of private firms. 



As private lenders withdrew from the market in 2007, Fannie Mae and Freddie
Mac became virtually the sole sources for mortgage refinancing, as Figure 1 shows. In the face of mounting deterioration in subprime markets, the Bush administration, with the acquiescence of congressional Democrats, pushed to loosen standards. A new phase of the Shadow Bailout began: “Paulson wanted to use the troubled companies to unlock the frozen credit market by allowing Fannie and Freddie to buy more mortgage-backed securities from overburdened banks” (Becker et al. 2008). Accordingly, “the White House pitched in. James B. Lockhart, the chief regulator of Fannie Mae and Freddie Mac, adjusted the companies’ lending standards so they could purchase as much as $40 billion in new subprime loans” (Duhigg 2008).19
Annual reports and the firms’ accounting statements indicate that Freddie Mac’s financial position was substantially weaker than Fannie Mae’s. Their quarterly reports show both buying mortgages and issuing guarantees in the face of the steep market fall, when from a business standpoint they should have pulled back. But Fannie Mae’s response was much more extensive.



By July 2008, private mortgage firms had all but melted away. Fannie Mae and Freddie Mac were virtually the only players left in the U.S. secondary mortgage market. If they went south, no one would step up to take their place. Primary mortgage markets would soon lock up, bringing housing sales across the United States to a screeching halt. Housing prices, already falling like a runaway elevator, would go into a steeper tailspin, pulling national income—and the dollar—down wit

 Bankruptcy of AIG would leave these firms exposed just as financial companies were going down like nine pins. AIG’s biggest domestic counterparty (customer) just happened to be giant Goldman Sachs, the firm Paulson had formerly headed (see Walsh 2009). As officials deliberated on how to respond, only one private bank chief executive was in the room: Goldman CEO Lloyd Blankfein.42
Reeling from the Lehman shock, Paulson and Co. made a dramatic about-face back to single payer: Law or no law, they effectively nationalized AIG by taking warrants for the Treasury worth 79.9 percent of AIG’s stock in exchange for an $85


It only appeared to be about AIG. In fact, Treasury and the Fed were subsidizing the giants—including Goldman, Citigroup, Bank of America, Morgan Stanley, and other large European firms



19. Duhigg (2008) adds considerable detail that illustrates the real relationships between the GSEs and private lenders. The article also relates a story according to which Paulson later sent a deputy, Robert K. Steele, to urge restraint on the GSEs. But for reasons unexplained, Steele failed to convey the message. This part of the story has all the earmarks of a precau- tionary memo for the files. It is unlikely in the extreme that Steele, who worked closely with Paulson, would have failed to convey a message his boss thought was important. As Becker et al. (2008) demonstrate, the priority just then was the Shadow Bailout. 

Tuesday, November 25, 2014

Fannie pays a Dividend to US treasury?

26 U.S. Code § 316 – Dividend defined
(a) General rule
For purposes of this subtitle, the term “dividend” means any distribution of property made by a corporation to its shareholders—
(1) out of its earnings and profits accumulated after February 28, 1913, or
(2) out of its earnings and profits of the taxable year (computed as of the close of the taxable year without diminution by reason of any distributions made during the taxable year), without regard to the amount of the earnings and profits at the time the distribution was made.
Except as otherwise provided in this subtitle, every distribution is made out of earnings and profits to the extent thereof, and from the most recently accumulated earnings and profits. To the extent that any distribution is, under any provision of this subchapter, treated as a distribution of property to which section 301 applies, such distribution shall be treated as a distribution of property for purposes of this subsection.

According to 26, “dividend” means any distribution of property made by a corporation to its shareholders.
In this case ONLY the US treasury, who conveniently was party to the taking and dictating of the dividend size. They decided they wanted all of xxxx corporations money from now on. Fill in xxxxx with what ever corporation name you want that is a Regulated entity by the US govt. It would not matter which name you place according to Judge Lamberth.

Fifth Amendment – an amendment to the Constitution of the United States that imposes restrictions on the government’s prosecution of persons accused of crimes; mandates due process of law and prohibits self-incrimination and double jeopardy; requires just compensation if private property is taken for public use.

DefineTaking:
The second element refers to the taking of physical property, or a portion thereof, as well as the taking of property by reducing its value. Property value may be reduced because of noise, accessibility problems, or other agents. Dirt, timber, or rock appropriated from an individual's land for the construction of a highway is taken property for which the owner is entitled to compensation. In general, compensation must be paid when a restriction on the use of property is so extensive that it is tantamount to confiscation of the property.

What has shareholders lost from the conservatorship and 3rd amendment?
1. The board does not answer to shareholders. Fairholm proved that.
2. The stock although still trading is depressed due to 100% of profits going to US.
3. No access to books of fannie. Ackman proved that.
4. I only own in Name the paper that has been devalued by US actions.
5. cannot regain value ever. The 3rd Sweep proved that.

Seems to fit the definition of TAKING!

=====================

Illegal Taking of property is Unconstitutional.
Dividend is property.
US treasury has taken a dividend from Fannie for taxpayers.
Simplify the three together in a sentence.
US treasury has taken Property from Fannie for public use, unconstitutionally.

waterstone, Shorting F&F using warrants from US treasury?

Waterstone, Shorting F&F using warrants from US treasury?

Waterstone Fund Profits off Fannie Mae, Freddie Mac Shorts

http://www.valuewalk.com/2013/08/waterstone-fannie-mae-freddie-mac/

Waterstone’s bet against FFederal National Mortgage Association (OTCBB:FNMA) and Federal Home Loan Mortgage Corp (OTCBB:FMCC)  is risky in the sense that being the largest position of a $1.36 billion fund, it can seriously topple the fund’s standing if it goes south.

And then:

Waterstone Capital Reduces Fannie Mae Short Right Before Big Drop

http://www.valuewalk.com/2014/04/waterstone-capital-reduces-fannie-mae-short/

After taking a beating from shorting Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA), Waterstone Capital Management used the recent dip in price to cut its losses and reduce exposure to what is becoming a difficult-to -predict political risk. Waterstone’s Fannie Mae short lost 2.5% in February, according to its recent letter to investors.

And then:

Waterstone Likes RBS; Closes Fannie Mae Short?

http://www.valuewalk.com/2014/06/waterstone-fannie-mae/

Not mentioned in the report was Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA). As previously reported in ValueWalk, Waterstone reduced their Fannie Mae short exposure previous to the precipitous drop in the stock price.



“You Can’t Handle The Truth!”

“You Can’t Handle The Truth!”


http://thetruthaboutfannieandfreddie.wordpress.com/2014/11/10/you-cant-handle-the-truth-fannie-mae-and-freddie-mac/comment-page-1/#comment-22

Awesome work.


Waterstone ,UST created these warrants into derivative instruments TO RECAP BANKS AND USE FNF EQUITY AS COLLATERAL.

from TimHoward717 blog:

UST TREASURY TARP WARRANTS TO SHORT FNFsaid:
Waterstone is sure to be implicated in this mess. See the UST created these warrants into derivative instruments TO RECAP BANKS AND USE FNF EQUITY AS COLLATERAL. They could be used to sell short FNF stock and win in two ways.
1. Win on short stock going to zero.
2. still keep warrants EXECUTE THEM INTO COMMON SHARES OF BANKS and sell those in the open market after FNF common was destroyed.
It is a double win – however since unrecorded sales of shares have been proven IN FNF 100’s of millions of UN recorded shorts shares sit outstanding and if FNF are brought back.
the warrants will executed by the OTC MM’s to be used to offset losses of short shares on FNF they been printing to keep shares depressed. Those warrants converted into common shares of banks they are linked to would be sold into the market against all the bank stocks flooding billions in securities into bank stocks and the losses on top of those derivatives would also be needed to be covered and those would be based on the price of the common of the banks verses cover counterfeit shares of FNF.
MARKET MAKERS or other who used those tarp warrants to short FNF OR AIG stock WILL then take delivery of the common of the bank that warrant was tied to and sell it to off set the counterfeit shares sold against the TARP WARRANTS.
This was PAULSON who handed off the problem to OBAMA. So they needed to for sure sweep the money back and then hope to crush FNF. SELL OFF AND MAKE A FEW HUNDRED BILLION ON THE SELL OFF.
But here is how it could work out. The gov gets it fake 187 billion plus 10% interest takes a huge loss on the common stock of FNF going back up to fair value.
They get cut out of warrants due to takings and come out with min loss or gain. This ENTIER transaction would be a huge wash if they can not reel in counterfeit shares and can not get warrants BACK. THEY SHOULD BUY SHARES NOW!!!
So the Gov got fake money in and back only to potentially have theses warrants called by the OTC brokers if release happens and boom losses begin to mount at the UST without any body being able to say anything and the money would be covered by selling more treasury notes to the fed or overseas.
There is what most likely SWEENEY already knows. BERKO knows!!!
The SEC allowed these offerings so they must have been stupid???? You decide.
SEC also has one board seat on FNF via HERA.
==================
part 2

Economic crash caused by MBS CRASH and economic slowdown globally.
Banks balance sheets were weakened by the MBS ISSUES and stock value losses due to stock market crash. Many held FNF common & Preferred as well other stocks.
GOV did stress tests to determine levels of capital needed. ( some needed more than others). To shore up US banks the UST stepped in with TARP (Troubled Asset Retirement Plan ) and Here is where the troubled started.
The largest banks including global governments held lots of MBS that were now not understood to be good or bad? So they assumed the worst and made them all bad!
Boom huge defaults happening and banks cried for help! FNF WERE DOING JUST FINE BUT WERE NEEDED TO DUMP MBS INTO TO RELEASE BANKS BALANCE SHEETS FROM HUGE LOSSES.
So TARP was to infuse cash into banks but this was not really happening because where do you get 750 billion??? Well you don’t you print paper but that was not good for those who were going to buy the bonds for the UST to print 750 billion. They wanted collateral and BAM – FNF assets were in the BILLIONS and ripe for the pickings to steal. So a forced CONSERVATORSHIP was put in place. HERA was written and voted on in weeks and many holes were left in it.
FNF in short stolen from shareholders to back the TARP OFFERINGS to recap banks.
The UST offered TARP warrants to banks that needed capital and took those offerings public. Those offerings were not public but were still going on as public offerings. Money raised by UST buying warrants and common stock in banks were using tarp funds to put capital into banks. But the UST needed a risk off set if those banks went belly up they needed a derivative instrument and that was TARP warrants that were created in these offerings with capabilities to short stock with out having to deliver or record short stock in other companies. Those who bought bank common got these warrants as well and they came with juicy capabilities backed by the good old UST.
This is where you here testimony about some companies were chosen to be massive shorted to punish shareholders!!!! This is how they did it!
So for the sake to shorten this down:
FNF common & preferred stock were shorted using derivatives that were created to recapitalize banks balance sheets, so was AIG and others like ford, Chrysler, GM were pounded into the ground and also others to created the dow crash to 6800.
Then the same parties bought back the short stock back in and trillions were made ON THE SELL OFF and more trillions were made being long on the way up. Losses were those who sold verses held.
Why FNF? They got tons of assets they should never had gotten from banks so the very same banks who wanted to get rid of those MBS papers wanted them back after default rates were not as bad.
Since FNF were picked to be the problem these TARP warrants were never bought back in since political leaders had been paid to kill FNF. Thus why wind down and shutter talk for years. But then the way the financials had to be book to keep the company’s running caused huge exposure for the crime. When the shut down bills failed the exposure of the fraud was just to hard to cover up. BOOM 3 rd amendment. So we are stuck in a circle where some of the TARP funds are still at risk by the derivatives instruments used by shorts to create FNF counterfeit shares.
These are of unknown amounts but guess what!!!!! someone knows and knows when the lid is blown off the CONSERVATORSHIP huge losses will be incurred because to keep FNF shares depressed like they are now takes lots of fake shares.
To me you need to see an offering and then see between the lines who were allowed to buy into those offerings. If the financial world clearly understands thus the third amendment will be the least of the worries. Nobody will ever trust the UST ever again.
Best solution – SET FNF FREE BUT BEFORE BUY ALL THE STOCK YOU CAN UST ( YOUR GOING TO NEED EVER SHARE)
==========
Very Interesting!!

Monday, November 24, 2014

Fannie was not insolvent.

Fannie was not insolvent.
At the time of conservatorship Fannie had 40 BILLION in capital. Its on my blog. broken down.
2007 loss 2.1 billion
2006 Gain 4.1 billion (profit)
2005 Gain 6.3 billion (profit)
SUM it up
2008 Q1 loss 2.2 billion
2008 Q2 loss 2.3 billion
As you can see, before the FHFA could fool with fannies books, The losses by July 2008 were a total of 6.6 billion dollars.
Quote from Fannies 10-Q. Q2 2008.
Our core capital as of June 30, 2008 was $47.0 billion, $14.3 billion above our statutory minimum capital requirement and $9.4 billion above our regulator-directed 15% surplus requirement. We currently expect that we will remain above our regulatory capital requirement for the remainder of 2008.
FROM 2005 to 2006, fannie was profitable.
2007 minor loss vs capital. 5% loss of capital
2008 first 2 quarters another loss of 5% capital.
SO the statement that fannie was insolvent was a LIE. they had 47 billion in capital.
Which after the lawsuits and the DTA they did not need to take, They would have never been Insolvent!!! Also without the treasury forcing Fannie to buy from TBTF banks MBS alt-a and subprime immediately after conservatorship began.
As reported in:
Fannie, Freddie to Buy $40 Billion a Month of Troubled Assets
By Dawn Kopecki – October 11, 2008 00:00 EDT
Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.
Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities

Sunday, November 23, 2014

Fannie History Lesson

I've heard how Fannie lost over 117 billion from 2005-2008.. Lets see if that's true?

2007 Year 10-K
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=5758495-940-1379982&type=sect&TabIndex=2&companyid=7848&ppu=%252fdefault.aspx%253fcik%253d310522

As of September 30, 2007, the latest date for which information was available, the amount of U.S. residential mortgage debt outstanding was estimated by the Federal Reserve to be approximately $11.8 trillion (including $11.0 trillion of single-family mortgages

Fannie Mae mortgage-backed securities (“Fannie Mae MBS”) held by third parties and credit enhancements that we provide on mortgage assets, was $2.8 trillion as of September 30, 2007, or approximately 23% of total U.S. residential mortgage debt outstanding.

Our financial results for 2007 were severely affected by the disruption in the mortgage and credit markets during the second half of 2007 and continued weakness in the housing markets. We recorded a net loss of $2.1 billion and a diluted loss per share of $2.63 in 2007, compared with net income and diluted earnings per share of $4.1 billion and $3.65 in 2006, and $6.3 billion and $6.01 in 2005.

SUM it up
2007 loss 2.1 billion
2006 Gain 4.1 billion (profit)
2005 Gain 6.3 billion (profit)


What about 10 Q on 8/8/2008 Just before the conservatorship took over?


Quarter 2 2008
 For the second quarter of 2008, we recorded a net loss of $2.3 billion and a diluted loss per share of $2.54, compared with a net loss of $2.2 billion and a diluted loss per share of $2.57 for the first quarter of 2008

SUM it up
2008 Q1 loss 2.2 billion
2008 Q2 loss 2.3 billion

Our core capital as of June 30, 2008 was $47.0 billion, $14.3 billion above our statutory minimum capital requirement and $9.4 billion above our regulator-directed 15% surplus requirement. We currently expect that we will remain above our regulatory capital requirement for the remainder of 2008.

SUM it up
After all of 2005, 2006, 2007, and the first 2 quarters of 2008, Fannie states that it has $47 Billion in Capital.
And have lost a total of ONLY 6.6 billion. We are now only 3 months away from conservatorship.

On September 6, 2008, the director of the Federal Housing Finance Agency (FHFA), James B. Lockhart III, announced his decision to place two Government-sponsored enterprises (GSEs), Fannie Mae (Federal National Mortgage Association) andFreddie Mac (Federal Home Loan Mortgage Corporation), into conservatorship run by the FHFA

Ok, Here is the First filing after the conservator took over:

Quarter 3, 2008  

On September 7, 2008, Henry M. Paulson, Jr., Secretary of the U.S. Department of the Treasury, or Treasury, and James B. Lockhart III, Director of FHFA announced several actions taken by Treasury and FHFA regarding Fannie Mae. Mr. Lockhart stated that they took these actions “to help restore confidence in Fannie Mae and Freddie Mac, enhance their capacity to fulfill their mission, and mitigate the systemic risk that has contributed directly to the instability in the current market.” 

Both prior to and after initiation of the conservatorship in the third quarter of 2008, our results continued to be adversely affected by conditions in the housing market. In addition, we recorded a significant non-cash charge of $21.4 billion during the third quarter of 2008 to establish a deferred tax asset valuation allowance, which contributed to a net loss of $29.0 billion and a diluted loss per share of $13.00 for the third quarter of 2008

SUM it up
After the conservator took over Fannie issued its first deferred tax loss, we know this was not needed as ALL DTA were returned in 2013. 
If you look close Q3 loss was Really 29 billion minus 21.4 billion or Q3 loss of 7.6 billion
We know from the previous quarter Fannie had 47 billion in capital and now subtract 7.6.billion and Fannie has 39.4 billion in capital still. The FHFA has stripped this capital from Fannie by requiring the 21.4 billion write down and severely diminishing its capital WELL AHEAD of its actual losses.
Fannie is Capitalized with 39.4 Billion at this point. 

The fair value of these level 3 non-recurring financial assets, which primarily consisted of certain guaranty assets and acquired property, totaled $12.0 billion as of September 30, 2008

SUM it up
You can see this works out with my sum it up $47 Billion in capital minus the 29 billion in Loss that the FHFA made up, You end up with only $18 billion left over in Capital. It would appear as $6 billion dollars disappeared but lets pretend like we don't NOTICE that. 

Finally lets look at the end of the YEAR 3 months after Conservatorship took over:


Our mortgage credit book of business, which includes mortgage assets we hold in our investment portfolio, our Fannie Mae MBS held by third parties and credit enhancements that we provide on mortgage assets, was $3.1 trillion as of September 30, 2008, or approximately 26% of total U.S. residential mortgage debt outstanding.

Notice Fannie now has 3.1 trillion in mortgages, just a year earlier they had 2.8 trillion. From 2008 start to 2008 end Fannie added $300 billion of Mortgages to their books as they were losing money. These purchases were mostly a backdoor purchase of HUGE amounts of subprime mortgages pushed on it by the Treasury. 


Fannie, Freddie to Buy $40 Billion a Month of Troubled Assets

By Dawn Kopecki - October 11, 2008 00:00 EDT 

Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.
Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities
As a result of our net loss for the year ended December 31, 2008, our net worth (defined as the amount by which our total assets exceed our total liabilities, as reflected on our consolidated balance sheet prepared in accordance with GAAP), had a deficit of $15.2 billion as of December 31, 2008, a decrease of $59.3 billion from our net worth of $44.1 billion as of December 31, 2007. As of December 31, 2008, our fair value deficit (which represents a negative fair value of our net assets), as reflected in our consolidated non-GAAP fair value balance sheet, was $105.2 billion, a decrease of $142.5 billion from the fair value of our net assets as of December 31, 2007.
In the fourth quarter of 2008, we recorded an additional deferred tax asset valuation allowance of $9.4 billion, which represented the reserve for the tax benefit associated with the pre-tax loss we incurred in the fourth quarter of 2008. The additional $9.4 billion valuation allowance increased our total deferred tax asset valuation allowance to $30.8 billion as of December 31, 2008

Sum it up
2008 loss of 59.3 billion but.... 21.4 billion write down in Q3 and 9.4 billion for Q4. Total of $30.8 billion in DTA.
2008 True loss of $28.5 billion loss, on the back of forced buy from FHFA of $60 billion in toxic assets.
2008 True NON FHFA Capital: POSITIVE $31.5 billion dollars.

Fannie has adequate capital now!!

seekingalpha.com/article/2267953-fannie-mae-has-adequate-capital-to-be-released-from-conservatorship

Fannie has adequate capital