Saturday, January 31, 2015

Bruce Berkowitz 2014 Letter To Investors: Fannie, Freddie, BAC, AIG

Bruce Berkowitz 2014 Letter To Investors: Fannie, Freddie, BAC, AIG

When we initiated the Fund’s investments in Fannie Mae (4.5%) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) (3.5%), conventional wisdom was that the companies would be liquidated. We disagreed. Our investment was predicated on a simple thesis: there are no substitutes. Fannie and Freddie provide services that are absolutely essential to the American way of life. They help make the popular 30-year fixed-rate mortgage available and affordable. They provide liquidity and stability to the nation’s housing finance system – during good and, especially, in bad times. No one does it better.
Time is proving our thesis true. Fannie and Freddie have already benefited from post-crisis reform and are returning to simpler, safer business models. Under a range of scenarios, the companies are collectively expected to earn at least $21 billion per year. The United States Treasury has already recouped $36 billion more than it disbursed to Fannie and Freddie during the crisis, rendering this our nation’s most successful equity investment ever. In fact, Treasury’s current profit from Fannie and Freddie is almost three times more than it made from all of its other financial rescue programs combined. These figures do not even account for Treasury’s warrants to acquire 79.9% of each company’s common stock.

Friday, January 30, 2015

Off Topic: Russia future in 6 months

The above represents a 70% decrease in the value of the Ruble compared to the dollar by 6/1/15


The above chart represents the decline in Russia $US dollar reserves by 2017, Note by 2016 they will have less the 150 billion in reserves left. They will have Zero in reserve by Jan 2017, at current sanction rates.

Thursday, January 29, 2015

"I would like to get fannie and freddie up and running on their own" , Senator Shelby

Senator Shelby, head of the banking committee:

Wants to de-leverage the FED and audit the fed, QE de-leverage!

What about fannie mae and freddie mac,

"We will address that, I dont want a bill for the sake of a bill.

I would like to get fannie and freddie up and running on their own, can we do it? i dont know."

Reporter: What about Fannie and Freddie? You were a big critic of the GSE’s before the financial crisis. What is your sense now about whether there is the political will – the ability to wind them down in this Congress?

Shelby: We will address that and see how far we can go. We need bipartisan support in in the Senate to do it but I don’t want a bill just for the sake of a bill. It has to be a strong one. I am not interested in any bill with explicit guarantees. I would like to get Fannie and Freddie up and running on their own without the government’s help. Is that possible? We don’t know.

Reporter: It is a big bipartisan lift, isn’t it.

Shelby: It is, it’s a big lift. But that’s what we are here for

Wednesday, January 28, 2015

Judge Rules Fannie-Freddie Lawsuits May Continue

Judge Rules Fannie-Freddie Lawsuits May Continue

The government suffered a set-back Wednesday in its attempts to fend off lawsuits brought by a group of Wall Street investors over the treatment of Fannie Mae FNMA +5.14% and Freddie Mac FMCC +1.90%.
A judge in the U.S. Court of Federal Claims denied the government’s motion to stay proceedings in that court, according to two people familiar with the decision. Lawyers for the government had asked the Court of Claims to put the lawsuits on hold pending the appeal of a decision by a judge in the U.S. District Court for the District of Columbia that dismissed a similar group of cases last September.
Shares of Fannie jumped by more than 8% Wednesday morning. Shares of Freddie rose by more than 4%.
Wednesday’s decision means the plaintiffs, who include Fairholme Funds, will be able to continue to collect information from the government in hopes of bolstering their argument that the Court of Claims has jurisdiction over the cases.
The cases were brought by investors claiming to be wronged by the government’s sweep of nearly all of the profits of Fannie and Freddie. The plaintiffs argue that the profit sweep is an illegal “taking” under the U.S. Constitution. The Court of Claims hears cases against government.

Tuesday, January 27, 2015

Housing Finance 01/27/15 Watt in front of congress for 4 hours!

Housing Finance

Federal Housing Finance Director Mel Watt testified before the House Financial Services Committee about housing finance and funding for affordable housing. 

Mayopoulos: Fannie Mae’s rebound means taxpayers have been repaid in full

Mayopoulos: Fannie Mae’s rebound means taxpayers have been repaid in full

The U.S. Congress should use caution if it undertakes housing finance reform because of the complicated nature of the industry and because of the potential risks involved, according to Timothy Mayopoulos, president and CEO of Fannie Mae.
Mayopoulos was the guest presenter at Monday's Rotary Club of Atlanta, where he was interviewed by Rotarian Egbert Perry, founder of the Integral Group and chairman of Fannie Mae.
Both Mayopoulos and Perry spoke about how Fannie Mae had developed an unfavorable reputation in the country after the 2008 economic crisis and required a federal investment from the U.S. Treasury of $116.1 billion.
As of December 2014, Fannie Mae is estimated to have paid back dividends of $134.5 billion back to the U.S. Treasury.Perry said that Fannie Mae's sibling company, Freddy Mac, had gone through a parallel experience.
When asked about the future of housing finance reform by Perry, Mayopoulos said it was hard to predict what could happen during the next Congress. But he warned much would be at stake in how the issue would get resolved.
Although many elected to Congress believe it is best to reduce the role of the federal government in housing finance, Mayopoulos said nearly every country in the world plays a public role in housing because of the "fundamental societal need."
Looking back, Fannie Mae, which was placed in conservatorship in 2009 during the financial crisis, ended up providing stability in the U.S. housing market, he said.
"This housing finance system works," said Mayopoulos, who joined Fannie Mae as general counsel in 2009 before becoming its CEO a couple of years ago – playing a critical role in the recovery of the company.
"Fannie Mae was able to repay the taxpayer within five years. It is sustainable," Mayopoulos continued. "The system works. Any new system being discussed would involve a lot of change and would have a huge amount of risk. It's important for policymakers to consider how much change do you want to introduce after the crisis when things have stabilized."
Perry said that since 2009. Fannie Mae has provided $4.3 trillion in liquidity in the mortgage market. Fannie Mae currently has a $3.1 trillion book of business – primarily in providing secondary mortgage financing.

Fannie Mae: Mortgage lending will see dramatic growth in 2015

Fannie Mae: Mortgage lending will see dramatic growth in 2015

Lenders are quick to agree with Fannie Mae's Lender Sentiment Survey that the lending market is not only doing well, but should see a drastic growth as we enter into the spring home-buying season.


Fannie is getting new building, with long term lease and ownership

Fannie Mae has signed a lease for about 700,000 square feet with Carr Properties at 1150 15th St. NW. The move will enable it to consolidate its current headquarters, a mix of about 1 million square feet of owned and leased space.
The Carr is planning to demolish the Post's current headquarters to make way for the new development. The Post has signed on for space at 1301 K St. NW and plans to make tis [sic] move in 2016.

“The lease provides attractive financial terms and gives the company the flexibility to adapt to changes to future workplace needs,” she said in a statement. “Our new location also will ensure business resiliency. After extensive negotiations, the company determined that 1150 15th Street is the best option to meet Fannie Mae’s needs. We look forward to moving into our new home in the next few years.”

Fannie officials said there was no firm timetable for the move. The Washington Post plans to vacate the existing building in early 2016, a move that must occur before demolition can begin on the Post’s headquarters and Carr can begin construction on the Fannie building. Carr has not released its plans publicly.
Fannie plans to sell its building along Wisconsin Avenue but has not begun the sales sales process.
Now How is it the FHFA has signed on to letting Fannie Mae get a new building, including bulldozing the Post to make a BRAND NEW BUILDING for fannie mae and have the time to wait till 2016 to begin building the multi year construction if the FHFA and the government has intentions of putting fannie mae out of business? Seems illogical to sign a lease and bulldoze buildings in 2016 and fund the building of a new building, since fannie would be on the hook for it, the lease, even if the government puts fannie out of business. Seems this would be far fetched to believe this is the direction and the true direction is of that of a LONG TERM lease for Fannie Mae.

Monday, January 26, 2015

Fannie Mae: The WSJ Versus Shareholders?

Fannie Mae: The WSJ Versus Shareholders?

Do you know how many posts they have run about Lamberth’s recent decision? I get 16 here and probably missed a few. So, its more than a little clear the Journal has morphed from “reporting” to “advocating” in these cases.
On the Oct. 28th the Leadership Conference, who represents over 200 national organizations sent a letter to FHFA Head Mel Watt demanding an end to the “permanent conservatorship” of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s and to allow them to rebuild capital. This is a massive national organization which represents very powerful groups (NAACP, NOW, PTA, ACLU, AFL-CIO etc etc etc) that will get the attention of lawmakers. Do you want to know how the WSJ covered this? Well, as of this writing they haven’t….. maybe they are too busy.