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The Fannie and Freddie Stakes Are High

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Re: The Fannie and Freddie Stakes Are High

#11

Post by bko »

onlyrealcuzzo wrote: post #4

> One possibility here is for the government to cancel its entire $348.4 billion senior preferred claim for the benefit of existing common and preferred shareholders. That is obviously what those shareholders want It seems the only reason the government should give up ~$28B in revenue PER YEAR for literally nothing is to put the government in more debt and give free money to Bill Ackman.

I don't think its a good idea but I think it's in the long run interest of the government/taxpayer to divest out of Fannie/Freddie. The current situation makes that impossible, so they'll have to take some kind of haircut. As the article discusses, one of the options is to screw over current investments (Ackman) and raise an IPO, although it would be impossible to raise enough to buy the government out at its current stake.

Of course the big caveat is that once private, the government needs to ensure another bailout is not possible.

Re: The Fannie and Freddie Stakes Are High

#12

Post by bko »

floren wrote: post #5
onlyrealcuzzo wrote: post #4

> One possibility here is for the government to cancel its entire $348.4 billion senior preferred claim for the benefit of existing common and preferred shareholders. That is obviously what those shareholders want It seems the only reason the government should give up ~$28B in revenue PER YEAR for literally nothing is to put the government in more debt and give free money to Bill Ackman.

Yeah it would be pretty fucked up if the current administration pushed something that's bad for the US government but very good for some billionaires. I assume the only reason it hasn't happened yet is that Trump is still figuring out how to tank Fannie/Freddie shares beforehand so he and his cronies can buy them up like they did with the on-again off-again tariff threats.

As the article discusses, the government owns virtually every dollar of profit Fannie/Freddie. I don't see how tanking the private shares (worthless in the current state) would benefit Trump or his cronies. Those shares are already owned by billionaires, I guess new ones can buy them?

Re: The Fannie and Freddie Stakes Are High

#13

Post by onlyrealcuzzo »

bko wrote: post #11
onlyrealcuzzo wrote: post #4

> One possibility here is for the government to cancel its entire $348.4 billion senior preferred claim for the benefit of existing common and preferred shareholders. That is obviously what those shareholders want It seems the only reason the government should give up ~$28B in revenue PER YEAR for literally nothing is to put the government in more debt and give free money to Bill Ackman.

I don't think its a good idea but I think it's in the long run interest of the government/taxpayer to divest out of Fannie/Freddie. The current situation makes that impossible, so they'll have to take some kind of haircut. As the article discusses, one of the options is to screw over current investments (Ackman) and raise an IPO, although it would be impossible to raise enough to buy the government out at its current…

> As the article discusses, one of the options is to screw over current investments (Ackman) and raise an IPO

Ackman is not getting screwed.

When the government essentially nationalized Fannie and Freddy, they made it clear that the stock in those companies was worthless.

Ackman bought it, thinking his billions would be enough to lobby the government into zeroing out their share and handing him $600B.

He's not getting screwed if they say, "you bought worthless stock, and it's still worthless, sorry."

Re: The Fannie and Freddie Stakes Are High

#14

Post by onlyrealcuzzo »

mrinterweb wrote: post #10

Looking at the graphs of US home prices to buyer income, it would seem something has to give (the value of homes or the value of the dollar). With how leveraged Fannie and Freddie are, the value of their assets would fall considerably if there is a significant disruption in the real estate market.

The government insures against home price decreases.

It has zero interest in homes going down in value (not only from a voting perspective, but also from a financial perspective).

The thing that's going to give (long term) is not going to be nominal home prices.

Real home prices declines are plausible.

Re: The Fannie and Freddie Stakes Are High

#15

Post by phkahler »

All that talk of putting home equity into bitcoin...

The big players have been trying everything to unload bitcoin onto the public - floating the idea of government having a "strategic bitcoin reserve" and other nonsense. Now this?

On a related note, the US housing market is overdue for price collapse part II. I'm very interested to understand what's holding them up so high - increasing even as interest rates rise. How? Is it just all that Covid money still sloshing around the economy?

Re: The Fannie and Freddie Stakes Are High

#16

Post by roxolotl »

jgalt212 wrote: post #9
shigawire wrote: post #8

Earlier quoted context omitted.

In your example student loan relief also has a tangible benefit to indebted people. Affordable housing initiatives benefit people who need housing.

My point was everything the dems do to help out the poor also has the side effect of helping out the investor class. They say they help out the poor, and they do, but they also keep the plutocrats plutocratic.

What would helping the poor without helping investors at all look like to you?

Re: The Fannie and Freddie Stakes Are High

#17

Post by jgalt212 »

roxolotl wrote: post #16
jgalt212 wrote: post #9

Earlier quoted context omitted.

My point was everything the dems do to help out the poor also has the side effect of helping out the investor class. They say they help out the poor, and they do, but they also keep the plutocrats plutocratic.

What would helping the poor without helping investors at all look like to you?

Loosening up zoning laws to allow for much greater supply of housing. Blue states don't do this because it would be bad for the investor class who's owns real estate.

Re: The Fannie and Freddie Stakes Are High

#18

Post by shigawire »

phkahler wrote: post #15

All that talk of putting home equity into bitcoin... The big players have been trying everything to unload bitcoin onto the public - floating the idea of government having a "strategic bitcoin reserve" and other nonsense. Now this? On a related note, the US housing market is overdue for price collapse part II. I'm very interested to understand what's holding them up so high - increasing even as interest rates rise. H…

In my locality it is a lack of supply

Re: The Fannie and Freddie Stakes Are High

#19

Post by mrinterweb »

onlyrealcuzzo wrote: post #14
mrinterweb wrote: post #10

Looking at the graphs of US home prices to buyer income, it would seem something has to give (the value of homes or the value of the dollar). With how leveraged Fannie and Freddie are, the value of their assets would fall considerably if there is a significant disruption in the real estate market.

The government insures against home price decreases. It has zero interest in homes going down in value (not only from a voting perspective, but also from a financial perspective). The thing that's going to give (long term) is not going to be nominal home prices. Real home prices declines are plausible.

Anyone who's invested in real estate doesn't want home prices to go down, but it seems a necessity considering how affordability has been decreasing. I would think a buyer market can only sustain so much. If a recession is caused by tariffs, AI taking jobs, war, etc; the real estate market seems to be in a precarious enough position to be affected.

Re: The Fannie and Freddie Stakes Are High

#20

Post by williamcotton »

jgalt212 wrote: post #17
roxolotl wrote: post #16

Earlier quoted context omitted.

What would helping the poor without helping investors at all look like to you?

Loosening up zoning laws to allow for much greater supply of housing. Blue states don't do this because it would be bad for the investor class who's owns real estate.

In states where there are looser zoning laws and more housing is built, who invests in and profits more from the new construction, the investor class or the poor?
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