Okay, VD Trading. Go ahead if you still have a question. Hey, Bill. Can you hear me? Yes, I can. Yes. I just wanted to talk about, you know, if, like, you know, you have conviction in certain names. I know Pershing runs an 8 to 12 stock portfolio at any given time. Like, and given that, you know, you have this is an outsized bet and return, like, that the expected return is a lot higher than some of your other investments. How would you, like, have, like, a weighting, and would you increase the position if, you know? Okay, so you broke up a little bit there. But, you know, this is a core holding for us. It's also not the most liquid holding, as we're a significant shareholder of the company. But we think the risk-reward of owning Fannie Freddie here is incredibly compelling. And we also think our kind of most recent thoughts on what the administration can do accomplishes all the objectives of the administration. Number one, not even minimize risk, eliminate the risk of any impact on the mortgage market. This is a step that can be taken, that can demonstrate market-to-market value for shareholders, and also, you know, allow the administration the time it needs in order to, you know, address the various issues before they can be released from conservatorship. I think it's like a very measured step consistent with how the Treasury Secretary has operated. It gives the President the opportunity to have a major victory and announcement. I think it's really a win. And, of course, a very important win for the shareholders. It allows the President to fulfill his commitment he made in 2021 to reverse the theft that had taken place in the Obama administration. Thanks for your question. Thank you, Bill. Long-time follower. Thank you. Okay. Let's go to Lumi Kassanova. I'm just taking these in the order I receive them. Hey, Lumi, if you could unmute, your hand is up. Oh, hi. There you go. Thank you, Bill. Pleasure. My question is, there was no talk about the potential merger. This was an idea which was previously thrown out there, I believe, by Trump in a tweet about Dollar Maga, the two companies becoming one. I'm against it as a common holder, but I just wanted your thoughts on the matter. Yeah, thank you. Sure. It's a good question. I do not think it makes sense to merge the two companies. I do think, while they're, you know, in a very dominant position, I think it's helpful that they're two separate businesses that have to compete. You know, I think the participants in the mortgage market don't want to deal with a monopoly. They want to, you know, obviously, customer service matters. You know, the banks that are selling their mortgages to Fannie and Freddie want a responsive person on the other side of the phone, if you will. I think the benefits of potential cost savings are not, you know, that so significant. I think perhaps, you know, even we may have misinterpreted the President's meme where he talked about the Great American Mortgage Corporation. He just left off an S to be the Great American Mortgage Corporation. I do think they should both continue to exist as independent enterprises. I give Director Pulte credit, for really, for the first time, someone thinking about, you know, how do we run these entities more efficiently. You know, they've been in conservatorship now for 16 years. It's not the best place for a business to operate. I do expect there are lots of opportunities, you know, with AI and otherwise to materially improve the profitability of these companies and have them operate more effectively. Let's have them compete in order to achieve that. Thanks for your question. Shogun, why don't you go ahead and ask a question. Please unmute if you still have a question. While we're waiting for Shogun, let's go to Futurist. Please feel free to ask your question. Remember to unmute before doing so. Okay, Futurist, do you want to go ahead and ask your question? Okay. Then we're going to go to Glenn Tung. Why don't you go ahead and ask your question. Please unmute. Maybe there's a technical issue because it seems like people are having trouble here. Glenn, can you unmute? Sure can. Okay, there you go. Hey, Bill. The perception is you have pretty good access to the administration. Why present, in this format rather than just going, directly down there? I have. In the past 10 days, I've spoken to the President, the, Pulte, Director Pulte, and most recently, the Treasury Secretary, as well as Howard Lutnick, about this idea, which I believe is being considered by the administration. One thing that's very helpful to the administration, you know, as I explained, you know, we've been an advocate for the public owners of the company. And so, you know, we've sort of updated our thoughts on the enterprises, and we intended to share those thoughts. The benefit to the administration is they'll get to see and hear from the stakeholders. You know, by putting this out in a public domain, the administration gets the benefit of feedback from everyone, all the stakeholders, the shareholders, the enterprises themselves, as well as any critics. What I like about what we shared here, I think it's almost inarguable and very difficult to criticize. If Elizabeth Warren has something to say, you know, let's hear what she has to say. Let's address whatever her comments are. The benefit to the administration is they get the visibility to hear the feedback before they make a decision. I was very, very transparent about doing so, so that, you know, I just actually had the opportunity to speak with the Treasury Secretary yesterday and share this very same proposal, let him know that we'd be putting it out there for kind of public comment. Terrific. That's great to know. Thank you. Okay. Thank you for your question. Okay. Looks like the Polymarket folks have asked, I'd like to ask a question. I wonder if they're, which way people are betting on, yeah, we should have, there should be a market and betting on whether they implement this plan. If you could unmute, apparently it takes a moment to unmute, so we'll wait for you to do so. In the meantime, I'm going to unlock the Futurist so that she's ready to ask a question. Go ahead, Polymarket, if you can manage to unmute yourself, please ask a question. A little frustrating here. If Futurist could unmute herself, there you go. Why don't you go ahead while we're waiting for Polymarket? Go ahead. You're live now. Thanks. Thank you, Bill. I'm a retail investor, and I've been a retail investor for a very long time. My question is, how do you think the IPO is going to affect stock prices of the current retail investors overall? I mean, we've been hit hard for a while, and it's been a roller coaster ride. I think a lot of us are banking on everything you're doing, which is absolutely amazing. I just kind of want to hear it from you. Sure. What we're proposing here is actually not an IPO. Fannie and Freddie are already public companies. You know, IPO is an initial public offering. I think in this case, it's been sort of a terminology that's been used that's a little actually inaccurate. What the government's been talking about is actually a secondary sale of a portion of their interest in the two enterprises in connection with a listing of the companies back on the New York Stock Exchange. What we're suggesting is now is not the right time to sell. You know, these entities are growing in value in a very significant way. There are significant opportunities for optimization, you know, for better management of these enterprises. There's needs, a lot needs to be done to remove, kind of uncertainty. By taking this, if you will, almost a baby step, okay, acknowledging that the senior preferred has been repaid, exercise of the warrants, listing on the exchange, what this will do is create a lot of visibility around the company. It will eliminate the fear of people, the preferred being converted, and it will open the market for Fannie and Freddie stock to a much broader group of investors. Right now, you know, there's a limited universe. Many institutions are not permitted by kind of mandate to invest in OTC listed securities. What we're really talking about is relisting them on the exchange, and that, in our view, is going to have a very significant positive effect on the trading value of the two companies. I mean, these are enormously undervalued companies. They're trading at, you know, two and a half to three and a half times earnings. These are, you know, effectively duopolistic, you know, growth companies, you know, that own royalties on, you know, the, the U.S. kind of mortgage system. You know, these are businesses that, they're, they're like infrastructure companies that should trade at infrastructure-like growth multiples. I think we'll take a very significant step in the direction if the administration, you know, kind of carries this forward. Yeah, it's very good for existing shareholders. We are not suggesting that they should do an IPO. We simply are suggesting they should list on the exchange while cleaning up the preferred. Thank you for your question. If Siri could go ahead and ask her question, and then I'll put Curtis on deck to see if someone can unmute theirself. Please unmute Siri so I can take your question. Or Curtis, if you can unmute. It seems to be something wrong with the system that's making it hard for people to unmute. Curtis, it looks like you're live. Why don't you go ahead? Good morning, Bill. Thank you for the presentation. I think it was an excellent job. As a retail investor, invested in both companies, I would definitely be in favor of your proposal. Hopefully it's considered. I do have a question pertaining to, in 2008, before the global financial crisis or amidst the global financial crisis, both of these companies were naked short sold to the point that the SEC had to prohibit, amongst other U.S. financial institutions, they had to prohibit naked short selling of both entities from an emergency SEC order. What do you see, project that these are ultimately uplisted to the New York Stock Exchange, whether by the end of the year or the beginning of the year, government maintains an equity stake of 80%. What prohibits whether foreign actors or other financial institutions from targeting these companies? Yeah, look, I think number one, these, first of all, I wouldn't be short Fannie and Freddie on a relisting, as the, if the administration, as the administration says, look, we're taking, you know, considering the, we're accounting for the repayment of the preferred. We're exercising our warrants. You know, these are going to be like sovereign, you know, assets of the, sovereign fund assets, the United States, government. And we're going to be working on optimizing these enterprises. I wouldn't worry about short sellers. Yeah, there are rules against naked short selling. I don't think there's a ton of quote unquote naked short selling that actually takes place. You know, so I would be very bullish, on, on owning these stocks. I also think the government should think seriously about never selling its stake. You know, a 79.9% stake in these entities, I think, is an excellent asset for a sovereign wealth fund. If the government were to say, look, we intend to hold these for the very long term, that would remove the government quote unquote overhang from the stock, would allow them to trade even, even better. Why don't we add, I'm adding Larry Goldberg. Larry, as soon as you are able to ask your question, looks like you had, you were unmuted there for a second. If you could, there you go. Go ahead, Larry. Yeah, Bill, this may be a little orthogonal to your argument, but I'm troubled by the fact that there will only be two of these companies. My experience in the past, you know, I had a lot of experience in working with these companies, is that they tend, they tend to become extraordinarily bureaucratic and, they tend to lack, service to the, to the industry. It would seem to me necessary to build more competition rather than less. The government should give serious thought to licensing more organizations to do what Fannie and Freddie do, which is simply print money. Yes. I think it's a good point. I do think the history here, you know, when companies are in a somewhat monopolist position, there are bad monopolists or duopolists. I think these are good examples of that. I think that can be addressed by, you know, better governance and better oversight. I mean, you know, FHFA has an enormous staff, but, you know, we should have an important, you know, private sector presence on the board of these enterprises. You know, you can make some arguments that, you know, while the government can retain its 80% stake, the board should be controlled by the private sector so that they have private sector discipline. You know, I think it can be managed that way. There's a sort of a delicate balance. I mean, if you quote unquote license more Fannie and Freddie's, not clear to me that that might create more risk. You know, three enterprises, does that really create a lot more competition? I'm not sure that it does. It might create more oversight kind of risk. That is a risk, but I think that can be mitigated by kind of better governance. I appreciate your question. Why don't we go to William P., if you can unmute yourself. Okay. You've got to unmute William P. in order to ask. Go ahead. You look live now. Hi. Thank you for everything you're doing, Bill, for Fannie and Freddie. My question is this, as a retail investor in the future, what do you see this stock opening up at or the value of it, the value of it long term? Because right now it's really low and it's a profitable company per se, right? What, and I know you don't have a crystal ball and I know you can't see the future, but what do you anticipate it at? Number one, you know, in the presentation, we value the, you know, for example, Fannie Mae at 16x earnings, Freddie Mac at 13 times earnings. We could be wrong low, we could be wrong high. I would say in terms of intrinsic value, these entities are worth at least the multiples that we're valuing them at. What will still be an overhang, when we, assuming the government takes the steps that we're talking about, is the conservatorship. You know, it has to be addressed. The capital rule needs to be resolved. These are steps that need to be taken. If the government takes the proper steps to set an appropriate level of capital for the enterprises, make sure that best in class management team is in place with appropriate kind of compensation structures, puts in place a board of directors, with, you know, a lot of talent, and then, you know, these entities are optimized in terms of their performance. I mean, AI, I think, can play a very meaningful role in improving their sort of productivity, profitability, underwriting, you know, hard to think about a business that would not benefit more by the power of AI. If you do all those things, you know, I would expect these businesses to compound at a very nice rate over time. I'm not in front of a screen at the moment, but, you know, at $9 a share where Fannie was, you know, our view is these are theoretically well into the 40 stocks on just this initial step. We think there's a ton of upside from here, which is why we've been such a persistent holder. You know, we've owned these companies now for 13 years. Thank you so much. Yeah, thank you for your question. Let's go to easy, easy, go ahead. If you can, unmute yourself. Okay. I'm going to add Brad Damasch while we're waiting for easy to unmute. Okay, Brad, go ahead. Hey, Bill. Longtime listener, first time caller. I was an original Tonton holder and now a Spark holder. I think I have this question on behalf of a bunch of Tontards. Any comments to make around Spark as it relates to Fannie and Freddie or broadly speaking? No comments with respect to Spark with regard to Fannie and Freddie. I will say that we've seen a number of very interesting targets and we're actually having some discussions about potential transactions for Spark, but that's really off topic for what we want to focus on here. I appreciate your question. Thank you. Let's go to easy, if you can unmute. Thank you. Okay. We might have lost easy. Let's go to Diane King Hall. Why don't you go ahead? This is Diane King Hall. We actually met on this, at the stock exchange. Jason Kalamboussis introduced us. Thank you so much for hosting this. How realistic is an IPO? Is this something that's actually like, is a legitimate possibility? Let me distinguish between what we, what we've proposed in an IPO. In our view, trying to sell, you know, 5% or 3% of Fannie Mae in a public offering today is very effectively not a likely or possible outcome. I think it would be a high-risk thing for the government to try to do because the entities are still in conservatorship. The capital rule has not been set. You know, there's lots to be done in terms of governance and otherwise. I don't think a public offering of stock is likely or possible. What we think is likely and high and easy to execute is effectively just an uplisting of the entities to the New York Stock Exchange once the senior preferred stock payments have been accounted for. That can literally be done in a simple letter of agreement. If the president were to say, I want this to happen tomorrow, it would happen tomorrow. It is really a few week process. I actually spoke to the New York Stock Exchange as recently as this morning, and they have confirmed that, you know, this would be obviously a very high priority for them. In a matter of weeks, these entities could be trading on the exchange. It is really up to the president, the Treasury Secretary, Secretary Lutnick, but ultimately the president's decision. I would view this as a massive win for the president delivering on his, you know, promises. In my experience with the president, he is, he keeps his promises, promises kept. That's, that's, I think is very achievable versus an IPO, or the public offering of stock, as a, as a very challenging, if not impossible thing to do, you know, at this moment. Okay. Terry S., I'm sorry, Terry Scanner, you're most welcome. Thank you, Diane. Hi. As I understand it right now, these entities are supplying cash to the government. Is that true? no. No. The entities, the net worth sweep, was stopped by Secretary Mnuchin in the first administration, which has allowed the enterprises to rebuild capital. They're retaining all of their earnings and they're building up capital as we speak. They're not a source of cash for the government. I would say they're a source of potential value, you know, a value that, you know, would be, you know, the day that trends, you know, this could be a several hundred billion dollar offset to our, you know, our nation's liabilities if they were to execute what we've described. It'd be a one-time deal. Just one other thing, which is. Actually, let me correct you. It's not a one-time deal. It would be the beginning of, you know, continued growth and value of these entities, which would, you know, our view is that the government's ownership stake of Fannie and Freddie can compound at a meaningfully higher rate than our cost of our, you know, government debt. Right? One way to delever the country is to reduce expenses and, you know, pay back outstanding borrowings. Another way to delever the country is for the government to own assets that compound in value faster than our debt balances grow. This is an asset that can compound its equity value at a very nice rate over a long period of time, well in excess, for example, of the 10-year treasury. One other comment or question, which is in 2008, when all this happened, the buzz was, you know, what we're doing is we privatize the profits and we're going to take the liabilities now public, to the public. Why is it now that you want to do this? Is it, it's a timing question. Why now? Sure. So look, Fannie and Freddie were not run well, going into the financial crisis. They were too highly levered, and they were very aggressive in the way they used their balance sheet. You know, well beyond their core mission was to provide liquidity, and keep, you know, mortgage costs low, for middle-class credit-worthy borrowers. That was the mission of Fannie and Freddie. Now they had a AAA rating from the rating agencies. You know, having that rating enabled them to borrow in the unsecured corporate bond market. They built these very large fixed income arbitrage books that had nothing to do with their core mission. They also went up the risk curve, and started investing in subprime and other securities going into the financial crisis. As a result, they blew up. and the government, bailed them out, and took, more than a pound of flesh. This was the most expensive bailout, I can maybe tied with AIG in terms of the terms. The government was entitled to its pound of flesh because it put $191 billion into these two companies and, and took back, free, you know, stock in effect, free, free warrants. Now what's happened since is the entities have rebuilt, very significant value to the credit of the management teams who've overseen these entities and the credit of the strength of the U.S. economy, since, you know, the financial crisis. They're now back to, you know, Fannie actually in our view already meets, the, the capital standards that would enable it to be a standalone enterprise. Freddie is not far behind as they, they have retained, capital. You know, these stocks have been held by literally millions of small shareholders who've been waiting, you know, more than a decade for their, you know, time in the sun, so to speak. Some institutions, we've been a, if you will, long-suffering shareholder of these, of these two companies. Why now? Among other things, the president, you know, four years ago, when he was no longer president, said, you know what, I would have handled this differently from Biden and Obama. I would never have stolen from taxpayers. This needs to be fixed, you know, right away. He wasn't president. He wasn't able to do it. Now he's president. This is definitely something on the president's agenda. He wants to do it in a way that is very careful, doesn't create any risk for the mortgage market. And, you know, this is a, you know, in the same way that Mnuchin stopped the net worth sweep, which was a very important step that allowed these entities to rebuild capital, they can now take another important step in, you know, attracting a broad base of owners, relisting on the New York Stock Exchange, and the entities will start to be covered by all the big banks. If and when the government wants to actually raise some cash by selling their interest, they can do so. At a minimum, these are steps that will help maximize the value of both companies. There's no time like the present, as my father used to say. With that, let's go to, let's see if Nico can ask his question. Go ahead, Nico. Bill, can you hear me? Yes, sir. I can. Great. Great job today. You, you know, laid everything out real nice for everyone. I really appreciate you have been following you for a long time. I can speak for a lot of our Fannie common shareholders. I just want to ask you one quick question as to your position. Is it over 200 million common shares? Would you be looking at increasing or decreasing your position in the future based on what the government does? I mean, the answer is we have over 200 million shares of stock in the companies. It's been a long-term holding. We have no plans to buy more because it's already a very large investment for us. We have no plans to sell any stock, either. You know, we think this is a very good investment. And, you know, we're excited about the future of the companies. Let's try, Easy, if it works this time. But thank you, Nico. All right, Easy. You're going to have to unmute or we're not going to get your question. Hey, Bill, can you hear me? Yes, I can. Amazing. It is a kind of a two-part question here. It has to do a little bit with the social sentiment recently with your virality that occurred over the last couple of days. I am curious if you feel that pushing some of these things on social media that do not have to do so much with equities, specifically the may I meet you comments you shared, do you think that that has positive or negative correlation to anything that you discuss on the equity market? I do have a follow-up question. I attempted it, but I said, can I meet you? Do you think can versus may I meet you has any glaring difference in those situations? Yeah, I think "can I meet you" is highly flawed, exposes you as someone who does not have very good grammar. I would avoid that phraseology. Okay. It's kind of fun how much my dating advice has gone viral and hopefully it has a positive effect on the world. You know, the follow-on business effects, I'll leave it up to you to calculate. Yeah, it's good. We need more human interaction in the world and less swipe right or left in my view. Otherwise, we're going to have. I do agree, Bill. I guess I'm curious, like, have you ever used the saying before in situations? Was that coming from direct life advice? I'm curious where and how you've used it. Was it those outline situations? Yes, I used it in college and thereafter when I was a young single man, that's how I perfected the technology. And it's been on the shelf now for several decades. I thought maybe this is a way to help boost, you know, interaction. Anyway, I enjoyed your question. Let's see if we can take Hector, Julian. Hector, go ahead. Can't hear you, Hector. Okay. We're going to go to 3N Developer. Hi, Bill. Thank you. Sure. I have just three quick questions, please. Please. I want to preface my first question with a concern, of a concern with the fact that, you know, Fannie and Freddie. We lost you here. Sorry, you're breaking up. Can you hear me? Do you want to repeat again? Sure. I'm concerned with the fact that Fannie and Freddie are both so profitable and they're in a vulnerable position within, you know, the whim of the government, which may attract ill intent. Based on your interactions with the administration, you know, like Lutnick, Bessent, or even Pulte, are they actively discussing protecting existing shareholders? You know, my conversations with the administration, I would describe them as more one way, in the sense that I shared with them, you know, what my thoughts are. In light of the fact that these are public companies, I think they, you know, have not wanted to share any private information, which I thought was, you know, the place we want to be and it's appropriate. You know, that's why I've relied on, as we quoted in the presentation, you know, the public statements of the president, of, you know, Howard Lutnick, of the Treasury Secretary, and even, as well as, Bill Pulte, the Director. What we tried to do is come up with something that was consistent, with, you know, their statements. Now, the president himself has been very clear in that public letter about how he thinks of the theft, you know, his words, stealing money that belongs to taxpayers. In our view, a conversion of the senior preferred stock into common stock, which is not something that was built into the instrument. There's no conversion feature in the senior preferred stock. So the government sort of unilaterally did so. I'd view that as, you know, effectively identical, the same kind of theft that took place when on a, you know, ultra vires basis, the Obama administration said willy-nilly, we're going to take 100% of the profits of these two companies. I actually had the opportunity, I've talked to Warren Buffett about this many years ago, and he acknowledged to me he thought it was one of the most absurd and inappropriate things the government had ever done in literally stealing from these two companies. When you, there are only a couple of different ways to take money from a company. One way is through a dividend, and another way is, I guess, a payment to a vendor or an interest expense on an obligation. Now, each of these things require, have to be accounted for. This is the first time in history that the, at any entity, let alone the government, has taken $300 billion of cash out of a company and that amount has been accounted for. I see no world in which the president of the United States would, quote unquote, screw the shareholders here to try to create an incremental benefit for the government. You know, it's just crazy. It is something that is out there as a perceived risk, and that's an overhang on the company. The government should just provide clarity on that issue, account for the payments, relist the companies, and then take its time in a very thoughtful, measured way on defining the right level of capital and the timing on the exit of the conservatorship. Thank you for your question. Why don't we go to, how about profits over wages? Let's add you as a speaker. If you could unmute, please. Okay. If you're having trouble, let's go to O Barack. You can go ahead. Oh, profit over wages. Looks like you're unmuted. Go ahead. Go ahead. You're unmuted. Okay. O Barack, if I'm saying it right, O Barack, O'Hare. Go ahead. Bill, hey, good morning. Thank you. Just had a quick question. Please. Yeah, as one of the largest, if not the largest holder of these securities, you stand to benefit. Pershing Square stands to benefit the greatest. How is, what, on the other side of this, of course, are the home borrowers, mortgage owners. I've looked at studies where interest rates could potentially rise by as much as 50 basis points, maybe even further depending on conditions. You know, how do you look at that? Because I think ultimately, you know, there's a fight between privatization, you know, the benefits for private equity owners and of course the general public and, you know, home buyers in America. If rates go up because of something like this, I would think that, you know, that, that, I don't, I would think that you would look at that in a negative way, would you not? Of course. If you, I don't know if you had the chance to hear the presentation. We, okay, so what we're proposing is not immediately releasing these entities from conservatorship, which I, in our view, creates risk to the mortgage market. What we're saying is, let's, you know, in fact, the uncertainty around Fannie and Freddie, what's going to happen in our view is not a positive for mortgage rates, right? I think having clarity on exactly what function and how Fannie and Freddie are going to perform their, you know, mission, I think is actually very important and how they're governed and who's managing them and how they operate, and how efficiently they operate, all of these things, I could have a potential impact on mortgage rates, which is why what we're suggesting here is in many ways status quo with respect to everything that could create risk in the mortgage markets. One, we're not saying they should come out of conservatorship immediately. We're saying stay in conservatorship, stay under complete government control, actually just respect the original terms of the senior preferred stock. The government's gotten its, got more than a 10% return on the instrument. They've been fully repaid. Account for that payment. Okay. We're saying account for a payment that was made many, many years ago. We're saying exercise warrants to turn the warrants into common stock and then list the companies on the exchange, all while staying in conservatorship. Now, all of the things that can impact the mortgage market are unaffected. This literally is a zero risk way for the president to kind of fulfill his, you know, promises he made to the stakeholders here without taking any risk on the mortgage market. Let's be thoughtful and let's be careful about how we set capital and what the governance structure of these entities, how they operate going forward, because none of us want any risk to the mortgage market. Right. The studies that I've looked at, you know, one of the reasons that people are afraid that rates will actually go up is because of that implicit government guarantee being a GSE. What are the implications for that going forward, if this were to actually happen the way you're planning? Sure. Number one, prior to the financial crisis, every systemically important financial institution has an implicit government guarantee. JP Morgan has an implicit government guarantee. Now, what does that mean? It means that JP Morgan is so large that if something really bad happened to JP Morgan, it's actually in the interest of the country for them to be saved. Okay. That, that's, it's implied, it's not explicit, it's not contractual, it's implied. Now, what the government does to make sure that that implicit guarantee is not called upon is these institutions are overseen to make sure they have adequate capital, that they're not taking stupid risks, that they have proper governance, that they have, you know, we have a deposit insurance program that's kind of paid for so that depositors up to certain levels are covered. That's how we manage systemically important institutions. If all of that failed, the government is going to step in. The same is true for Fannie and Freddie. What do we need to do to make sure what happened in the past does not happen again? Number one, the 45 basis points of capital these entities held was inadequate. What made it even, it was almost enough actually for them to get through the financial crisis had they not done stupid stuff like borrowing hundreds of billions of dollars in a fixed income arbitrage program and investing in higher risk securities or, you know, going down the risk curve on the mortgages that they underwrote. Still. Bill, wasn't that a two-way street? Wasn't that the fault of actually the counterparties to those transactions that ended up becoming, you know, Let me see if I can finish and then I, the fault doesn't matter at this point. Okay. Let's focus on, so what you want to do is you want to set up a Fannie and Freddie, okay, that has what Jamie Dimon often talks about, a fortress level balance sheet. Government intervention is not required. You can't set the capital levels at a stupidly high level because then the entities are not viable as private companies or as, you know, publicly traded, but privately controlled enterprises. You got to set it at a robust, sensible level that they can earn an adequate return on capital so they can attract investor capital. Okay. We think that level is about 250 basis points. It was sort of artificially set at a too high level, almost in response to the crisis at 450 basis points. That's number one. Number two, there should be some explicit government backstop, i.e., a bit like deposit insurance, but in this case, the senior preferred stock, about $445 billion of it, remains outstanding, once it's deemed repaid. That should not be a free backstop, it should be, it should, you know, like a, it should be a cost. There should be an ongoing cost for that ability to draw capital from the government if needed. In our view, it will never again be needed, but the existence of that explicit ability to draw on preferred stock in the future and raise capital is going to make these even more robust enterprises, but it shouldn't be free. It should be way out of the money, unlikely to be called upon. It should have an ongoing cost, where the taxpayer is being paid for that very remote catastrophe insurance is the way I think about it. The implied government support is always going to be there. You know, the president, even in one of his tweets said, you know, I'm going to keep the implied support. The answer is implied support is not something that's decided upon. Every major financial institution has implied government backstop and because, you know, that's how, you know, you don't want to punish the entire country if a major financial institution fails. You want the shareholders in a circumstance like that to suffer severe pain. That's really what happened here. The government stepped in and massively diluted shareholders and put in very expensive preferred stock, you know, a 10% coupon where all the banks got capital. Their preferreds were at 5%. This company got 10%. The other banks, you know, diluted 5% or 10% with warrants. Fannie and Freddie diluted 79.9%. The government got its pound of flesh here, but these entities are so profitable and they did a good job managing them and the recovery of the housing system, housing market enabled them to become profitable again. The way you manage this risk is making these sufficiently robust that the probability of the government ever having to step in is as close to zero as possible. You provide proper oversight so they do not do stupid stuff in the future. It is a very good question, but I am going to take, let me take from someone else. Okay. Let's go to Dimitri. By the way, guys, I am going to run out of time. I got a hard stop in about five minutes. If IH8Y, this sort of creature here, can ask this question, I'd be delighted to take it. If you could unmute IH8Y. Okay. I'm trying now, David Skadron. Skadron. Go ahead, David. Skadron. There Skadron. There you go. Hey Bill, Mr. Ackman, you were retweeting some of my stuff during Dean Phillips' presidential campaign. Okay. I'm a student at the University of Wisconsin-Madison. I was also, I basically protested all the protesters on campus. I've been inspired by the way you've been sticking up for the Jewish community. I'm wondering if you have any advice to me on how to reach levels of success that you've reached where then you can then use your success to like give back to the community. I appreciate your question. I'm not going to answer it here because this is really a forum on Fannie Freddie, but feel free to reach out at another time. Let's go to Michelle Ma. Please unmute. Thank you so much, Bill. Yeah, I've been following this, dog being investor. I just have a quick question. It feels like right now the biggest issue is how to deal with the senior preferred and the warrants. So, my question is, do you think that's purely president and Treasury Secretary's decision or they have to get other politicians or regulators' approval to proceed, proceed this? The good news is the President, the Treasury Secretary and the, you know, Director Pulte can, can get this done. It literally can happen, you know, by Monday if they just, if they made the decision to do so. You know, so it's a, there is no congressional or other regulatory approval. Oh, great. Thank you so much. Thank you. Matthias Alem, why don't you go ahead and ask your question? Hi Bill, nice to talk to you. Congrats on your career and all the work you're doing with Fannie and Freddie. I have a question. I got cut off for a little bit, so I don't know if this was asked, but what is the likelihood of this actually happening with them uplifting it? If this was to be delayed or not happen now, what would be your plans for the future with these? I would say, look, my view is I think it's reasonably likely, hopefully very likely, because it's consistent with the objectives, the publicly stated objectives of the president and his administration. While I did not view the probability of an IPO as described, the largest offering of all time, getting done by the end of the year or even Q1, that doesn't make sense to me because I think it's too much risk. I, and actually I think it's contrary to the objectives of maximizing value for the taxpayer. The beauty of what we've proposed is it's very simple. It's an accounting change. It's an exercise of warrants. It's a listing application to the New York Stock Exchange, which is going to be approved. It can happen, you know, before the end of the year, certainly in Q1, but even could happen before the end of the year if people, you know, obviously the Treasury Secretary has a lot on his plate, and the President does, but this would be a very nice positive thing for the President to get done. That's really what I would say there. I'm going to take one last question from Marshall Sterman, and then I'm going to thank everyone for their time. We've had a couple thousand people paying attention here for a long time and over an hour, but go ahead, Marshall. Assuming your plan is executed, how do you see the government monetizing their investment in the future and obtaining cash flow? Importantly here, the government ownership of the stake is itself a monetization, because the government will own a liquid interest, you know, own stocks in a publicly traded company. If the government chose to, it could have a program of selling down a position over a matter of years. They would not want to do it, you know, rapidly. They, you know, create an overhang on the stock. These companies, once their capital levels are reset, are going to generate a huge amount of cash, that will not require reinvestment in the enterprises and they can pay out big dividends. These become, you know, relatively high yielding stocks. The government can own them, participate in the capital appreciation of their equities, which in our view here will, will well outpace the cost of debt, the corresponding amount of debt. It is a very nice ROE, if you will, for the government. And they, the government will receive significant dividends. Now, the government, you know, housing affordability is a big issue. The government could choose to take those dividends and use them for deposit assistance for, let's say, the next generation of first-time home buyers. It could use, they could monetize some of the stake and, you know, there are various things that could be done here, that could help, the housing market. You know, in our view, that is a critically important thing to do. It is not a good thing that people have to wait until they're 40 years old, to be able to afford a home. Home ownership is one of the great ways to, save for your retirement. You know, people take better care of their neighborhood when they own their home than if they're their renter. I do think there's a lot more that can be done on home ownership. You know, I've kind of run out of time here, but I'm grateful for really all excellent questions and an important subject. I encourage everyone on this Zoom, if you have a, or on the space, a point of view here, you know, reach out to your, reach out to the administration. There are email addresses where you can reach the president, you can reach the treasury secretary, or you can just share your views on X, or with your local congressman or senator. I just do think it's useful to the administration to hear your feedback. Thank you so much for a very good session. Bye-bye.