Friday, July 11, 2014

Okay FINRA, Who Had The Call From The FHFA?

 Last night at 4:05 PM E.S.T. the news hit Bloomberg that the Federal Housing Financing Agency was proposing an astoundingly, stupidly strict set of standards for private mortgage insurers who do business with Fannie Mae and Freddie Mac, the net effect of which would be to reduce the availability of credit for home buyers at the very time that credit is needed to keep our economic recovery going.
 We are not here to explain the issue, only to point out to FINRA, the self-policing body in charge of sniffing out strange behavior in the public markets, the enormous--nay, ginormous--option trades in the two publicly traded stocks most affected by the proposed standards just hours before the news hit the tape, betting on a drop in those stocks.
 Those two stocks, Radian and MGIC, are tickers RDN and MTG, and they stand out in this screen shot from our Bloomberg on outsized options activity by a mile:



 So, we wonder: who had the call yesterday from the FHFA...before it hit the tape?

JM

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