Fannie Mae, and Freddie Mac

[Davestone]

For the first time ever there is a very real possibility these two institutions will fail,they hold billions in inflated declining mortgages.The govt. will bail them out, or restructure them, but at what cost? This could be the death blow to any real estate come back for some time. :bow:

[Sponsored Links]

[cx]

The govt. will bail them out,....And "The Government" just loves it when you talk like that, Stoner. The Government can't bail anyone nor anything out. You will provide the bail-out for Freddie and Fanny.

It helps to keep things in perspective when you state it more accurately. The Government will force you and me and all our neighbors at gunpoint to provide money to bail out still another of their mistakes.

And once again we'll let them. That's the sad part. :(

[ceramictec]

Fannie, Freddie shares drop as worries of government rescue build amid ongoing housing woes

WASHINGTON (AP) -- Fears that the government will be forced to rescue Fannie Mae and Freddie Mac could well become a self-fulfilling prophecy.

Shares of the government-chartered mortgage finance giants plummeted Thursday and are trading at levels last seen in the early 1990s. If the prices don't recover, it will be harder for the two companies to raise more money through stock sales to compensate for losses from the housing bust. Investors are afraid their stakes will vanish if the government is forced to rescue the companies.

"The government has to step in and do something," said Friedman, Billings, Ramsey & Co. analyst Paul Miller.

Freddie Mac shares fell $2.26 or 22 percent, to $8, after sinking as low as $6.75 earlier in the day. Shares of Fannie Mae fell $2.11, or 13.8 percent, to $13.20, after earlier falling to $11.70.

Testifying on Capitol Hill, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke sought to calm investor jitters about the financial health of Fannie and Freddie.

They are "working through this challenging period," Paulson told lawmakers. Asked whether such companies could pose a risk to the U.S. financial system, Paulson replied: "In today's world, it is not helpful to speculate about any financial institution and systemic risk."

[sandbagger]

the interesting thing here is that these are private companies, and there really isn't any obligation for the Feds to bail them out. These are not gov'mint backed loans. Problem is in the perception of gov'mint backing, and perception usually trumps reality.

and fwiw, I'm obligated to point out that both organizations were inventions of Democrats, not the GOP. But they were created by Congress in bad years for the GOP resistance - 1939 and 1970. That's what happens when the balance of power gets out of whack. :cry:

[JTG]

Art
Can I point out that both were doing fine until we got this Republican administration!
Turn their heads so their buddies can make record profits off of mortgage scams and we will all have to pay while they are off on their fancy boats, planes and cars to lavish places in exotic locations.
What is wrong with this picture?
JTG

[ceramictec]

Stocks fall sharply on Fannie, Freddie worries
Friday July 11, 1:28 pm ET

Stocks tumble on worries about Fannie, Freddie; Dow falls below 11,000 for first time in 2 yrs

NEW YORK (AP) -- Wall Street sank further into a bear market Friday as investors dumped stocks in response to troubles at mortgage companies Fannie Mae and Freddie Mac and oil's continuing climb into record territory. The Dow Jones industrials at times fell more than 250 points and slid below the 11,000 mark for the first time in two years.

[SteveVB]

Can I point out that both were doing fine until we got this Republican administration!

And which party blocked legislation on more restricitons for Freddy and fanny, complaining that the "underserved " would be hurt back in 04 or 05?

It was great giving loans to anyone and everyone who could sign their name- made great headlines- increased homeownership etc... but too bad someone has to pay for it all.

There is plenty of blame to go around.

[Davestone]

Well it's here.Funny how they wait till a Friday afternoon to really come out with it.I hope this doesn't do the damage i think it will.We are headed for mortgages most of you have never heard of...two step,balloons,five year..all these mean you'll be faced with refinancing frequently, adding to inflation and more financing costs.I am very worried about this,this is even worse than the savings and loan debacle where i lost all my investment properties. :bow:

[cx]

I love it when y'all argue about them two political parties as though there were actually substantive differences betwix them. :rolleyes:

It's like arguing the relative merits of two Mafia families as though they weren't both involved in organized crime, eh?

[SteveVB]

Everything is going to get more expensive- you got that right Dave.
The rates and loan/financing products we have enjoyed for the last decade will be gone, the products that enabled the easy credit EVERYONE enjoyed, are going to be repriced in recognition of the risks, some will disappear. The fall out will take years to undo, housing, business financing is going to be materially different in the coming decade.
If you can hedge against rising rates take the opportunity....


Back to the blame game : Jerry wasn't Raines the head of Fannie back in the last FNM crisis a Clinton Guy? Late 90's into 03 or 04? When he was brought up on the hill for managing to profit from options grants, and accounting problems or something with FNM- so there were problems before the "republican administration".
Lots of talk back then about the risk that holding all of those notes would fall on the government if the mortgages couldnt be resold, and the large amount of mortgages they held with low capital requirements.

[Davestone]

Indymac being taken over by feds,the largest single bank failure to date.33 bil. in assets.I hate to keep harping on this housing thang, but i've been saying it forever, things are going south,this in my opinion is something we've never seen, it ain't a depression, not a recession, not stagflation, it's gotta have a new name.Terrafirmaflation is what i'm callin it. :bow:

[SteveVB]

Dave ,
Indymac was a plain old run on the bank- ala "its a wonderful life" , instigated by Chuck Schumer?

People talking about outcomes that could be, but that are not certain, spread at the speed of light to everone with eyes and ears, but not enough knowledge to use the information they have, leading to emotional decisions.

Depositors wanted their money back after talk about being a going concern. People in high places need to put a bit more thought into what they are saying and realize who is listening. This is a dangerous time.

Watch "its a wonderful life" for a simple primer on banking.

[Davestone]

Saw the movie many times,when you hear a bell an angel gets his wings.Don't know much about New York politics,don't want to, but i know the bank was in much trouble, and not the only institution that way, or going under.They are falling like dominoes,and i've heard the t.v. purists putting a happy face on it, i'm tired of it.If something had been done to help people refinance two years ago this might not have happened,but nobody cares about the little guy losing his home,only the people lending the money, that made the mistake in the first place.They are the (experts) in finance and mortgage,and debt and liquidity,not the poor schmuck trying to get a bigger home or a piece of the pie.The real estate flippers,and investors jacked up the prices to a ridiculously inflated pinnacle,and the mortgage companies,banks,realtors,and blind eyed politicians with zero economic sense let it go on.I saw it coming and sold my house at the top of the market, even then i said bad things were coming but nobody believed it, and kept holding out for more money.I have had realtors assuring me they could get me into a house i could ill afford, but i'm not stupid, i had a real estate license,and own a few homes of my own,now someone with less experience would have fallen for it and wound up upside down.And i got real tired of hearing them say this housing is nothing but a sidebar to the economy, we've got it under control, it's quarantined to subprime mortgages. :bow:

[sandbagger]

Can I point out that both were doing fine until we got this Republican administration!sure, you can point it out if you want - doesn't mean anything. Correlation does not equal causation. These things don't happen overnight, as Jerry has pointed out nicely. You often have to trace back many years through many events. Even with a bad foundation a house will often look just fine for a long time. But one day the ground shifts a little and POP! walls and floors follow. Doesn't take long before the value of the house drops through the floor. Is it the fault of the current owner? Not unless he was also the original builder, or unless he ignored advice to shore up the foundation.

yes, there's plenty of blame toss around, but the last guy in the house is usually perty far down the list.

[jvcstone]

difference here Art is that shoddy construction or not, there is some substance in that house.

What is happening now is the result of a 25 -30 year bing of creating wealth out of nothing, and now all those folks with their hands so deep in the cookie jar want you and me and every other working stiff to take responsibility for their excesses and pay the band for them.

This is not elephant or donkey ---it is the direct result of we the people letting our government become what it was never ment to be. Any one who believes that anything that goes on with in the "beltway" has the best interests of the people in mind needs to pull their head out from wherever they have it stuck. It has been a long time since we had a government of the people for the people by the people, and unless there is some fundamental change of the system as it now is, America is fast becoming the government we supposedly spent much of the last century fighting against.

Only good thing about it-- we are now seeing the beginnings of the ultimate financial demise that ends the reign of every empire. Time to give sound money, small government, individual choice, and a sane foreign policy a chance--obviously what we have been doing since 1913 hasn't worked out very well.

JVC

[Crestone Tile]

It's interesting, to say the least, that the big players in the financial world use descriptions like "free market", "capitalism", and "consumer driven" to rationalize the substance behind their practices and profits. That type of sell works very well on anyone who has been taught that even the slightest degree of a socialized mechanism in our country is evil.

Meanwhile, the big players aren't operating under a free market mechanism, but rather proliferating their power by the means of political favors, earmarks, obscene rules / bills coming out of congress, and other government corruption.

Suddenly, however, these financial giants get into trouble ... at least that's how it's portrayed to the public, a sudden emergency! The management is so poor and the greed so malignant, that these companies can't even succeed despite all of the corrupt favoritism and support they receive.

FORGET ABOUT THE FREE MARKET NOW! It's time for a government bail out. These free market spieling companies become beggars of social assistance , and we give it to them. What a bunch of nonsense.

It's too bad the small business owner who is folding in real free market operations, because he or she is rendered bankrupt after receiving medical treatment under a failing free market health care system, doesn't get the same type of government bailout. Give me a friggin' break!

I'm just sayin'.

[Davestone]

Here's interesting info about all this...http://money.cnn.com/2008/07/10/news/economy/senate_housing_vote/index.htm?postversion=2008071016

[flatfloor]

I have been through this before but this time is different, I'm really scared that train is getting closer and closer.

[ceramictec]

On July 11, 2008, IndyMac Bank, F.S.B., Pasadena, CA was closed by the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC) was named Conservator. All non-brokered insured deposit accounts have been transferred to IndyMac Federal Bank, F.S.B., Pasadena, CA ("assuming institution") a new FDIC-insured Federal Mutual Savings Bank. No advance notice is given to the public when a financial institution is closed.

http://i.l.cnn.net/money/2008/07/12/news/companies/indymac_fdic/indymacbancorp.mkw.gif

[Davestone]

I believe we're in the eye of the storm, halfway through this,hopefully,and i think the parts of the country not hit by this will ne when banks start failing,which they will,most didn't fail till 2002 at the end of the last recession,and they tighten lending and or interest rates go up(which they will)...http://www.marketwatch.com/news/story/bank-failures-surge-credit-crunch/story.aspx?guid=%7B2FCA4A0C-227D-48FE-B42C-8DDF75D838DA%7D

[sandbagger]

what's really getting ugly is that some people who ought to know better are saying some pretty stupid things in public. Some folks are citing Chuckie Schumer's recent comments (http://latimesblogs.latimes.com/laland/2008/07/feds-cite-schum.html) as a major contributor to the run on Indy's funds that sent it over the edge. People are rightfully nervous, but I'm confident 1929 is not an option. OTOH these morons in the gov't and media seem bound and determined to prove me wrong. :bang:

[Davestone]

Just read my paper that a local bank in town here was shut down by the feds.Bank blamed it on the real estate problem, :bow:

[ddmoit]

I have been through this before but this time is different, I'm really scared that train is getting closer and closer.What???

[ceramictec]

CNN Breaking News--

---The Bush administration will ask congress authority to prop up Fannie Mae and Freddy Mac, the treasury dept. announces.

[Davestone]

They really tried to get this in under the radar on a Friday afternoon, but it'll be interesting to see what Monday brings.Also, the U.K. is in the same spot as us,Europe,and Japan aren't far behind, and Asia may very well pull investment money outta the U.S....considering the U.S. borrows about 3 bil each day to survive, i'd say this is gonna be a rough last half of the year. :bow:

[ddmoit]

Mises.org on Fannie May back in July of last year...

http://mises.org/story/2627

[ceramictec]

IndyMac to reopen Monday with business as usual; deposits 'strong and safe,' FDIC says

[Westie]

What will probably happen is the fed will just print more money to bail them out. Ya that will fix everything. :shake: :shake: :shake:

[Davestone]

What gets me is the managers of the funds say they were well capitalized(i assume this means more money than liability)so why the feds decision to open the discount window,,,and what good does a discount window to more funds do for an institution that is well funded? :bow:

[ddmoit]

Fifteen minutes of Jim Rogers on the economy...

http://www.donharrold.net/jimrogers.html

[Davestone]

Today is a black day,after the press conferences we may know more, but the news with G.M. and inflation look ugly,now if Israel bombs Iran(which i believe they have to) it should send gas into the $6.00 range...yeehaaa.

[kilroy]

Dave,
Why do you believe they have to attack Iran?

[ceramictec]

WASHINGTON (Reuters) - The Securities and Exchange Commission will issue an emergency rule later on Tuesday to stop "naked" short selling in major financial firms, including Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News), the SEC said.

Short sellers borrow shares they consider overvalued and sell them. If the price drops, they repurchase the shares, return them and pocket the difference.

In a naked short sale, the investor sells stock that has not yet been borrowed. Sellers sometimes deliberately fail to deliver securities as part of a scheme to manipulate the stock price.

[SteveVB]

Why do you believe they have to attack Iran?

Won't speak for Dave, but my take is that Barack Obama won't, and Israel is cautious that an Obama presidency will be weak on ME diplomacy- a view shared by more than a few ME countries-
moderate Arabs are not to thrilled either, afraid that the weakness will lead to Israel thinking its backer isn't as willing to back so Israel will "need" to do things on its own.
Diplomacy isn't just about talking...

[Davestone]

I think they have to, to protect themselves,Iran has said it would attack Israel and wipe it off the map,better to strike first,plus what Steve said. :bow:

[flatfloor]

Take the leash off Israel.

[ceramictec]

-- The FBI has launched an investigation into possible fraud at now-defunct IndyMac bank corporation, CNN confirms.

[Davestone]

Also, i believe they are scrutinizing about 90 banks.

[Davestone]

Now the lawyers and constitution scholars are involved claiming fraud,seems this is truly against the grain of free enterprise,(govt' bail outs) let's see what happens.

[ddmoit]

To your point, Dave...

http://www.lewrockwell.com/orig9/quinn3.html

[Davestone]

Thanx Dan, as if i wasn't already confused,incensed and disillusioned. :D

[ceramictec]

2 hours, 5 minutes ago

WASHINGTON (Reuters) - The U.S. economy will need months to recover from a growth slowdown caused by a home mortgage crisis, turmoil in financial markets and high energy prices, Treasure Secretary Henry Paulson said on Sunday.

Paulson also told CBS television's "Face the Nation" he was optimistic Congress would approve the Bush administration's request for authority to lend money to the troubled mortgage giants Fannie Mae and Freddie Mac.

"We're going through a challenging time with our economy," Paulson said. "We're going to be in a period of slow growth for a while ... I think it's going to be months that we're working our way through this period."

A key to recovery was for the housing market to stabilize quickly, he said. To that end, it was essential that Congress approve the plan aimed at shoring up confidence in Fannie Mae and Freddie Mac.

Paulson said he was "very optimistic we're going get what we need from Congress."

[Crestone Tile]

Oh good, more band-aids. :ducttape:

[Davestone]

I'll take a band-aid, too bad no-one is offering me one. :bow:

[ceramictec]

28 branches scheduled to reopen Monday as Mutual of Omaha Bank

Carson City Sheriff's detective David LeGros locks the door at 1st National Bank of Nevada on Friday, July 25, after federal regulators closed the bank.
http://msnbcmedia4.msn.com/j/ap/4849292f-6dfa-4530-8c71-07422c1a953a.hmedium.jpg

updated 1 hour, 47 minutes ago
CARSON CITY, Nev. - U.S. regulators took over two banks on Friday and sold them to Mutual of Omaha Bank, the sixth and seventh bank failures this year as financial institutions struggle with a housing bust and credit crunch.

Two weeks after the Federal Deposit Insurance Corp seized IndyMac Bancorp Inc., the Office of the Comptroller of the Currency said it closed First National Bank of Nevada and First Heritage Bank NA of California.

First National, characterized as undercapitalized, had total assets of $3.4 billion and $3 billion in deposits. First Heritage, described as critically undercapitalized, had assets of $254 million and $233 million in deposits, regulators said.

[sandbagger]

I heard Larry Kudlow interviewed yesterday and he made the point that McCain has come out very strongly against the bailout and has even promised to reign in Fannie and Freddie. Apparently he wrote a memo to that effect. Kudlow's pretty reliable so I'm confident it's true, but I haven't been able to find it. Not surprising, I guess, given the non-coverage of McCain. :rolleyes:

[ceramictec]

Treasury hires Morgan Stanley to help assess risks facing Fannie, Freddie as part of lifeline.


WASHINGTON (AP) -- The Treasury Department said Tuesday it had hired investment firm Morgan Stanley to help the government assess the risks facing mortgage giants Fannie Mae and Freddie Mac.
For $95,000 to cover the company's expenses, Morgan Stanley will assess the state of the mortgage market and give the government a financial profile of the two firms. The two mortgage firms received a promise of support from the federal government as part of a sweeping housing rescue bill passed by Congress and signed into law by President Bush last week.

[ddmoit]

Ron Paul from five years ago (September 10, 2003)...

http://blog.freeny.org/?p=3548

One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

[ceramictec]

WASHINGTON (AP) -- The government is expected to take over Fannie Mae and Freddie Mac as soon as this weekend in a monumental move designed to protect the mortgage market from the failure of the two companies, which together hold or guarantee half of the nation's mortgage debt, a person briefed on the matter said Friday night.

Some of the details of the intervention, which could cost taxpayers billions, were not yet available, but are expected to include the departure of Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron, according to the source, who asked not to be named because the plan was yet to be announced.

Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and James Lockhart, the companies' chief regulator, met Friday afternoon with the top executives from the mortgage companies and informed them of the government's plan to put the troubled companies into a conservator ship.

[Davestone]

Here's my opinion and some say i'm wrong,but if the govt. can help the mortg. co. then they could help the mortgagee.The write downs will happen and the govt is essentially filling the gap with our money, they could have helped before the mortgagee lost the house..maybe this is too socialistic, but i'm seeing toooo many people losing their homes.We can send a $bil. to Georgia but we can't help the people that are funding it?

[ddmoit]

I think I'd go the other way, Dave. Instead of bailing out everyone, I would bail out no one - especially the financial institutions. Let them fail. Yes, it will be painful, but there is no way to avoid the pain that's coming. The ones who were irresponsible are the ones who should feel it most.

Truth be told, a good many of the folks in danger of losing their homes are folks who should not have been "homeowners" (mortgage holders, really) to begin with. On top of that are many folks who bought more house than they should have. Sure, they were encouraged to do so, but who ultimately is responsible for choices if not the individual?

One of the big lies in our lifetime is that a house is an investment. I admit that I bought that lie for a while too. The truth is that a house is a durable good that can depreciate like any durable good.

Most people are waiting for housing prices to return to "normal". Well, that is gonna happen, but not in the direction that people think. The bubble is still deflating.

Government bailout of financial institutions or homeowners will only serve to drag out the problem and make it worse. The pain is coming; better to take it now. If we learn the right lessons, we can return to prosperity sooner.

[flatfloor]

The ones who were irresponsible are the ones who should feel it most.

Dan, I agree with you up to a point. The responsible persons are either gone or going with either bonus payments, severance packages or both intact. Left holding the bag are the small investors either as individuals or mutual funds, union retirement accounts and an assortment of investment instruments.

[ceramictec]

We can send a $bil. to Georgia but we can't help the people that are funding it?that what pisses me off. let Europe with their currency worth 1 1/2 to 2 times ours give them money. :complain:

[flatfloor]

What, you never heard of buying friendship and loyalty? :rolleyes:

[SteveVB]

I agree with Dan for the most part. Ideally if we were in a free market they should fail, but they weren't created by the market, they created the market, they were govenrment sponsored companies who's business was basically to promote policy- ease of homeownership, by allowing banks to transfer risk. Another problem is that the system is so complex, and the charter for the GSE's has been intruded on in so many ways by regulators and political considerations that we really dont have a choice but to support the institution- we do NOT have to support the shareholders, and hopefully the execs who made some of the decisions will NOT be rewarded as they are shown the door, but they do have agreements in place which may say otherwise. Blame the BOD for those- they should all be gone also. A failure of the GSE's would be a disaster that would cause undo stress to the banking system and the economy- probably worse than the depression in the 20's30's, although of a shorter duration IMHO.

Dan has a point about housing- as an investment the house you live in is rather poor, but since its usually the only savings vehicle Americans have we do much to protect it- support it, promote it- THE reason for the creation of the GSEs in the first place, a political motive rather than a profit motive really, but it did make a profit. Interesting that a few years ago when fannie and freddy were making money there was talk in DC about taking them over then too... results would have been the same. When they return to making money they will have to repay the government somehow, probably a similar mechinism that was set up for homeowners in the bailout just passed. Uncle Sam gets to participate in the returns in the years going forward.

It all comes back to a lack of education- folks wanted what they couldnt afford, people were there ready to take advantage of them.

[ceramictec]

Government takes control of embattled Fannie, Freddie

26 minutes ago

WASHINGTON (Reuters) - The U.S. government announced on Sunday that it was taking control of troubled mortgage finance giants Fannie Mae (FNM.N) and Freddie Mac (FRE.N), effectively wiping out shareholders' interest in the publicly traded companies.

The regulator of the two companies, the Federal Housing Finance Agency (FHFA) will manage the two companies on a temporary basis.

[ddmoit]

Jim Rogers on the topic...

http://www.youtube.com/watch?v=6gZuG-52js0&e

[johnnyhomeowner]

a stock that had a $68.60 52 week high closes today at $0.73 :sick:

[Davestone]

Think i should sell? :bow:

[flatfloor]

Who's buying? :lol1:

[ddmoit]

Who's buying?The American taxpayer - whether they like it or not. Our government sure doesn't want to anger all its friends at foreign central banks - especially the Chinese.

[SteveVB]

Who's buying?

shorts covering is the only thing keeping this up-the stock is worthless. It will pop a little in the next few days and then sink. Sort of like a sinking ship as the bow rises out of the water, hesitates and then, woosh, the whole thing slides into the sea and disappears.

I think in the long run, this isnt going to cost the gov much if anything, these entities make money when the risk control is in place, and the way the treas. structured it, they are going to own it. As an arm of policy it belongs to the government, and you could make the case in the future that mortgage rates should be marginally lower with government control- at least that was the argument a few years ago when it was making money and the gov wanted it. Be interesting to see if it gets back into public hands with the conflicts that are going to arise by having a gov monopoly.
BTW if you were looking to refi rates are heading down....

[ddmoit]

http://www.moneymorning.com/2008/09/09/bailout/

Still, millions of investors who thought they were "safe" from this whole bailout mess because they didn’t own Fannie or Freddie directly might get blindsided anyway. The reason: These investors may have indirect ownership in one or both of the two mortgage miscreants, thanks to shares held in their mutual funds, 401(k) plans, pension funds or annuities.

[ddmoit]

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_weil&sid=aB5s3oci5VH8

Don't cry for investors who lost money on the companies' stocks either. If they didn't do any research or didn't understand what they owned, the people they should blame are themselves.

The reality is that investors should withhold their faith in the government officials who regulate our financial markets. That's not cynicism. In the parlance of securities law, it's a risk-factor disclosure.

The moral of this story: You're on your own, folks, and there's more where this came from.

These completely unnecessary monstrosities were created by the federal government. And now your labor - and the labor of your children - will be used to feed them for the benefit of the elite few who are truly served by your government. The difference between McCain and Obama pales in comparison to the mess we're in.

Those who have stolen 95% of the value of the dollar from our pockets since 1913 don't care who wins. It won't matter to them either way.

[ddmoit]

http://www.moneymorning.com/2008/09/11/fnm/

For anyone who still doubted the growing global influence of such emerging powerhouses as China, consider this: The U.S. government’s decision to take control of foundering mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) was driven not by worries about the fading U.S. housing market, but by concerns that foreign central banks in China, Japan, Europe, the Middle East and Russia might stop buying our bonds.

This bailout is a symptom of the largest issue facing our country, but both major parties and the media are all but ignoring it.

How much influence do creditors of our government have to have before it starts to seem like we've been defeated in a war?

[ddmoit]

OK, I'm done after this one...

http://mises.org/story/3104

It's interesting, isn't it, that all these people believe that waving the magic money wand can make reality just go away. That incredible superstition seems to be the official position of the entire US establishment. And we like to flatter ourselves into believing that we live in an age without illusions!

[Davestone]

Another bailout?NY times says feds will give 85 Bil to A.I.G. for an 80% stake.I thought the feds were done using our money for bailouts? :bow:

[ceramictec]

The Federal Reserve is negotiating a $85-90 billion secured bridge loan for AIG according to a report on CNBC.

[Davestone]

It's a done deal,some say.I say this is alarming that the fed takes a percentage of a company for a loan,what's next?The fed won't do a damn thing for the little guy losing his house though,and it's our money! :bow:

[ceramictec]

CNN Breaking News-

-- The Federal Reserve says it is taking over crumbling insurance giant AIG in an $85 billion rescue plan

7 minutes ago

WASHINGTON - In a bid to save financial markets and economy from further turmoil, the U.S. government agreed Tuesday to provide an $85 billion emergency loan to rescue the huge insurer AIG. The Federal Reserve said in a statement it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.

[Davestone]

HAH! I had the story before it became public, :bow: I got it from my source.....Deepthroat :D

[ceramictec]

I got it from my source.....can I have her number ?

[ceramictec]

NEW YORK - Two days after walking away from a deal to purchase all of Lehman Brothers, Barclays PLC said Tuesday it had agreed to acquire Lehman's North American investment banking and capital markets businesses for $250 million in cash.

The British bank will also purchase Lehman's New York headquarters and its two data centers in New Jersey for $1.5 billion.

Lehman's parent company Lehman Brothers Holdings Inc.'s filed for bankruptcy protection on Monday after it was unable to find financing or fresh capital to shore up its balance sheet amid a continued downturn in the credit markets.

The deals require approval from the bankruptcy court.

[ddmoit]

http://www.youtube.com/watch?v=rnH0tGjHm1Q

I kinda like this guy. I guess I feel a bond because a lot of the same things make the both of us angry.

Peace, fellow Comrades.

[ddmoit]

Here's Ron Paul on Freddie and Fannie five years ago:

http://www.lewrockwell.com/paul/paul128.html

This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.... which is exactly what happened.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.Sound familiar?

Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. I therefore hope this committee will soon stand up for American taxpayers and investors by acting on my Free Housing Market Enhancement Act.A loony tune, indeed. :rolleyes:

[SteveVB]

The fed won't do a damn thing for the little guy losing his house though,and it's our money!

Thats not quite the case- not sure of all the details, but FHA mortgage resets are available to homeowners, with certain income guidelines, mortgage limits - no investors. terms basically 80% of current apprasial, forgiveness of the pricipal over that. Live in for 5 years and the government gets a prorated share of any appreciation over the 80%. so basically a 0% loan over the 80% reset apprasial, and less payment burden for a borrower who shouldnt have borrowed to begin with.... Something I heard in conversation so Ill have to see if I can find some article or hardcopy about it. So dont feel bad- they are giving our money out to everyone- everyone must feel good no matter what type of decision they make.

Dan, the GSE's were created to distort the capital allocations- period. The investors were secondary, and used as a tool to promote homeownership. They were instruments of policy, the bail out as you point out is just back end cost.

[Davestone]

Steve don't know about that program,my guess is the sheer blue tape will prevent most from getting anything, but i do know a few people trying to work out something that are getting stonewalled by the banks,and didn't the banks get working capital from the govt. awhile back to handle this? But they don't seem to want to pass it down....Also, it seems most think the worst is over,at least the attitude seems to be changing maybe we can start to heal the bleeding. :bow:

[SteveVB]

Ill dig up the details if I get some time, true the hoops are sure to be huge, but the payoff would be worht it to someone who could afford to make payments on the reduced principle.

Banks that hold the mortgages themselves are the ones that will be willing to work with homeowners.
Problem is that the banks "stonewalling " folks probably sold off all or part of the mortgage and dont have a way to reset the terms. Securitized mortgages have been sold off to various parties and they dont even know whos mortgage they hold, so they can't work with them even if they wanted to.

[ddmoit]

Dan, the GSE's were created to distort the capital allocations- period. The investors were secondary, and used as a tool to promote homeownership. They were instruments of policy, the bail out as you point out is just back end cost.Agreed.

[ceramictec]

Sub Prime Primer (http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1)

:lol1:

[cx]

About as accurate and concise a description of what happened as I've seen. :)

[ceramictec]

WASHINGTON – Regulators shut down Houston-based Franklin Bank and Security Pacific Bank in Los Angeles on Friday, bringing the number of failures of federally insured banks this year to 19.

The Federal Deposit Insurance Corp. was appointed receiver of Franklin Bank, which had $5.1 billion in assets and $3.7 billion in deposits as of Sept. 30, and of Security Pacific Bank, with $561.1 million in assets and $450.1 million in deposits as of Oct. 17.

The co-founder and chairman of parent Franklin Bank Corp., Lewis Ranieri, is credited with inventing mortgage-backed securities two decades ago, but apparently was unable to save his own company from getting ensnared in the home-loan bust.

[sandbagger]

Thats not quite the case- not sure of all the details, but FHA mortgage resets are available to homeowners, with certain income guidelines, mortgage limitswell, just got my very own "You have been approved for Government-sponsored mortgage relief" letter. HUH? :scratch: This is either a scam or this program is about to run seriously amuck (that would be a surprise :rolleyes: ). Don't mean to brag, but I should definately not be getting a bailout. I'm one of those dumb schmucks who thought the right thing was to borrow responsibly and pay it back on time. We have about a 50% equity and ZERO lates. I suspect the only thing dumber is a couple of you folks who are free and clear. :bang:

[ceramictec]

WASHINGTON (AP) July 18, 2009 -- Regulators on Friday shut two banks in California and two smaller banks in Georgia and South Dakota, boosting to 57 the number of federally insured banks to fail this year.


The Federal Deposit Insurance Corp. was appointed receiver of the four banks. The two biggest were Temecula Valley Bank, in Temecula, Calif., with $1.5 billion in assets and deposits of about $1.3 billion as of May 31 and Vineyard Bank, National Association, of Rancho Cucamonga, Calif. It had assets of $1.9 billion and $1.6 billion in deposits as of March 31.

The two smaller banks were First Piedmont Bank, based in Winder, Ga., which had about $115 million in assets and $109 million in deposits as of July 6 and BankFirst, based in Sioux Falls, S.D., with around $275 million in assets and $254 million in deposits as of April 30.

[jjwq8]

Suggest that the forum members establish a cooperative bank using their assets as collateral. Register with FDIC then, lend every contributing member 25 times the value of the asset(s) used as guarantee. Every contributing member also receives a multi million $ bonus due to exceptional performance and everyone then simultaneously declares default on the loan, and the bank declares bankruptcy.

[Davestone]

Sounds like help...but.. the govt. now owns parts of the banks, the car companies,the brokerages,now our homes?:tongue: