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Fannie, Freddie insolvent, Poole tells Bloomberg
Reuters ^ | Thursday July 10, 8:58 am ET

Posted on 07/10/2008 7:07:50 AM PDT by BenLurkin

Reuters) - Mortgage lenders Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News) are "insolvent" and may need a U.S. government bailout, former St. Louis Federal Reserve President William Poole was quoted as saying in an interview with Bloomberg.

"Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer," Poole was quoted as saying in an interview held on Wednesday.

Chances are increasing that the government may need to bail out the two mortgage companies, Poole was quoted as saying.

Shares of the two companies have taken a beating recently on worries about whether they can withstand more losses and support housing as well as concerns that they may need to raise massive amounts of new capital.

Freddie Mac shares tumbled 23.8 percent to $10.26 on the New York Stock Exchange on Wednesday, while Fannie Mae shares sank 13.1 percent to $15.31.

(Excerpt) Read more at biz.yahoo.com ...


TOPICS: Business/Economy
KEYWORDS: bailout; bearstearns; fannie; fanniemae; fed; fnm; fre; freddie; freddiemac; govwatch; mortgage; poole

1 posted on 07/10/2008 7:07:51 AM PDT by BenLurkin
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To: BenLurkin

Freddie is sitting at 7.50 at the moment.Down over 26%.


2 posted on 07/10/2008 7:19:10 AM PDT by quack
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To: BenLurkin
Congress is suggesting that failing housing mortgages should be taken over by Fannie Mae, whose share price has dropped from about $70 to about $15 over the past year.
Fannie Mae will need tons of money and a huge gush of money to bail out Fannie Mae will see the value of the dollar drop producing more inflation.
3 posted on 07/10/2008 7:22:42 AM PDT by count-your-change (you don't have to be brilliant, not being stupid is enough.)
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To: BenLurkin

Why isn’t Harold Raines in prison?


4 posted on 07/10/2008 7:40:20 AM PDT by Ron Jeremy (sonic)
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To: BenLurkin
bastions of privilege, financed by the taxpayer

Somebody needs to explain to me how an organization that buys and guarantees home mortgages is a "bastion of privilege." Between the two of them, Fannie Mae and Freddie Mac are involved in half of the mortgages in the country. Is this guy saying that owning a home in America is a privileged state that needs to be abolished?

The quote doesn't sound like something that a former Fed bank president would say. It sounds more like what a doofus reporter would tell us he said.


5 posted on 07/10/2008 7:40:46 AM PDT by Nick Danger (www.swiftvets.com)
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To: Ron Jeremy

Odd co-inky dink - just last night we were have the bar argument about Why is Harold Baines in the Hall of Fame


6 posted on 07/10/2008 7:42:02 AM PDT by Hegewisch Dupa (The goo on John Kerry's flip-flops)
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To: BenLurkin

Whats wrong with making banks stand by the home loans they make? Allowing them to immediately dump them on somebody else obviously doesn’t work.


7 posted on 07/10/2008 7:44:22 AM PDT by skeeter
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To: BenLurkin

The warning has been given.


8 posted on 07/10/2008 7:53:23 AM PDT by hripka (There are a lot of smart people out there in FReeperLand)
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To: count-your-change

Congress is wrong. These people in trouble would have never under normal circumstances been approved for a loan in the first place.


9 posted on 07/10/2008 8:00:21 AM PDT by television is just wrong
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To: Nick Danger

These two institutions have been “rewarding” ex-government officials / politicians with very cushy jobs and rich perks (stock options, bonuses, etc), mostly Democrats by the way.


10 posted on 07/10/2008 8:00:37 AM PDT by fatez ("If you're going through Hell, keep going." Winston Churchill)
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To: fatez
These two institutions have been “rewarding” ex-government officials / politicians with very cushy jobs and rich perks

Oh, so what. In a country of 350 million people and 80 million homeowners, worrying about the perks provided to a couple dozen — or even a couple hundred — fat cats is a waste of time.

Class envy speeches don't cut it for me. "These guys make more money than we do! We must bring them down!" How did America ever come to that?


11 posted on 07/10/2008 8:13:26 AM PDT by Nick Danger (www.swiftvets.com)
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To: BenLurkin

Fannie and Freddie are not mortgage lenders. They buy (invest) mortgages from other lenders so technically Rooters gets it wrong from the get go.


12 posted on 07/10/2008 8:13:39 AM PDT by steveo (Time flies like an arrow, fruit flies like a banana.)
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To: Ron Jeremy

It’s Franklin Raines. And don’t forget Jamie Gorelick, she of Clinton’s DOJ who constructed ‘the wall’ between FBI and CIA pre-9/11 costing us a chance to prevent the entire disaster. Gorelick who was ‘somehow’ on the 9/11 Commission investigating the cause of our failure (investigating herself) made ten’s of millions of dollars just sitting on Raines’ Board at Fannie Mae while all along they were cooking the books.


13 posted on 07/10/2008 8:16:46 AM PDT by masadaman
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To: masadaman

Franklin. Right, thanks.


14 posted on 07/10/2008 8:18:01 AM PDT by Ron Jeremy (sonic)
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To: Nick Danger

Over the years, FNMA and FHLMC have contributed a ton of money to Democrats in Congress. Now, the last thing Congress wants is for that piggy bank to go away. Congress will do whatever they can to keep FNMA and FHLMC afloat, hoping that Obama will be elected and then Congress can pump money back into them.

Essentially, FNMA and FHLMC are enormously leveraged hedge funds that are financed at rates slightly higher than US Treasuries. They got in trouble for the same reason that banks, dealers, and hedge funds did...they chased higher yields in the wonderful world of subprime mortgages. If they would have stuck with their mission of guaranteeing prime conforming mortgages, they would not insolvent.


15 posted on 07/10/2008 8:24:28 AM PDT by Raster Man
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To: Nick Danger

OK, open up your check book and pay for the bailout, because as a taxpayer, you will be bailing them out. Since you seem to be OK with the corruption and the decisions they made...


16 posted on 07/10/2008 9:25:17 AM PDT by fatez ("If you're going through Hell, keep going." Winston Churchill)
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To: fatez
Here's something else to consider: Since Fannie and Freddie carry a few trillion dollars of mortgages what will happen if they are forced to write those mortgage values down to their market value? Then watch what happens when the feds. ride to the rescue with tons of cash or some pseudo buyer of their bonds.
A gush of fresh money and the value of the dollar falls. Guess what happens to crude prices with more dollars dumped into the economy. Congress is voting soon on a mortgage “fix”, stay tuned, you won't need to open your check book, just hand it over and the gas station will fill in the amounts.
17 posted on 07/10/2008 10:35:08 AM PDT by count-your-change (you don't have to be brilliant, not being stupid is enough.)
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To: Nick Danger
It's the institutions that are ‘privileged’ not the homeowners involved.
The supposedly private enterprises have a virtual monopoly along with special government credit and the implicit backing of the fed. gov.
HUD is supposed to supervise them and we know what an able and competent organization that is! (ahummm-choke).
18 posted on 07/10/2008 10:44:41 AM PDT by count-your-change (you don't have to be brilliant, not being stupid is enough.)
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To: count-your-change
The supposedly private enterprises have a virtual monopoly along with special government credit and the implicit backing of the fed. gov.

We all have to pick our battles. You take the one about getting politicians to stop subsidizing home ownership, and I'll work on RKBA or taxes.


19 posted on 07/10/2008 11:21:44 AM PDT by Nick Danger (www.swiftvets.com)
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To: Nick Danger

No one is going to touch the country’s favorite couple, Freddie and Fannie or crimp their style. Just ain’t gonna happen.


20 posted on 07/10/2008 11:34:41 AM PDT by count-your-change (you don't have to be brilliant, not being stupid is enough.)
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To: count-your-change
No one is going to touch the country’s favorite couple, Freddie and Fannie or crimp their style. Just ain’t gonna happen.

It probably shouldn't happen. These are the only government programs that turn people into Republicans. People who own their own homes are far more likely to vote GOP. Compared to the dough taxpayers shell out to create more Democrats, this is chump change.


21 posted on 07/10/2008 11:49:45 AM PDT by Nick Danger (www.swiftvets.com)
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To: count-your-change

Agreed, ultimately a lower dollar. It could lead to stagflation. Lower dollar and recession at the same time. Last time Volker’s medicine didn’t taste so good, now it will be more like Chemotherapy.


22 posted on 07/10/2008 11:52:22 AM PDT by fatez ("If you're going through Hell, keep going." Winston Churchill)
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To: Mrs Zip

ping


23 posted on 07/10/2008 8:24:06 PM PDT by zip (((Remember: DimocRat lies told often enough become truth to 48% of all Americans (NRA)))))
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To: Nick Danger

Um, lets try again. A very large quasi private entity has been spectacularly mismanaged by political apointees with little or no background that would allow them to successfully manage said entity.

Now, it is in very bad shape, and politicians are suggesting that the taxpayers take over the firms. This would add 5 Trillion dollars to our debt, according to another article linked on drudge this AM. If only 10% of their debt is bad, we, the taxpayers would get stuck with a $150 billion check to cover.

The cost of the Iraq war. But of course it could be 15% or 20%, we just don’t know.

I would say that among all the idiotic things that politicians have done this is probably the most expensive, and so one of the worst.

It’s not class envy that makes me mad, its favoritism, nepotism and they resulting massive costs to taxpayers.


24 posted on 07/11/2008 9:11:51 AM PDT by Jack Black
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To: Nick Danger
We all have to pick our battles. You take the one about getting politicians to stop subsidizing home ownership, and I'll work on RKBA or taxes. Run the math, Nick, baby! Taxes are going to need to go up to cover this bailout. A LOT!
25 posted on 07/11/2008 9:14:34 AM PDT by Jack Black
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To: Nick Danger
We all have to pick our battles. You take the one about getting politicians to stop subsidizing home ownership, and I'll work on RKBA or taxes. Run the math, Nick, baby! Taxes are going to need to go up to cover this bailout. A LOT!
26 posted on 07/11/2008 9:14:42 AM PDT by Jack Black
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To: Nick Danger
Nick wrote:It probably shouldn't happen. These are the only government programs that turn people into Republicans. People who own their own homes are far more likely to vote GOP. Compared to the dough taxpayers shell out to create more Democrats, this is chump change.

Stupid big government programs are bad, even if they might help the GOP. I'm a conservative first and GOP partisan second.

Section 8 housing is about $10 billion a year. If we the taxpayers only get stuck with a 10% write down that's $150 billion. NOT HARDLY CHUMP CHANGE. 15 TIMES bigger than a flagship social welfare program (that I hate).

Big Government Conservatisms at it's most wasteful.

27 posted on 07/11/2008 9:20:10 AM PDT by Jack Black
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To: Jack Black
It’s not class envy that makes me mad, its favoritism, nepotism and
they resulting massive costs to taxpayers.


No kidding.

I respect Dubya for all he's done to fight back against the Islamo-nuts.
And getting a couple of good guys onto the USSC.

But I was wondering what would be the outcome of his endless mantra
about getting as many Americans as possible into home ownership.

Now we are going to live with the bitter fruits of that well-intended
and horribly mis-managed enterprise.
Dubya ain't the one that committed the massive frauds...but I
do wonder if, to some degree, he passively didn't exercise
more oversight by not using his bully pulpit to advocate PRUDENT
financial approaches to home ownership.
28 posted on 07/11/2008 9:26:59 AM PDT by VOA
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To: Jack Black
spectacularly mismanaged by political apointees with little or no background that would allow them to successfully manage said entity

You would have more credibility if the stuff you said was true. I just looked up the backgrounds of all of the key officers of both Fannie Mae and Freddie Mac. For you to say that any of these people have "little or no background that would allow them to successfully manage said entity" marks you as someone who either has no clue who these people are, or does know who they are and is lying to us on purpose. Every one of these people is an accomplished, experienced executive.

Rant away, but please don't lie to us.


29 posted on 07/11/2008 12:04:28 PM PDT by Nick Danger (www.swiftvets.com)
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To: Nick Danger
Every one of these people is an accomplished, experienced executive.

Yes, after the house cleaning. Jamie Gorelick on there? Is she your idea of an "accomplished experienced executive". Her last "executive" job got us a firewall that helped prevent CIA and FBI from communicating with each other in the Clinton Justice department. A contributing factor in 9/11. Then, showing that her real executive expertise was damage control she was a donk appointment to the 9/11 commission itself, an tribunal she should have been a witness for. Stunning abuse of power. Awesome track record as Clintonista sock puppet. Experience as a finance exec. ZERO.

30 posted on 07/11/2008 3:17:54 PM PDT by Jack Black
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To: BenLurkin

I’m just curious, who came up with these names anyway? Sounds like a stereotypical black couple from the South.


31 posted on 07/11/2008 3:23:02 PM PDT by Extremely Extreme Extremist (BARACK OBAMA WILL SAVE US! HE HAS RISEN!!)
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To: Extremely Extreme Extremist

Apparently, the two names are acronyms - for Federal Realty Mortgage Exchange ... all words like that.

In the Australian media, they have to constantly explain the two names of these important institutions, and also say that they ARE institutions, and not two individuals. To foreigners, the names seem quite funny. But once the implications of a Federal bailout, and a collapse of the dollar, are explained, then suddenly everyone stops laughing.


32 posted on 07/15/2008 6:57:22 PM PDT by BlackVeil
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