See ya later bagholders! I'm off to spend my 200 million severance package.
Posted on 07/11/2008 4:19:55 PM PDT by DeaconBenjamin
They own or guarantee $5 trillion worth of mortgages - nearly half of all the country's outstanding home loan debt - and they're crashing. Big time.
Fannie Mae and Freddie Mac are struggling with an investor loss of confidence so great that, while they're unlikely to go under, they could conceivably see their ability to function impaired. That would wreak yet more havoc on an already wrecked housing market- making loans tougher to come by and possibly pushing hundreds of billions of dollars in cost onto U.S. taxpayers.
How could the companies end up in such awful straits?
... as quasi-government programs, they've long carried an implicit guarantee that the feds wouldn't let them fail.
Their hybrid nature created both the opportunity and the temptation for the enterprises to take on more risk and to make themselves ever larger, more important and thus more profitable players in the mortgage market.
The market and ratings agencies have treated Fannie and Freddie as bulletproof, even though the actual business of dealing with interest sensitive loans is very risky. This is in large part because of the very special perks granted to the mortgage giants, but to no one else.
Each may borrow up to $2.25 billion direct from the Treasury. They are exempt from state and local income taxes and from Securities and Exchange Commission registration requirements and fees. And they can use the Federal Reserve as their bank.
One result of all this special treatment was AAA credit ratings. That means Fannie and Freddie could borrow at super-low rates, a benefit they used to purchase - and hold - high-yielding mortgage loans. The spread between the two provided an irresistible earnings stream and the companies just kept getting bigger.
(Excerpt) Read more at money.cnn.com ...
I work for a bank and we bought a house in April.
Anyone got a bullet?
Weren’t the former CEO’s of both Mac and Mae fired for illegal actions?
See ya later bagholders! I'm off to spend my 200 million severance package.
No One and I mean No One can figure out Fannie or Freddie. I have been saying it for years. You could write a thesis on it and still not figure them out.
Find the Lone Ranger. His bullets are silver.
This was under $2 trillion earlier this week. $5 trillion is starting to get into series teritory.
A sinecure for satraps of BOTH PARTIES !!!
Dunno if anyone’s posted a thread on it yet, but federal regulators just siezed IndyBank.
Clinton had put unqualified cronies in charge of the two companies who proceeded to steer the organizations down a path of sub-prime lending in order to pad their paychecks with "performance bonuses" in the millions.
The thieves got away with it.
Franklin Raines was fired as CEO of Fannie in 2004 for cooking the books to the tune of almost $11 billion. He used to be Clinton's director of OMB, by the way.
Could someone ping me when the next 'scam' begins so I can get in on the groundfloor and make out like a bandit too? Be it gold, or some South American, wool producing quadraped?
Just look at the guys/gays who ran these companies and you will see their problem. If the CEO is busy arranging a mortgage for Senator Dodd, with Countrywide in his office, I guess you get the picture.
We need to make sure that everyone we know understands this is Not the fault of President Bush or John McCain. This problem, like all of America’s problems, was caused by Carter, Clinton and the Democrat Party.
Didn’t FDR shut down all the banks when he first came into office in ‘32 until they proved they were solvent? Could that be done today?
Sanctioning sub-prime high risk loans to anyone with a pulse. The banks in their stables and their lackadaisical underwriters were giving away mortgages like candy to people who had no business buying a house in the first place.
Hell, even illegal immigrants were able to get mortgages which is right disgusting IMO.
I say, let them crash and burn.
This is what you get when you take an entity that is supposed to be run like a business and populate it with political hacks.
Second largest bank failure in history, no doubt there was an ample supply of golden parachutes to go around.
whatya need a bullet for?
Everything I see indicated the Government wants these companies to be MORE aggressive in extending credit. They will do ANYTHING to keep the facade in place. The truth is that all these guarantees only fuels inflation, making the problem even worse. Of course, don’t try telling that to “Helicopter Ben”.
If we’re all indeed as f**ked as some suggest...
“[House] price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas.” — Fed Chairman Ben Bernanke, Oct. 20, 2005
“[The housing downturn] looks to be a very orderly and moderate kind of cooling.” — Fed Chairman Ben Bernanke, May 18, 2006
“All the signs I look at [show] the housing market is at or near the bottom.” — Treasury Secretary Henry Paulson, April 20, 2007
“I don’t see [subprime mortgage market troubles] imposing a serious problem. I think it’s going to be largely contained.” — Treasury Secretary Henry Paulson, April 20, 2007
“Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited.” — Fed Chairman Ben Bernanke, May 17, 2007
My favorite quote about this image was something like “Countrywide CEO demonstrates that you can fit in a Lamborghini, even with 2 senators in your back pocket.”
cheer up!
some people enjoy self pity. as harry truman said—my mother-in-law’s happiest when she is unhappy.
from what i see the economy’s moving along; the last quarter’s growth exceeded expectations.
financials, housing, cars ... are going to be off until well into 2009.
once the banks digest their losses the economy will move up.
life goes on.
In keeping with the times, the magazine that published this article is being renamed “MisFortune”. Others considering new names include Business Weak and funnyMoney. Smart Investor is considering dropping the adjective.
http://www.freerepublic.com/focus/f-news/2031535/posts
The looting of Fannie Mae by Democrat insiders
Wash Post ^ | 2006 | Wash Post
Posted on Sunday, June 15, 2008 5:01:42 PM by dennisw
Next big scam will be alternative energy, green technology, sustainable products, etc...
You’re already seeing it ramp up with these companies trading carbon credits, politicians using it as a pandering tool like when they claimed it was a “right” to be a real estate owner, and green product home shows.”
Even if what you say is true, a lot of 401Ks, pension funds, and investments are crashing and burning with them. It wasn't long ago that Fannie and Freddie were said to be bullet proof.
If you want an entity to be run like a business, make certain it isn't sucking on the federal teat from the gitgo.
From My article "Will the Left Ever Support the War on Terrorism?" at Townhall.com
Ironic how the Left was eager to expose Enron executives but ignored the suspicion that head 9-11 Commissioner Jamie Gorelick benefited financially from the $10.8 billion scandal involving accounting irregularities and outrageous bonuses at Fannie Mae.
The Business & Media Institute’s Web site (www.freemarketproject.org) had a story titled “Media Ignore Democratic Ties to Fannie Mae Scandal,” which asserted: “The Business & Media Institute previously documented how much the media overlooked about Democratic connections to Fannie Mae. According to that April 2005 report: ‘Former Chief Executive Officer Franklin Raines and former Vice Chairman Jamie Gorelick were both instrumental figures in the Clinton administration.’ ” Not a word mentioned during the 9-11 hearing about that news or the fact that as No. 2 in the Clinton Justice Department as Deputy Attorney General, in 1995 Gorelick was a key architect of an information "wall" causing intelligence lapses leading to 9-11. Gorelick’s participation on the 9-11 Commission clearly was a conflict of interest. A 2004 Washington Times article titled “Memos show Gorelick involvement in 'wall'” noted: “Newly released Justice Department memos show that September 11 panel commissioner Jamie S. Gorelick was more intimately involved than previously thought with hampering communications between U.S. intelligence and law-enforcement agencies fighting terrorism.
As the No. 2 person in the Clinton Justice Department, Ms. Gorelick rejected advice from the U.S. attorney for the Southern District of New York, who warned against placing more limits on communications between law-enforcement officials and prosecutors pursuing counterterrorism cases, according to several internal documents written in summer 1995.”
I work for a bank and we bought a house in April.
Anyone got a bullet?
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If you get in trouble just ring up Bernacke ,, the Fed has no hard and fast rules about who can get a loan at the discount window (it’s more of a guideline really) ,,, it’s open to everyone!
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