Posted on 11/07/2009 9:37:39 AM PST by TigerLikesRooster
Treasury Blocks the Sale of Tax Credits by Fannie
By NICK TIMIRAOS
The U.S. Treasury blocked Fannie Mae's proposed sale of nearly $3 billion in low-income housing tax credits to Goldman Sachs Group Inc. and Berkshire Hathaway Inc. on Friday after concluding that the deal was too costly for taxpayers.
The extraordinary move was the latest sign of tensions within the Obama administration over how to balance political and financial pressures resulting from the housing crisis.
Fannie Mae had agreed to sell roughly half of its $5.2 billion tax-credit portfolio and had received approval to proceed with the sale from its federal regulator, the Federal Housing Finance Agency.
Those credits are virtually worthless to Fannie because the company doesn't have any taxable income to offset, and it is forced to write down the value of those credits every quarter as their value declines.
(Excerpt) Read more at online.wsj.com ...
GS is the lowest scum on scum laden Wall Street. We all know that....
Check out the comments here
http://seekingalpha.com/article/171978-fannie-s-tax-credit-sale-to-goldman-no-deal
These guys know what they are talking about and this was a case of more highway robbery by Wall Street. Fortunately it got denied. One guy is guessing GS offered 20 cents on the dollar for fanny mae tax credits
In it’s November 5, 2009 10-Q Fannie Mae discusses the proposal. The cost to them of not disposing of the tax assets? $5.2 billion.
That's like saying those IOU's in the Social security fund are really money.
They are referring to imaginary book keeping of immaginnary money. You gots to read the comments which are much better than the article
(I think you read both)
LOL, fund accounting.
The taxpayer is screwed because of the tax credits. Business subsidized by the taxpayer, further insult the taxpayer by getting a special tax break that has to be made up for by others paying more tax.
These "tax credits" are not instruments created by a free market. They are created by politicians - as they have to be as a matter of law.
In short, idiot shills like you for the financial houses are the one's who are living in a fantasy. The rest of us do not owe your overlords a guaranteed no risk posh lifestyle.
We own apartments that were built in the 60’s or before and they are in fine shape and well occupied. All the subsidized government buildings of that era have been torn down.
Your logic escapes me here. Because some government programs are screwed up, we are not supposed to be angry because GS sought to take advantage of another screwed up government program, got caught and were told no.
Why would GS pay Fannie $.65 and $.85 for something that is worthless to them, particularly since the GS folks are the best negotiators in the business and Fannie / Freddie demonstrably the worst?
lets assume that Frannie and Freddie let all their tax credits expire: that would be an asset expiring that they currently hold on their books at about 7 billion.
I guess the problem I have in all of this is the entire notion that a [tax payer funded] tax credit is a tradable asset that can be kept on the books as an asset against liabilities for liquidity purposes.
Which investment bankers can convert into yachts, private get aways, and fractional jet ownership at par value.
http://seekingalpha.com/article/171978-fannie-s-tax-credit-sale-to-goldman-no-deal
Comment #4 or #5 says 20 cents on the dollar would have been a likely price for GS to pay-——>>>
Nov 08 08:49 AM
+5 0
treasury made the right move. i am a tax credit developer & for the past 18 months wall st & all the big boys (fannie, freddie, BOA, Wachovia, etc) have walked away from the market, driving down pricing 40%. this has had the effect of increasing the investor yield from 6 - 12+%. it has taken a while, but there are some new players @ the table now (attracted by the bigger return) & there are still lots of new product in need of tax credit equity. The effect of a big goldman/buffet buy would be eliminating their tax liability on old credit deals the govt is in effect holding, driving down appetite (& price) even further, resulting in more govt bailout in the short term.
treasury is saying in effect - go buy the new deals, we will sit on these credits until the mkt stabilizes (around a 9-10% irr i think), then we will release when the demand is back (ie companies making $ again)
a quick sale @ probably a 20% irr would have done nothing but fatten warren & goldman, while costing the taxpayers more to prop up the market even longer.
saying no was a no brainer & im glad to see treasury get this one right.
Part of the reason has to do with the time value of money. F & F would get an immediate infusion of cash for an asset they hold, where as if they have to write off the 7 billion they will need an immediate infusion of cash from the USG. The tax credits are over several years, so while GS buys them up front they are not all used in the year of acquisition, which is why the price is discounted.
I am not totally disagreeing with you. I am just pointing out how it works.
Mr. Jackson,
I have tried to explain, but you just do not get it(”tax credit is a tradable asset that can be kept on the books as an asset against liabilities for liquidity purposes”).
Oh I got it perfectly well. It is a tradable asset only because the idiot lawmakers who created the thing at taxpayer expense allow it to be traded. It ought to be damned illegal, as I see no public purpose in this.
And no the taxpayer is not better off subsidizing Fannie and Freddie by giving GS a $5B tax credit of which some percentage then goes to Freddie and Fannie. If there is a legitimate public purpose, it can be much more efficiently achieved by just giving the money directly to Fannie and Freddie.
No it is not that I don't understand. What I understand very well is that this is a fraud on the public and you are a base scoundrel who does not belong on a conservative forum for attempting to defend it.
We all understand this transparent fraud perfectly well. The only person here who does not get it is you.
Hi Mr. Jackson,
You are clueless and this conversation is over. Enjoy your ignorance, you wear it well.
What we really want to know is whether you are a crook yourself or just a vapid shill for your criminal overlords who want us to believe their is something free market and economically healthy about taking a cut for trading government created tax credits.
Debating technique? Name calling? Not in my responses but certainly in yours.
I do not have the time to deal with the clueless.
Have a nice day.
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