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U.S. seizes Fannie and Freddie
CNN ^ | 9/7/2008 | David Ellis

Posted on 09/07/2008 9:02:41 AM PDT by CodeToad

NEW YORK (CNNMoney.com) -- Federal officials unveiled an extraordinary takeover on Sunday of troubled mortgage giants Fannie Mae and Freddie Mac, signaling the most dramatic move to date aimed at shoring up the nation's housing market.

(Excerpt) Read more at money.cnn.com ...


TOPICS: Breaking News; Business/Economy; Front Page News; Government
KEYWORDS: fanniemae; freddiemac; govwatch; housingbubble; lp; mortgage; rino
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To: org.whodat

The appraisal industry and state boards have a way of dealing with dishonest appraisers. We are obligated by state law to file complaints against dishonest and fraudulent appraiser - which I have. As far as my degree, I have a Juris Doctorate from Gonzaga.


51 posted on 09/07/2008 2:13:41 PM PDT by illiac (If we don't change directions soon, we'll get where we're going)
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To: CodeToad; Uncle Ike; RSmithOpt; jiggyboy; 2banana; Travis McGee; OwenKellogg; 31R1O; Ken H; ...

Ping!


52 posted on 09/07/2008 2:24:23 PM PDT by TigerLikesRooster (kim jong-il, chia head, ppogri, In Grim Reaper we trust)
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To: Abathar; Abcdefg; Abram; Abundy; akatel; albertp; AlexandriaDuke; Alexander Rubin; Allerious; ...


Libertarian ping! To be added or removed freepmail me or post a message here.
53 posted on 09/07/2008 2:24:34 PM PDT by bamahead (Few men desire liberty; most men wish only for a just master. -- Sallust)
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To: grey_whiskers

Neither Obama nor McCain have a handle on economics and finance. They are both lightweights in this area. But of course McCain is the better candidate, by a long shot.


54 posted on 09/07/2008 2:26:01 PM PDT by pleikumud
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To: CodeToad

This plan should lower interest rates, thus increasing # of home loans and stimulating building activity...hopefully.


55 posted on 09/07/2008 2:26:31 PM PDT by what's up
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To: aimhigh

But the act was introduced by two Republicans, including McCain’s current campaign economic advisor, so nobody will go there IMO.


56 posted on 09/07/2008 2:29:56 PM PDT by A CA Guy ( God Bless America, God bless and keep safe our fighting men and women.)
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To: aimhigh

true, but gramm was one of the authors of the act, as was leach, both republicans.

and gramm has served as an adviser to mccain.


57 posted on 09/07/2008 2:35:48 PM PDT by ken21 (people die and you never hear from them again.)
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To: TomasUSMC
Waiting for Feds to take over my credit card balance.....

Cool, can we get welfare for that? /s

58 posted on 09/07/2008 2:37:00 PM PDT by ovrtaxt (I <3 my PitBull. Sic em girl!!)
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To: Defiant

Whoa!
Thanks


59 posted on 09/07/2008 2:39:10 PM PDT by norton
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To: CodeToad

Where’s Herbert Hoover when you need him? /sarc


60 posted on 09/07/2008 2:48:21 PM PDT by P.O.E. (Big Government is the opiate of the masses.)
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To: CodeToad
http://solari.com/blog/?p=1407

Great read.

I heard that Wachovia is loaded up with shares and will be in some real trouble next week.

61 posted on 09/07/2008 2:59:24 PM PDT by Afronaut (It's 1984)
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To: org.whodat
It should be noted that you have not answered post #16.

I suppose ot should be noted I don't live at my computer. Post 16 is good info. Then add the following info:

Clinton vowed to veto the Senate version of the deregulation bill unless it was re-written to include "requirements that banks make loans to minorities, farmers, and others who have had little access to credit." Once added, he signed it. Those changes brought about the subprime.

62 posted on 09/07/2008 3:01:14 PM PDT by aimhigh
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To: Afronaut

I’ve never look at who owns what with these guys but I bet we start hearing of major losses and bank failures, which will lead to bank bailouts.


63 posted on 09/07/2008 3:07:59 PM PDT by CodeToad
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To: javachip

Thanks. Good read.


64 posted on 09/07/2008 3:08:27 PM PDT by CodeToad
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To: CodeToad

Bullish! Best time to buy... EVER!

Now that I’ve got my sarcastic response out of the way, I’ll say anybody who can’t see the deep problems in our economy is flat blind, or just can’t handle the truth, or they are too busy to bother even following the problems.

Our economy is in deep snow. It won’t last forever. It won’t be TEOTWAWKI. But it will be worse than a lot of people think it will be. Tough times are coming and I hope they aren’t too tough or too long. I’m glad I have job security. I hope those who may not are taking measures to save or cut spending or get out of debt now and not waiting before they lose a job.

The 40-year debt binge had to be paid off sometime. This might be the time, or maybe the powers that be will find a new bubble to blow and keep the dishes of credit spinning on top of the sticks. This credit crisis is for real. It is not just made up by the evil MSM to get Hitlery elected.

The world is starting to feel the effects of it now, decoupling be damned. Fake 3.3% GDP numbers be damned. Huge amounts of debt are being destroyed. Deflation is real.

Disclaimer: Past performance does not guarantee future results.


65 posted on 09/07/2008 3:11:33 PM PDT by Freedom_Is_Not_Free
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To: Attention Surplus Disorder

“is a “market clearing” move or is a “preserve biz as usual” move.

I don’t think it is either. I see it this way: The feds and the markets have conspired for various reasons using various means over a number of years (75+) to create a housing market by which people must take loans or else least be unable to afford a house. Now that those practices have resulted in a negative outcome for both the markets and the feds, we are treated to the announcement that credit shall be dried up considerably and that we must now pay the price; not the markets pay the price, homeowners and taxpayers will pay the price.

I totally agree that the hmortgage market has been out of control and we consumers are to also blame, but, why should private industry not also take the rap for their own actions?


66 posted on 09/07/2008 3:13:22 PM PDT by CodeToad
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To: aimhigh
...Didn't that old wrinkled husband of Andrea Mitchell have a hand in this rush to the edge of the cliff?

What was his name???

67 posted on 09/07/2008 3:16:25 PM PDT by pointsal
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To: Freedom_Is_Not_Free

“Bullish! Best time to buy... EVER!”

I totally agree. People with the money and credit will make out like fatcats. I was just talking to the better half and she agrees that as we have been waiting for the right time to buy a better property the wait is still worth it. Home prices will no doubt drop as that 20% equity position rule kicks in. We are already seeing $700k homes go for $550 and $450k go for $325, so this hopefully will drop everything into the $275to $575k range, which is perfect for what we are looking at.


68 posted on 09/07/2008 3:17:41 PM PDT by CodeToad
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To: aimhigh

It should be noted that the Republicans OWNED the house and Senate at the time. It should be noted that the repeal of Glass-Steagall was sponsored by REPUBLICAN Phil Gramm in the Sentate and REPUBLICAN Jim Leach in the House.

It should be noted that the REPUBLICANS caused the subprime mess. Thank you very much. All Clinton did was Co-opt everything the Republicans were pushing for and make it sound like his own idea, so he could take credit for it. Without doubt, Clinton signed the repeal. He is partly to blame. Without doubt, the repeal of Glass-Steagall was written and sponsored by REPUBLICANS in both the House AND the Senate.

The idea from both Donkeys and Elephants is to make Wall Street rich and to rape the little guy of his money. Works great, don’t it?


69 posted on 09/07/2008 3:21:53 PM PDT by Freedom_Is_Not_Free
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To: Doe Eyes

Thanks for the post. I didn’t realize that this was uniquely a Republican made catastrophe. I assumed some Democrats voted to repeal Glass-Stegall. Thanks for the vote tally that this is SOLELY a Republican made mess. This doesn’t make me very proud to be a Republican. Indeed, the Democrats have more skeletons in their closet as far as I am concerned, but actions like this really give credibility to the leftist claims that Republicans only help the wealthy fat cats and don’t give a crap about regular people.


70 posted on 09/07/2008 3:26:50 PM PDT by Freedom_Is_Not_Free
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To: FlyVet

I don’t know how the markets could predict anything without knowing the details of the bailout — who gets repaid and who’s shares go to zero. I think everyone assumed that the preferred shares would get repaid, but without knowing the details of the bailout, there was a lot of guessing if buying Fannie and Freddie last week was worth it or not. Shares jumped up in value last week, so somebody was guessing that their common shares would be bailed out. I guess we’ll see...


71 posted on 09/07/2008 3:29:33 PM PDT by Freedom_Is_Not_Free
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To: litehaus

We are talking about 6 trillion dollars here. Not billions!
These or a lot of the mortgages were secondary market loans!
It is the leading market-maker in the U.S. secondary mortgage market, which helps to replenish the supply money for mortgages and enables money to be available for housing purchases.


72 posted on 09/07/2008 3:29:59 PM PDT by tallyhoe
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To: TomasUSMC

Pump it into the billions and I’m sure they will. Otherwise, you are SOL.


73 posted on 09/07/2008 3:32:25 PM PDT by Freedom_Is_Not_Free
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To: Attention Surplus Disorder

But... but... but... only 14 banks have failed to date and GDP was 3.3% in 2Q. Times are good. Ignore the man behind the curtain.

Shop! Spend! Get more credit cards! Tap ALL the equity in your home. Life is good.

Best time to buy... EVER!


74 posted on 09/07/2008 3:34:44 PM PDT by Freedom_Is_Not_Free
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To: what's up

“This plan should lower interest rates, thus increasing # of home loans and stimulating building activity...hopefully.”

Mortgage rates are very high, compared other interest rates right now.
This could drop rates a bunch, which potentially could get the housing market unfrozen.
If that happens the taxpayer outlay would be much less.
Time will tell.


75 posted on 09/07/2008 3:35:08 PM PDT by HereInTheHeartland (Help fight the left's anointed candidate, contribute and work for McCain/Palin..)
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To: narses

It means the credit crisis is worsening. It means a recession is all but guaranteed. It means, the economy won’t turn around any time soon. It means housing isn’t bottoming, or those who hold bad loans wouldn’t be seeing increasing losses. It means we still lack transparency in banking and we still have no clue how much toxic paper is out there or where it is. Having Freddie and Fannie fess up to their toxic paper probably identifies a huge portion of it, since they hold half the nation’s mortgages. But where is the rest of it? Who knows? So the credit crisis just worsens and deepens and deflation keeps spreading.

It means, it is not a good time to blow your wad, but it is a good time to get out of debt and save a little in case you are one of those caught in rapidly rising unemployment.


76 posted on 09/07/2008 3:38:15 PM PDT by Freedom_Is_Not_Free
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To: TruthConquers

This is very bad news if it is true that banks keep their capital reserves in instruments that are hemorrahging. Very bad news.


77 posted on 09/07/2008 3:42:21 PM PDT by Freedom_Is_Not_Free
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To: Afronaut

Wachovia may hold FNM shares, but at the same time they are one of the ones who will benefit the most from this action, since they have tremendous exposure to the mortgage industry (remember they bought Countrywide) and stand to gain much of the mortgage business that FNM now controls.


78 posted on 09/07/2008 3:43:00 PM PDT by what's up
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To: HereInTheHeartland
If that happens the taxpayer outlay would be much less

True.

79 posted on 09/07/2008 3:44:00 PM PDT by what's up
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To: Freedom_Is_Not_Free
I will offer this up again. Read it, it will take some time. Your head will spin for weeks.

http://solari.com/blog/?p=1407

80 posted on 09/07/2008 3:49:19 PM PDT by Afronaut (It's 1984)
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To: illiac

Your objection rings hollow, your personal integrity notwithstanding. It is fact that appraisers were pressured into making false and fraudulent appraisals during the bubble and some are even going to jail because of it. So just because you don’t personally like being lumped in with the bad guys doesn’t mean there were not a lot of bad guys giving fake, false and fraudulent appraisals.

In fact, I seem to remember the comment being “even if the appraisal is wrong today, wait a few months and house prices will go up to it...” Sound familiar?

http://www.allbusiness.com/economy-economic-indicators/economic-indicators-existing/10393248-1.html

http://www.detnews.com/apps/pbcs.dll/article?AID=/20080906/METRO01/809060364/1409/METRO

http://www.state.nj.us/lps/ca/press/pralex.htm

http://www.signonsandiego.com/news/business/20080817-2104-mortgagemess-appraisers-abridged.html

I could go on for hundreds of pages...


81 posted on 09/07/2008 3:50:05 PM PDT by Freedom_Is_Not_Free
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To: what's up
"stand to gain much of the mortgage business that FNM now controls."

If you are a Bull in the mortgage market, that would be true. I do not see any profits in the next 5 years. Too much garbage that needs to be "rescued" by our Fed. There is a long road out of the woods here.

Wachovia is screwed as far as I see. They are exposed to a blindside hit in the next few months.

82 posted on 09/07/2008 3:53:15 PM PDT by Afronaut (It's 1984)
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To: TigerLikesRooster

Can’t help but wonder if we all would be better off if FNM and FRE took over the government rather than the other way around!

(do I need a sarcasm tag with that one????)


83 posted on 09/07/2008 3:54:06 PM PDT by djf (I always see turkeys in Oregon. Sometimes, I see birds as well.)
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To: Afronaut

Every other word from that womans mouth is “tapeworm”.

Unless she can come up with a better description of what she is trying to say, I pay little heed to it.


84 posted on 09/07/2008 3:56:10 PM PDT by djf (I always see turkeys in Oregon. Sometimes, I see birds as well.)
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To: djf

Bank of China Ltd may own about $20 billion of debt issued by Fannie Mae and Freddie Mac, representing two-thirds of total holdings among the six largest Chinese banks, according to CLSA Ltd.


85 posted on 09/07/2008 3:56:29 PM PDT by Afronaut (It's 1984)
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To: Doe Eyes

Ouch.


86 posted on 09/07/2008 4:00:37 PM PDT by DemonDeac
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To: Afronaut

In the big picture, 20B ain’t exactly peanuts, but it’s not really a significant fraction of total FRE and FNM equity.

Not a whole lot of exposure there.


87 posted on 09/07/2008 4:05:19 PM PDT by djf (I always see turkeys in Oregon. Sometimes, I see birds as well.)
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To: Doe Eyes
Conservatives can rightly argue that had Congressional Democrats not blocked the various initiatives of the Bush administration to reform Fannie Mae and Freddie Mac for the past five years, we would not be sitting at the precipice like we are today.

Hank Paulson's Fannie Gamble

http://online.wsj.com/public/article_print/SB121754567926302543.html

88 posted on 09/07/2008 4:05:41 PM PDT by Afronaut (It's 1984)
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To: CodeToad

I can’t help being sarcastic. We had a spate of posts along those lines, “it it time to buy” about a year ago. Since then, the Sacramento area has fallen around 30%. Everybody Sacramentan who took their advice has lost their down payment and much more.

I now live in Yuba City, which is a backward little cowtown an hour north of Sacramento. We act as a suburb of Sacramento, and house prices here are down about the same as Sacramento, year over year. Last fall I found a house I just loved listed at $340,000 that sold last July for $250,500 at $120/SQFT — a drop of 26% in 8 months.

With the avalanche of foreclosures set to hit when the Option ARMs reset over the next 18 months, price pressure will be further down, and down hard. Sacramento area house prices can’t go down forever. A bottom has to come in. But a bottom has to be based on fundamentals, and those fundamentals are not saying the bottom is in.

In the meantime, lenders like Fannie and Freddie will get their heads handed to them while all those Option ARMs reset and the default rate goes through the roof.


89 posted on 09/07/2008 4:05:55 PM PDT by Freedom_Is_Not_Free
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To: what's up

Could you please detail step by step how this plan will decrease mortgage rates? I’m a bit lost by your assertion.


90 posted on 09/07/2008 4:07:49 PM PDT by Freedom_Is_Not_Free
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To: Afronaut

I’ll check it out.


91 posted on 09/07/2008 4:10:56 PM PDT by Freedom_Is_Not_Free
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To: tallyhoe
"We are talking about 6 trillion dollars here. Not billions!"

.

You are oh So right,,,,,I just can't get used to TRILLIONS !

92 posted on 09/07/2008 4:11:15 PM PDT by litehaus (A memory tooooo long)
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To: djf
That was posted as an FYI
93 posted on 09/07/2008 4:12:50 PM PDT by Afronaut (It's 1984)
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To: org.whodat; aimhigh

Republicans made key mistakes in deregulation, and we better learn what happened before we attempt it again.

By deregulating without removing the government safeties which are intended to bail out bad decisions, you get an unbridled industry that feels it can take unlimited risk at no cost.

We are as much to blame as the Dims on this one. We better learn from it this time.


94 posted on 09/07/2008 4:13:51 PM PDT by VictoryGal (Never give up, never surrender!)
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To: Freedom_Is_Not_Free

Interesting that some of the troubadours here have forever held...

“Hold stocks for the long term” and
“The DJIA has outperformed all other investments”

are now changing their tune to..
“The stupid investors deserve to lose all they had...”


95 posted on 09/07/2008 4:14:03 PM PDT by djf (I always see turkeys in Oregon. Sometimes, I see birds as well.)
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To: djf

Agree.

Citi alone has written down $50 billion. I don’t think China would have any problem absorbing a $20 billion writedown.

Lehman has $20 B in write downs already. No, not massive exposure there for China.


96 posted on 09/07/2008 4:16:00 PM PDT by Freedom_Is_Not_Free
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To: djf

Good point. How quickly things change. When the “best time to buy... EVER!” crowd comes on saying, “RE will NEVER be a good investment again,” then it is time for me to buy. LOL.

I heard the same thing from scores of people back in 1992. “We will never see real estate prices go up like that again.” Ha. Little did they know...


97 posted on 09/07/2008 4:18:31 PM PDT by Freedom_Is_Not_Free
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To: djf

Agree.

Citi alone has written down $50 billion. I don’t think China would have any problem absorbing a $20 billion writedown.

Lehman has $20 B in write downs already. No, not massive exposure there for China.


98 posted on 09/07/2008 4:18:51 PM PDT by Freedom_Is_Not_Free
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To: Virginia Ridgerunner
So when can we expect to see Jaime Gorelick going to jail?

If anything, they will call her in to run the 'federalized' Fanny Mac ...

99 posted on 09/07/2008 4:19:07 PM PDT by spodefly (This is my tag line. There are many like it, but this one is mine.)
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To: CodeToad

Great. So much for that.

So, any bets on what the market is going to do Monday? Up or down 400 points?


100 posted on 09/07/2008 4:25:27 PM PDT by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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