Free Republic

Keeping track of the ever mutating bailout debate is becoming increasingly difficult. With the Federal money spigots now thrown wide open, and with no one of influence advising restraint, the only debate is where to direct the torrent. During the past week, the talk began with Detroit and Citigroup, but by Friday had shifted to a massive "stimulus package" to bail out consumers. The early buzz includes some very large figures. But first, a bit of a recap: On Monday, the $300 billion Citigroup bailout took center stage. Once again Henry Paulson decided to throw taxpayer funds into a bottomless...

WASHINGTON — Senators Barack Obama and John McCain each cite the mess at Fannie Mae and Freddie Mac as a consequence of the corrosive coziness of lobbyists and politicians that they promise to end. But each man and his party also have ties to the fallen giants that will complicate the next president’s job of reshaping the mortgage finance companies that have been essential to the economy. The Republican nominee, Mr. McCain of Arizona, has numerous close relationships with and contributions from current and former company lobbyists. Mr. Obama, his Democratic rival from Illinois, is second among members of Congress...

The government has formulated a plan to put troubled mortgage giants Fannie Mae and Freddie Mac under federal control, dismiss their top executives, and use government funds to prop them up, government officials told the two companies yesterday, according to sources familiar with the conversations. Under the plan, the federal government would place the firms in a legal state known as conservatorship, the sources said. The value of the company's common stock would be diluted but not wiped out while the holdings of other securities, including company debt and preferred shares, would be protected by the government. As the pace...

The government has formulated a plan to put troubled mortgage giants Fannie Mae and Freddie Mac under federal control, dismiss their top executives and prop them up financially, federal officials told the two companies yesterday, according to three sources familiar with the conversations. Under the plan, which could prompt one of the most sweeping government interventions in the workings of financial markets in U.S. history, federal officials would place the firms under a conservatorship, a legal status giving the government the option and time to restructure and revive the companies, the sources said. The value of the companies' common stock...

A freedom-focused grassroots organization has issued a nationwide alert about a plan in Congress that would require credit card companies, eBay, Amazon, Google and other companies to report what you buy to the federal government. FreedomWorks chairman Dick Armey said the privacy implications are "breathtaking." "This is a provision with astonishing reach, and it was slipped into the bill just this week," he said. "Not only does it affect nearly every credit card transaction in America, such as Visa, MasterCard, Discover and American Express, but the bill specifically targets payment systems like eBay's PayPal, Amazon and Google Checkout," he said....

Americans should be outraged at the latest sweetheart deal in Washington. Congress will put U.S. taxpayers on the hook for potentially hundreds of billions of dollars to bail out Fannie Mae and Freddie Mac. It's a tribute to what these two institutions — which most Americans have never heard of — have bought with more than $170-million worth of lobbyists in the past decade. With combined obligations of roughly $5-trillion, the rapid failure of Fannie and Freddie would be a threat to mortgage markets and financial markets as a whole. Because of that threat, I support taking the unfortunate but...

Ok folks, its time for a long sit-down type of Ticker - the sort that I usually don't write. Let's start with Fannie and Freddie. As anyone who has been reading The Ticker knows, I have been saying for quite some time that Fannie and Freddie are in fact "short to zero" candidates for the common stock. This is simply due to the mathematics of their financial situation - they are levered up anywhere from 60 to more than 200:1, depending on what you include and exclude from "capital" and "credit book." I use the worst-case set of numbers, because...

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...

Federal Reserve Chairman Ben Bernanke, in a speech this morning in Orlando, FL on "Reducing Preventable Mortgage Foreclosures," reportedly urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting, according to mainstream media reports. That's one way to look at it, but it actually misses the entire point of his speech. In the speech Bernanke outlines the grim path ahead for individuals besieged by declining home values and rising mortgage payment resets. This year about 1.5 million loans, representing more than 40 percent of the outstanding stock of subprime Adjustable Rate Mortgages, are scheduled to reset....

The Bush administration will unveil its methadone plan for the mortgage crisis today. Instead of going cold turkey and letting the free market take its course, the administration reportedly has reached an agreement with lenders and mortgage investors to freeze interest rates for a select group of subprime borrowers who made bad, greedy or uninformed decisions. "You're just giving the junkie more dope," says Christopher Whalen, managing partner with Institutional Risk Analytics, a consulting firm. Treasury Secretary Henry Paulson also has urged Congress to pass a law that would let cities and states sell tax-exempt bonds to refinance mortgages for...

Fortune) -- Freddie Mac and Fannie Mae can only make it through a prolonged credit crisis if they raise billions of dollars of new capital. That, in a nutshell, is what the plunging stock prices of both mortgage buyers are saying Tuesday. Freddie accounted for a sharply higher batch of bad loans in its third quarter earnings, a little more than a week after Fannie did the same thing. But Freddie said that it would move quickly to raise more capital through a large issue of preferred shares. It added that it was seriously considering cutting its dividend - another...

On May 2, a national election will be held in the Bahamas. The stakes are very high in this Island Nation. The Progresive Liberal Party (PLP) led by Prime Minister Perry Christie is up for re-election. Former PM Hubert Ingraham of the conservative FNM wants his old job back. Ingraham is still a member of Parlimnent, but chose not to run for PM in 2002, after 2 terms as Prime Minister. The PLP main slogan is NO Turning Back. A race baiting slogan that's purpose is to remind voters of the white minority rule. The whites last ruled in 1967...

Wall Street has a soft spot for the "soft landing" thesis, but to me it's crystal clear that a serious economic slowdown is under way. What has been surprising: not that the economy is weakening but that so many people seem to expect a soft landing, and therefore remain in denial about the seriousness of the slowdown. I guess the predilection toward a soft landing is a function of the following: So many folks in the investment business -- and in the country at large-- haven't experienced a consumer-led recession in so long that they think this outcome is just...

If the housing market sputters, it's not just individual homeowners who will feel the jolt. The legion of financial institutions that own mortgages will also get rattled. Banks, thrifts and credit union lenders now hold only one-third of the $8.5 trillion in single-family mortgage debt outstanding. That's down from 44% in 1989 * * * In the place of traditional lenders, government-chartered mortgage financers such as Fannie Mae (FNM) and Freddie Mac (FRE) have added volume to their loan books. They've pooled and sold off many of these mortgages to investors in the U.S. and abroad. * * *And banks'...

WASHINGTON (AP) -- Mortgage giant Fannie Mae has used its regional partnership offices over the years primarily to lobby Congress instead of promoting affordable housing, the Department of Housing and Urban Development concluded after a yearlong review. HUD opened a formal inquiry into the political activities of Fannie Mae's regional offices in July 2004 following a Wall Street Journal story that said the company used its partnership offices to funnel money into key congressional districts. HUD, which refused to release its report to the public, said in a statement Monday that Fannie's congressional charter allows it to set up regional...

WASHINGTON (AP) -- Embattled mortgage giant Fannie Mae said Thursday that it has hired the chief financial officer of MCI Inc. to help it "rebuild and renew," as it disclosed new accounting errors and confirmed it will have to restate earnings by some $11 billion. Its shares fell more than 2 percent. The government-sponsored company, which finances one of every five home mortgage loans in the United States, also named a new chief operating officer as it again missed a regulatory deadline for filing a financial report -- this time for the third quarter. In a filing with the Securities...

NEW YORK (MarketWatch) -- Fannie Mae said Thursday it's uncovered new accounting problems in the course of an ongoing review, with the mortgage giant identifying more than $10 billion in issues related to derivatives, insurance accounting and other matters.In a filing with the Securities and Exchange Commission, the Washington-based company (FNM:Fannie Mae), which has previously said it will restate several past periods of financial results, now expects that its 2005 annual financial report won't be completed before the second half of 2006.Fannie also said the New York Stock Exchange is reviewing the company's listing since it's been unable to file...

Privatize Fannie and Freddie Government reformers need to look toward the markets. By Mallory Factor Two centuries ago, Thomas Jefferson argued that private property was the touchstone of American democracy. If he were alive today I am sure he would still be making that argument, because the idea is just as valuable now as it was then. And so I don’t hesitate to argue, in the spirit of Jefferson, that Congress today is jeopardizing the American Dream. What are they doing to contravene the wishes of our third president? Confronted by a real problem related to the semi-governmental status of...

WASHINGTON, D.C. - As director of the U.S. Office of Federal Housing Enterprise Oversight, Armando Falcon took on the once untouchable mortgage finance giants, Fannie Mae and Freddie Mac. His efforts ultimately led to higher standards for risk management and the dismissals or retirements--depending on whom you ask--of top suits at both companies. On Falcon's watch, Fannie and Freddie's fancy accounting footwork was exposed, encouraging some in Congress to try to limit the powers of these government-sponsored enterprises. But Falcon, who resigned in April and now helps institutional investors understand the policy world of Washington from his perch atop Canonbury...

WASHINGTON — An extensive investigation of embattled Fannie Mae (FNM) points to its former finance chief and controller as mainly responsible for the accounting failures at the mortgage giant now struggling to emerge from an $11 billion scandal, said a report released Thursday. The report by a team of investigators led by former Sen. Warren Rudman also found that former chairman and CEO Franklin Raines, while not sharing direct responsibility, contributed to a culture of arrogance at the government-sponsored company. The report comes about 17 months after the revelation that federal regulators had discovered violations of accounting rules and earnings...

Franklin Raines — the ousted cooked-books chief of mortgage giant Fannie Mae — is being accused of corrupting its directors by giving them $12M in charity checks to ignore his scandals. A federal shareholder suit yesterday claims that Raines lavished directors with generous donations to their favorite charities, funneled through a Fannie Mae charitable foundation he controlled for serving the needy......to "dominate his fellow board members" and prevent them from challenging his activities in a mounting $10.8 billion accounting scandal at Fannie Mae. Raines who was chairman of Fannie Mae's board and the its charitable foundation, directed the money to...

Homeless Man Gets Five Fannie Mae Loans In Florida The St. Petersburg Times found a homeless man who had bought a few houses. “After struggling much of his adult life with unemployment, homelessness and drug addiction, Johnny Moon Sr. died last year on a dirty mattress on the floor of a small home near Tampa’s College Hill district. Moon left behind a watch, a flashlight and a wallet containing a solitary dollar bill. And more than a half-million dollars worth of real estate.”

WASHINGTON, May 10 (Reuters) - Fannie Mae's (FNM.N: Quote, Profile, Research) chief executive said on Wednesday the U.S. housing market will face significant resetting of adjustable rate mortgages over the next two years and he worries about this sparking foreclosures in some locations. Daniel Mudd, president and chief executive officer of the government-sponsored mortgage giant, told Reuters in an interview that Fannie Mae models suggest a couple of reset "spike periods" in the next two years, based on past originations of mortgages with adjustable rates and other features such as low initial "teaser rate" periods. It is still unclear what...

WASHINGTON (AP) -- Employees at mortgage giant Fannie Mae manipulated accounting so that executives could collect millions in bonuses as senior management deceived investors and stonewalled regulators at a company whose prestigious image was phony, a federal agency charged Tuesday. The blistering report by the Office of Federal Housing Enterprise Oversight, the product of an extensive three-year investigation, was issued as the government-sponsored company struggles to emerge from an $11 billion accounting scandal. Earlier, a person familiar with the situation said that Fannie Mae was being fined between $300 million and $500 million for the alleged manipulation of accounting to...

WASHINGTON (XFN-ASIA) - Fannie Mae's federal regulator said Tuesday the company's executives and board of directors were to blame for the accounting scandal that rocked the big mortgage company, and said the firm must pay a $400 million fine. A harsh and stinging 348-page report by the Office of Federal Housing Enterprise Oversight said senior management manipulated accounting at the giant company, that Fannie 'stonewalled' government investigators and that Fannie should further probe employees associated with the accounting scandal. The long-awaited report says Fannie employees manipulated earnings to trigger bonuses for management from 1998 to 2004. 'The image of Fannie...

US Senate panel plans one more hearing on GSE bill Tue Jun 20, 2006 6:10 PM ET By David Lawder WASHINGTON, June 20 (Reuters) - The U.S. Senate Banking Committee expects to hold one more hearing on legislation to rein in government-sponsored housing enterprises before sending the bill to the Senate floor, a panel aide said on Tuesday. Sen. Richard Shelby of Alabama, the committee's Republican chairman, will schedule a hearing in the next few weeks to collect testimony on Fannie Mae's $11 billion accounting scandal from credit rating agencies and possibly from Fannie Mae board members, said panel spokesman...

Director of oversight agency says still finding control issues following the $11 billion accounting scandal. June 15, 2006: 1:59 PM EDT WASHINGTON (Reuters) - Fannie Mae's $11 billion in accounting errors cost shareholders up to $30 billion, the acting director of the Office of Federal Housing Enterprise Oversight told a Senate panel on Thursday. James Lockhart said his agency continues to find control problems at the mortgage finance company and that it will be many years before Fannie Mae (up $0.25 to $47.51, Charts) has the proper financial controls in place following an $11 billion accounting scandal.

WASHINGTON (MarketWatch) -- The Bush administration continued to turn up the heat on government-sponsored housing giants Fannie Mae and Freddie Mac Thursday as a senior Treasury official warned that the huge companies shouldn't expect government assistance if they get into financial trouble. In a speech to a real estate group, Treasury Undersecretary Emil Henry said past government bailouts don't mean the government will act again. "Past actions, especially in the case of government bailouts, are not a good predictor of future actions," Henry said in prepared remarks to a real estate roundtable. "And," Henry asked, "do we really want to...

” As investigations by OFHEO, the SEC and Department of Justice into the company's accounting irregularities continue, Fannie Mae announced an unusual change to its long-term bonus plan…Dan Mudd, who was officially installed as Fannie Mae's CEO in June, received $11.5 million in total compensation in 2005, which included a cash bonus of $2.6 million, an annual salary of $950,000, and $8 million in restricted stock… Newly installed Chief Business Officer Rob Levin received $8.9 million in total compensation, including a cash bonus of $1.8 million, $4.3 million in restricted stock and an additional $2.1 million in restricted cash paid...

U.S. FORECLOSURE MARKET REPORT Nearly 847,000 Properties Enter Foreclosure During The Year; Florida, Colorado and Utah Post Nation’s Highest Foreclosure Rates. Irvine, Calif. – January 23, 2006 – RealtyTrac™ (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released year-end data from its 2005 U.S. Foreclosure Market Report, which showed that 846,982 properties nationwide entered some stage of foreclosure in 2005, and a 25 percent increase in the number of new foreclosures from the first quarter to the fourth quarter. RealtyTrac publishes the largest national database of pre-foreclosure and foreclosure properties, with more than 550,000 properties in nearly 2,000 counties...

WASHINGTON, Aug 9 (Reuters) - Mortgage finance giant Fannie Mae (FNM.N: Quote, Profile, Research) , whose accounting problems are expected to result in a multibillion-dollar profit restatement, on Tuesday said it would not file its second-quarter earnings on time. Fannie, a shareholder-owned but government-sponsored housing enterprise, also said it was unlikely to post 2004 results before the second half of 2006. Fannie Mae last filed a quarterly financial report in June 2004. The company expects to restate results for 2001 through 2004 and has said it will not likely release any financial results before the restatement process is completed. "Completing...

The doughty band of Fannie Mae and Freddie Mac reformers isn't beaten yet. Senate Banking Committee Chairman Richard Shelby plans to mark up a bill this week to protect taxpayers against the risky business of these "government-sponsored enterprises," and the question is whether he can coax enough skittish Republicans to pass it. The Alabama Senator's proposal is a quantum improvement over the non-reform that passed the House Financial Services Committee earlier this year. In particular, it would force Fan and Fred to reduce their portfolios of mortgage-backed securities, a source of great profit for the companies but also of significant...

For the list of worst Congressional legislation ever, we have a new candidate: last month's debacle in the House Financial Services Committee on Fannie Mae and Freddie Mac. In the name of reforming these "government-sponsored" mortgage giants, the Members voted to make them even more financially dangerous, while grabbing a chunk of their profits for political payola to boot. Chairman Mike Oxley and friends voted to create a new "affordable housing fund" to the tune of $600 million or more a year. Already facing deserved criticism for being under-capitalized, Fannie and Freddie would have to dole out 5% of their...

We have no proprietary information about Fannie Mae, but what is publicly known is scary enough. As you may recall, last December the SEC required Fannie to restate prior financial statements while the Office of Federal Oversight (OFHEO) accused the company of widespread accounting regularities that resulted in false and misleading statements. Significantly, the questionable practices included the way Fannie accounted for their huge amount of derivatives. On Tuesday, a company press release gave some alarming hints on how extensive the problem may be. The press release stated that in order to accomplish the restatements, “we have to obtain and...

Fannie Mae Shares Dive on Report of New Problems Wednesday, September 28, 2005 STORIES •Fannie Mae Restatement Delayed, Stocks Drop•Fannie Mae Mortgage Portfolio Drops Again •Fed Head Warns Congress on Fannie, Freddie•Fannie Mae Accounting Probe Widens•Fannie Mae: New Accounting Issues Found•Fannie Mae Won't Pay Bonuses to Top Execs•Fannie Mae to Sell $5B in Preferred Stock •Fannie Mae to Pay Ex-CEO $1.3M Per Year•Ex-Fannie Mae Chief to Get Hefty Pension•Two Top Fannie Mae Execs Forced Out WASHINGTON — Shares in Fannie Mae (FNM) plunged Wednesday after a report saying investigators found new accounting violations at the mortgage finance enterprise, which is...

...[I]nvestigators have uncovered even more accounting "irregularities" -- including overvaluation of assets, attempts to hide derivatives losses and the possible improper use of tax credits.... Which brings us to Mr. Oxley, the House Financial Services Chairman who is pressing a "reform" for Fannie and its sibling, Freddie Mac, that fails to address their core financial risks. His bill does nothing to reduce their huge portfolios of mortgage-backed securities (MBSs) and the derivatives they use to hedge those portfolios. Reducing their MBSs would dent their profitability. But a meltdown in their black-box hedging operations could have far worse consequences, and the...

Jon D. Markman Fannie Mae: With Friends Like These By Jon D. Markman RealMoney.com Contributor 9/30/2005 1:19 PM EDT URL: http://www.thestreet.com/funds/jondmarkman/10245079.html This column was originally published on RealMoney on Sept. 29 at 7:43 a.m. EDT. It's being republished as a bonus for TheStreet.com readers. It's going to be very interesting over the next few days and weeks to see who comes to the defense of Fannie Mae (FNM:NYSE) , the badly wounded mortgage lending giant that weathered a new blow on Wednesday. So far, it looks like the Wall Street investment banks that have been its counterparty or underwriter on...

WASHINGTON, Aug. 9 /PRNewswire-FirstCall/ -- The following is a statement by Daniel H. Mudd, President and Chief Executive Officer of Fannie Mae: Last December, the SEC required Fannie Mae (NYSE: FNM - News) to restate our prior financial statements to eliminate the use of hedge accounting and, to the extent material, to correct for errors in our accounting for deferred purchase price adjustments. Our safety and soundness regulator, OFHEO, also raised questions with respect to our accounting, which has led us to undertake a comprehensive review of our accounting policies and practices. Today, in our SEC Form 12b-25 filing, Fannie...

<p>July 28 (Bloomberg) -- The European Central Bank is eliminating its holdings of debt issued by Freddie Mac and Fannie Mae, the two biggest U.S. providers of mortgage financing, and recommended that its national central banks do the same, according to a person who has seen the ECB's recommendation.</p>

NEW YORK -(Dow Jones)- Agency debt securities seem to be quickly losing their overseas appeal, with Asian interest in the bonds dropping substantially in recent weeks and the European Central Bank reported to be unloading its holdings. The ECB is said to be selling all (!!!) the bonds it owns by housing finance companies Freddie Mac and Fannie Mae and is advising its member central banks to do same, according to a report on Bloomberg News. "If the news is true, it is obviously a negative for agencies, but I don't think it's as bad as people might think because...

DJ Freddie Regulator: Detected Acctg Problems In '01 >FRE . By Dawn Kopecki Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Freddie Mac's (FRE) federal regulator told lawmakers Thursday that the company's accounting problems have been brewing for several years, and it questioned Freddie's competence in that area when it tried to implement complicated derivatives rules in early 2001. The Office of Federal Housing Enterprise Oversight flagged problems with Freddie's 2000 and 2001 consolidated financial statements which were also noted by Freddie's auditor Arthur Andersen in an internal letter to senior managers. Outgoing OFHEO Director Armando Falcon told the Senate Banking Committee...

Fannie Says It's 'Troubled' By OFHEO Disclosure Proposal By John Connor of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Fannie Mae (FNM) is "troubled" by a proposal made by its regulator to facilitate the process whereby Fannie Mae and Freddie Mac (FRE) voluntarily register their common stock with the Securities and Exchange Commission. The two mortgage finance giants agreed last July 12 to voluntarily register their common stock with the SEC pursuant to the 1934 Securities Exchange Act, and Fannie Mae earlier this week filed its Form 10 registrations statement and initial Form 10-K annual report with the SEC. The Office of...