Posted on 12/25/2009 7:30:21 PM PST by blam
Fannie / Freddie - What Does Treasury Know?
by: Karl Denninger
December 25, 2009
On Christmas Eve one would think you could have a nice evening with your family. Little did I know what Timmy Geithner had up his sleeve:
The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each on backstop capital from the Treasury. Under the new agreement announced today, these limits can rise as needed to cover net worth losses through 2012.
I see. But I thought housing was getting better? That's what I heard on CNBS Tuesday when existing home sales came in "above expectations."
But then Wednesday came around and, well, new homes? They're just not selling.
Purchases dropped 11 percent to an annual pace of 355,000, lower than the lowest estimate of economists surveyed by Bloomberg News, figures from the Commerce Department showed today in Washington. The median sales price decreased 1.9 percent from November 2008.
Wait a second. How come the disparity?
Two reasons, really. The first, which the pumpers cite, is that "the tax credit was maybe going to expire." Uh huh.
No, folks, that's not the reason. The reason sales fell is that they're still falling everywhere. What's happening in the "existing home" sales numbers is that foreclosure sharks are taking a bite here and there, in many cases generating double counts in the "existing home sale" category, never mind the alleged data source in the first place. But even the NAR acknowledges that 33% of existing home sales were foreclosures, not actual organic "meeting of the minds" transactions. Take those out and existing home sales didn't rise 7.4%, they instead did their best imitation of a cliff-dive, with organic sales being a mere 4.38 million units (annualized), which is a mid-to-late 1990s print (and then again around the 1978 time frame).
The Obama administration is “beginning to realize it’s not getting better and it’s not likely to get better” soon in the housing market, said Julian Mann, who helps oversee $5.5 billion in bonds as a vice president at First Pacific Advisors LLC in Los Angeles. “They don’t want the foreclosures now, so they’re saying, we’ll pay whatever it takes to continue to kick the can down the road.”
No, really?
Mark Hanson has been on this since the beginning: if you haven't read his stuff, here's a nice treatise of why we are nowhere near recovery in the housing market. Read it and weep - Timmy has.
By the way, if you're wondering what sort of trash Fannie (FNM) and Freddie (FRE) are holding, here's what Mark says about their "underwriting quality" during the boom years:
Many lenders, especially the big banks, had in-house DU and LP underwriting ‘trainers’ that would go around to the various mortgage branches and teach underwriters how to ‘trip’ the systems in order to achieve automated loan approvals when a declination was certain, or simply get fewer approval conditions on a loan that was borderline. Getting a loan approval out of DU/LP on a borrower with a 100% DTI — with limited documentation required on the automated findings — was not uncommon.
Got that? A DTI - that is, debt-to-income - of one hundred percent - was quite possible, along with limited documentation as well.
[snip]
Karl Denninger has been on this from early on and
should be our next Sec. of the Treasury. IMHO
This was all a scheme to transfer wealth to minorities. It was “reparation theology”. It was “give then a house and then we will blame the banks” It was “the community Reinvestment Act” IT WAS THEFT OF YOUR MONEY WHILE YOU WERE ASLEEP”. So the “modified the loans” and guess what? The leeches still can’t pay. If you give them the damned house it will fall down. No taxes will be paid so you will pay to rebuild it and you will pay the taxes. This is madness!!!
I know he knows, but he doesn’t mention the spike in ARM resets coming soon. I guess Timmy’s gonna have Fannie and Freddie soak that up.
why until 2012?/////////// Obies nonelection so it will be our NEW Presidents problem
fan and fred became the collection point for all the trash mortgages during the “boom years.”
When the first wave hit, we had an economy. This is gonna be really, really ugly, especially if our “friends” stop buying our bonds.
>>>>But, let’s continue on!
It came out on Thursday that the chief executives of both Fannie and Freddie are in line to be paid $6 million in cash and vested stock for their exelempar performance in year 2008.
Not to mind that real bankers who have to set real strategy, and face real risks have been capped at $500k salary.
These asshats, as government employees, don’t abide by the same rules!
Total disgust!
bump
“Cost the taxpayer an unlimited amount due to shoddy underwriting and lax (or absent) risk controls and not only do you get bailed out, you also get paid $6 million a year.”
But Karl, those guys were just ‘following orders.’
Well, that's what happens when "minorities" get control of government. They start venting their racial resentments against the "majority" as payback for all the imagined "injustices" they have supposedly endured. Believe me, they are intent on destroying America, i.e., you, me, our families, our traditions, our history, our very existence. The wrecking of the banking system and the housing and mortgage industries is just the beginning. Wait unit they get their hands on the health care and medical services sectors of our economy.
Dishing out some shock on debt
December 18, 2009
David Broder http://freerepublic.com/focus/news/2414579/posts?page=6#6
When they had to sneak the news of this out on Christmas, it had to bad.
They have already cut back considerably. US consumers stopped buying their cheap junk, so now they don't have any money to buy our government's cheap junk. 2010 will be financed by the printing press. After that, maybe sea shells and beads.
You are precisely right. Evidence abounds in all parts of the government and their new corporate pals. Just look at Kevin Jennings seeking to destroy our children and get them into the clutches of the radical homos.
It looks like everything will settle down just in time for the 2012 elections. The worst will be over starting in September 2011.
POST OF THE YEAR!
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