Shocker: U.S. Nears Rescue Plan For Fannie And Freddie

DriftingByTheStorm

spyguy wrote:

then obviosly you do not know jack shit about who fannie and freddie even are. they are Government sponsored enterprises

http://en.wikipedia.org/wiki/Government_sponsored_enterprise

secondly, they are not completely "bailing them out" they are providing up to 100 billion in liquidity until they are get back on the feet.

they back 5 Trillion in mortgages.

seriously man, you just dont get it

I know what a fucking GSE is, i'm not an idiot.
And from what the Washington Post is reporting, Congress signed a BLANK CHECK for UNLIMITED infusions to Fannie and Freddie.
It didn't say anything about a cap on it.

What am i not getting, exactly?

spyguy

SpreadtheJAM wrote:

I think this bailout is necessary. It could get alot worse if this step was not taken. the housing market is the worst since the 1930's and this bailout should lower mortgage rates and unclog this kink in the hose of money.

Pressure is taken off the banks, rates will fall and and housing prices will rise.

Its drastic and the deal will be paid for by us. but what could've come can be much more costly than this alternative.

I agree with you.

here is another good article. (sorry goneintoastrom, its not infowars)

http://news.yahoo.com/s/csm/20080908/ts_csm/afanfred

Why is it coming to this?

The short answer is that legislation Congress passed in July failed to reassure financial markets enough to position the two companies to raise needed capital on their own. That law gave the Treasury new authority to funnel credit or capital into Fannie and Freddie, if needed – at taxpayer expense.

Meanwhile, foreclosures continue to pummel the mortgage firms with big losses.

"It's going to get worse if they don't act," says Peter Morici, an economist at the University of Maryland. "We want this dealt with now."

The two companies will now operate, as they open their doors Monday, under the authority of the Federal Housing Finance Agency (FHFA), a new agency that Congress created this summer to regulate Fannie and Freddie.

SpreadtheJAM

DriftingByTheStorm wrote:

I moved most of my retirement holdings to gold ETFs, simply because you can not hold PHYSICAL metal in most bank accounts (though ROTH IRAs do technicaly allow that) ...

after i did that, i also purchased a $250 FACE bag of 90% from NWT Mint.

I have some other things going on that require CASH ON HAND, unfortunately, or i would through everything i have at it.

The good news is my grannie croaked and i get a SERIOUS inheritence soon, and THAT WILL be going towards silver, assuming the price doesn't skyrocket too soon.
:eek:

I hope you bought gold early or have at least taken some money off the table because its down over 25% from its high. Commodity boom is over.

spyguy

DriftingByTheStorm wrote:

I know what a fucking GSE is, i'm not an idiot.
And from what the Washington Post is reporting, Congress signed a BLANK CHECK for UNLIMITED infusions to Fannie and Freddie.
It didn't say anything about a cap on it.

What am i not getting, exactly?

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/07/AR2008090700259.html

There is no guarantee that the takeover will work, and it comes at a potentially massive cost to taxpayers. The government has pledged to inject money in the companies in any quarter in which they would otherwise be insolvent -- up to $100 billion in total for each company.



http://money.cnn.com/2008/09/07/news/companies/fannie_freddie/index.htm?postversion=2008090720

The move, which extends as much as $200 billion in Treasury support to the two companies, marks Washington's most dramatic attempt yet to shore up the nation's housing market, which is suffering from record foreclosures and falling prices.

http://biz.yahoo.com/ap/080908/wall_street.html

The plan to inject up to $100 billion in each of the government-chartered mortgage financiers could not only help lower mortgage rates but, some investors are hoping, buoy the overall economy. The plan could help banks feel more open to write new mortgages and to refinance existing mortgages at lower rates, offering a possible lifeline to consumers struggling with increasing payments.

SpreadtheJAM

DriftingByTheStorm wrote:

I know what a fucking GSE is, i'm not an idiot.
And from what the Washington Post is reporting, Congress signed a BLANK CHECK for UNLIMITED infusions to Fannie and Freddie.
It didn't say anything about a cap on it.

What am i not getting, exactly?

Treasury can supply upto 200 billion. When you put that next to the 17 trillion that has already been wiped out globally from the crisis, its a drop in the bucket

spyguy

http://money.cnn.com/2008/09/07/news/economy/velshi_comments/index.htm?postversion=2008090720


fannie & freddie 101

catch22

DriftingByTheStorm wrote:

I moved most of my retirement holdings to gold ETFs, simply because you can not hold PHYSICAL metal in most bank accounts (though ROTH IRAs do technicaly allow that) ...

after i did that, i also purchased a $250 FACE bag of 90% from NWT Mint.

I have some other things going on that require CASH ON HAND, unfortunately, or i would through everything i have at it.

The good news is my grannie croaked and i get a SERIOUS inheritence soon, and THAT WILL be going towards silver, assuming the price doesn't skyrocket too soon.
:eek:

wow, $250. you're really putting your money where your mouth is. if money is so worthless, why are you doing anything that requires cash on hand? i thought all of this is inevitably doomed to failure? take that cash and buy silver, nothing else. it's the only thing that will be worth a damn, right?

and of course banks don't hold metal. neither will 7-11. surprise surprise.

i'm glad your grannie croaked. that sounds like a big win for you.

freindlyfired

Please lets not confuse the issue here.. borrowers borrowing more than they can afford has absolutley nothing to due with lenders lending on "market value" and suffering balance sheet losses on reduction of value.

Its not about people not being able to pay their mortgages, its about Fannie&Freddie holding receivables at 5 on properties worth 2. In the end they (F&F) made bad investments becasue they cant foreclose on the properties, sell them and payoff the receivable and recoup their investment. Plan and simple, any other explanation is B/S.

If the borrower cant pay the monthly mortgatge then they can be foreclosed on and they are out in the cold. If the lenders made bad investments (lending money on inflated FMV of property) then they are out in the cold, scratch that, then they run to the govenment with there lobbyist and promise to take care of the incumbents.

Absolutlely nothing has been done for the Shmoe that purchased the house and cant pay for it, and nothing should be. There are limited cases where the mortgages were reworked but it only applied to less than ten percent of the total.

OutOfBreath

Actually, there is precedent for this. It happened in Norway in the early 90s. We had a period of liberalized banking that quickly led to overlending and a banking crisis when the general economy took a plunge, and house mortgages couldn't be paid for. Several banks went under and was saved by the government to secure the savings there-in. At the same time there were implemented stricter rules for how much the banks need to have in reserve and for loans in general. Since then, things have picked up considerably.

So we have had that property market downer amid a recession, had the government intervene and regulate, and come out on top again. So it might work for the US too.

Peace
Dan

Cosmo

catch22 wrote:

i was told to buy gold because there would be no 7-11's or grocery stores left by this time of year.

...
I remember that bet.
And I was supposed to be wandering around the mountainous regions of Arizona, looking for food and water because my home in Orange County was supposed to be under 20 feet of Pacific Ocean.
...
Then... he was going to shoot me.

SpreadtheJAM

freindlyfired wrote:

Please lets not confuse the issue here.. borrowers borrowing more than they can afford has absolutley nothing to due with lenders lending on "market value" and suffering balance sheet losses on reduction of value.

Its not about people not being able to pay their mortgages, its about Fannie&Freddie holding receivables at 5 on properties worth 2. In the end they (F&F) made bad investments becasue they cant foreclose on the properties, sell them and payoff the receivable and recoup their investment. Plan and simple, any other explanation is B/S.

If the borrower cant pay the monthly mortgatge then they can be foreclosed on and they are out in the cold. If the lenders made bad investments (lending money on inflated FMV of property) then they are out in the cold, scratch that, then they run to the govenment with there lobbyist and promise to take care of the incumbents.

Absolutlely nothing has been done for the Shmoe that purchased the house and cant pay for it, and nothing should be. There are limited cases where the mortgages were reworked but it only applied to less than ten percent of the total.

Well they were once worth fives but people started to lose home equity and figured if my mortgage is worth more than the equity in my house why pay it. Many people in that situation said fuck it and walked away from their obligations. 9.2% of mortgages are delinquent right now, not saying that is all of it but its part of it.

catch22

Cosmo wrote:

...
I remember that bet.
And I was supposed to be wandering around the mountainous regions of Arizona, looking for food and water because my home in Orange County was supposed to be under 20 feet of Pacific Ocean.
...
Then... he was going to shoot me.

i'm almost disappointed. that all sounded kind of exciting. now i don't even have the proper satisfaction of gloating.

SpreadtheJAM

OutOfBreath wrote:

Actually, there is precedent for this. It happened in Norway in the early 90s. We had a period of liberalized banking that quickly led to overlending and a banking crisis when the general economy took a plunge, and house mortgages couldn't be paid for. Several banks went under and was saved by the government to secure the savings there-in. At the same time there were implemented stricter rules for how much the banks need to have in reserve and for loans in general. Since then, things have picked up considerably.

So we have had that property market downer amid a recession, had the government intervene and regulate, and come out on top again. So it might work for the US too.

Peace
Dan

Intersting. Pretty much same scenario we have today.

DriftingByTheStorm

spyguy wrote:

thats nice

Fuck off.
I moved down to Georgia for the sole and specific reason that i wanted to spend time with my ailing grandparents before they died (they were both 90+) ... i spent the last 12 months taking care of my grandmother, held her hand and kissed her forehead repeatedly in her last week on earth, and was by her bed when she died.

Excuse me for being excited about receiving an inheritance.
My wording was poor because i was being rushed out of the house by my girlfriend.

SpreadtheJAM wrote:

I hope you bought gold early or have at least taken some money off the table because its down over 25% from its high. Commodity boom is over.

I didn't buy it as early as i would have liked, but i did take some off the table.
I do not think the boom is over though. I think we are going to see another spike here at some point after all this BS cheerleading over the bailout subsides and the reality about the broader nature of this crisis is realized. Remember the dollar amounts involved in the 80s with the S&L and remember how long that took to clear. And that wasn't about the ENTIRE housing market, or about ALL the major banks, it wasn't global, and the numbers were nothing compared to this.

catch22 wrote:

wow, $250. you're really putting your money where your mouth is. if money is so worthless, why are you doing anything that requires cash on hand?

I said FACE VALUE.
Now you are REALLY showing your ignorance. A $250 dollar bag of 90% silver US coins is worth about $2800 now, and was worth about $4,000 a few months ago.

As far as cash on hand goes, its called life, buddy.
Contrary to what most of you yuck yuks believe about me i do have one, and i do intend to live it day by day for as long as i can until (if\when) this shit really hits the fan. Business requires CASH, not silver or gold, unfortunately.

Ah fuck it.
Just go ahead and ban me kat.
I can't take it anymore.

jeffbr

Cosmo wrote:

...
I remember that bet.
And I was supposed to be wandering around the mountainous regions of Arizona, looking for food and water because my home in Orange County was supposed to be under 20 feet of Pacific Ocean.
...
Then... he was going to shoot me.

LOL. I was going to bet OLS $100,000 but he wanted to have me put it in escrow. I didn't really want to liquidate assets to tied up $100,000 in escrow for a bunch of years, and he didn't think we could do the bet with just a written piece of paper, so it never happened. Probably just as well since it appaears OLS was a fraud anyway.

spyguy

DriftingByTheStorm wrote:

Fuck off.

enjoy your ban. you have no reason to be mad at me. you are the one who said it..

DriftingByTheStorm wrote:

Excuse me for being excited about receiving an inheritance.

I wouldnt be at all excited for receiving money from my dead grandmother. I would be too hurt to care. but thats just me.

OutOfBreath

SpreadtheJAM wrote:

Intersting. Pretty much same scenario we have today.

There are at least similarities to the situations. Norwegian media highlights it as sort of "we have been through it, now it's America's turn". They also talk to norwegian economists that are surprised that the US government would do this, since it's very much a socialist move, but maintain that it's a good thing they did, as it could have gotten a lot worse.

And if it is done after the "norwegian model", what happens is that the boards are fired, the stock holders have forfeited their investment, and the government pick up the accounts to prevent many people from losing their everything. So the banks/companies are history, but the government lessens the impact for those affected (which in this case was 1/2 the mortgages in the US?) in order to prevent the economy to crash completely.

Peace
Dan

SpreadtheJAM

Yeah sounds like both CEO's are out and common stock holders wont recieve anymore dividends or any other residuals. Bond holders are safe as well as the preferred stock holders. Thing is many of these institutions that should benefit hold most of the stock of fannie and freddie, they'll probably take that tradeoff though

DriftingByTheStorm

spyguy wrote:

enjoy your ban. you have no reason to be mad at me. you are the one who said it..



I wouldnt be at all excited for receiving money from my dead grandmother. I would be too hurt to care. but thats just me.

I can't wait.

Wuss.

catch22

driftin, just sayin, if we're headed for an apocalyptic meltdown, you should have a stockpile of gold, weapons and food in an underground bunker. but it appears that you're playing the system like everybody else... still dumping cash into stocks and hoping to get rich once it all blows over. brokers are more vile than lawyers even.