graphrix - 07 September 2008 11:02 AM

Did you all read the statement and the other attachements?

Don’t worry, the GSEs will pay the guberment a fee when this done to pay the guberment back.

Treasury temporary authorities will expire, the GSE portfolios will begin to gradually run off, and the GSEs will begin to pay the government a fee to compensate taxpayers for the on-going support provided by the Preferred Stock Purchase Agreements. Together, these factors should give momentum and urgency to the reform cause. Policymakers must view this next period as a “time out” where we have stabilized the GSEs while we decide their future role and structure.

I just like the “time out” part. Now Phony and Fraudy, you are not behaving like good little GSEs, do you want a time out? Oh… look what you have done now, look at all those delinquent loans. That’s it you get in the corner and face the wall, you can’t come out to play GSE again until uncle Jim and uncle Hank fix this mess. What did your uncle Jim and Hank do to you to deserve this mess. Bad, bad GSE, shame on you for lying to us.

So now we have Jon and Kate + Eight style governing.  Neato!

awgee - 05 September 2008 07:17 PM

redline - 05 September 2008 04:41 PM

Great… my hard earned tax dollars at work to bail out the irresponsible acts of Fannie and Freddie.  I wish I could start a company, not get taxed on profits, and have taxpayers bail it out when it suffers astronomical losses!  A brilliant business plan!

What tax dollars?  Seriously, where are these supposed tax dollars going to come from?  The US federal government is already spending more than it collects, so just what tax dollars are we refering to?

Good point.  Our dollars are spread out sooo thin across some many different types of bailouts and of course protecting our foreign oil reserves… ugh I mean… protecting the freedoms of our Iraqi brothers and sisters. 

My question is what the hell the stock market will do with this news on Monday…will it plunge or rally like no tomorrow???

USC, I think on Monday, things could get really ugly…...

I have no clue what will happen, but I’m expecting commodities to rally. The dollar is tanking right now, as it has opened lower to the EURO today after Friday’s close. As long as these bailouts continue, there is no safe haven. Another thing that could happen is we see everything reverse tomorrow. Instead of commodities rallying and dollar being trashed, it could be the opposite. We are in a market environment where nothing seems to make sense anymore. If the dollar rallies tomorrow, I know that there is some serious manipulation going with increased debt of bailing out FRE/FNM. We still don’t know all the details to the FRE/FNM bailout.  Which could lead some to say that things were overdone. I believe there could be major dollar selling overnight with a big spike in oil and gold.

Part of me believes that this was all planned by the government to prop up the dollar and bail out these dogs. It is a scary time to be a investor in 2008 as markets are moving against the fundamentals.  I will not be suprised if the gold tanks and the dollar rallies tomorrow. 

What are the opinions of others?

All I know is I should have been completely reckless the last 6 years.

I have no idea what the market will do tomorrow or the day after that, nor do I find it relevant.  I have read about how short term Americans think, but now I am truly amazed.  Is there no one who understands what the long term consequences are of the government explicitly subsidizing home mortgage rates?  Does anybody realize it is not “tax” dollars which will fund this?  There are no “tax” dollars left.  The US is in debt by trillions of dollars and somehow there are many people who think the debt can be fixed by spending more money we don’t have and going further into debt.  Fannie and Freddie can not be fixed by doing more of the same.  The only good thing to come out of all this is that long term, gold will be worth so much more than I can logically comprehend.

The futures are indicating the market likes this quite a bit so far, much to my dismay, while the japanese index is down. Americans eternal optimists, japanese eternal pessimists, it seems.

Dollar not liking it that much, though asian currencies are falling with respect to it so far. Sorry Panda!

Here is some more.  Are those dollars in your pockets feeling a bit lighter?

more bailout

awgee - 07 September 2008 04:19 PM

I have no idea what the market will do tomorrow or the day after that, nor do I find it relevant.  I have read about how short term Americans think, but now I am truly amazed.  Is there no one who understands what the long term consequences are of the government explicitly subsidizing home mortgage rates?  Does anybody realize it is not “tax” dollars which will fund this?  There are no “tax” dollars left.  The US is in debt by trillions of dollars and somehow there are many people who think the debt can be fixed by spending more money we don’t have and going further into debt.  Fannie and Freddie can not be fixed by doing more of the same.  The only good thing to come out of all this is that long term, gold will be worth so much more than I can logically comprehend.

I agree this is huge. Gold is rallying right now so at least some things make sense. I might increase my gold holdings, given the reaction.

What saddens me is how everything seems to run around classes of people screwing around other classes of people, and how everything is just a giant breach of trust from everyone. Homeowners are screwing their debtors, breaching their trust, some walking away from houses they could actually pay. Those same homeowners are breaching the trust of renters who assume the homeowners actually own the house. The government is bailout out debtors, breaching the trust of its taxpayers. Banks breached the trust of clients with respect to the safety of their securities. We are breaching the trust of our children, chaining them in our debt. Realtors and economists are breaching our trust, telling us “the bottom” in housing is near. And retirees who would normally invest in the relative safety of high-dividend bank stocks have had their thrust breach as well.

Everywhere I turn, I see people walking away from their engagements. Isn’t that what defines a financial collapse?

I posted some additional information in the “Economy” forum.  I was prevented from xposting here. 

The Politics of Fannie and Freddie Takeover

http://boards.fool.com/Message.asp?mid=26968793

Most people around here already seem to understand that most government actions under the Bush administration have served corrupt political or financial purposes. I suspect, however, that most casual observers don’t understand how this all fits in with the GSE takeover plan announced today. Having read through all the statements offered by the treasury this morning, here are my thoughts:

Press releases from the Treasury Department:
http://www.treasury.gov/news/index1.html

muzie - 07 September 2008 04:21 PM

The futures are indicating the market likes this quite a bit so far, much to my dismay, while the japanese index is down. Americans eternal optimists, japanese eternal pessimists, it seems.

Dollar not liking it that much, though asian currencies are falling with respect to it so far. Sorry Panda!

Patience my friend. Never under estimate the power of the China man’s currency. Panda is long on the Yuan. Asia will be hurt the most in the short-term (compared to Europe) from United States’s recession. Long term, Panda’s bets are on Asia.

muzie - 07 September 2008 04:29 PM

awgee - 07 September 2008 04:19 PM

Isn’t that what defines a financial collapse?

Perhaps, though fiat currencies are built to crumble.  The only difference between crumbling and collapsing is the rate of the deterioration. 

But, at any rate, it is the logical fate for any system built on a store of value which only exists in the imagination.

I respectfully disagree Awgee and defer to CR, who I agree with:

The cost to taxpayers is also very unclear. It is possible that taxpayers will not be negatively impacted in the long run. This depends heavily on the losses in the retained portfolios of Fannie and Freddie, and the cash flow from the good portion of the portfolio, and also on future defaults and house prices. Even if the Treasury has to purchase $50 billion or $100 billion in senior preferred shares to maintain the positive net worth of Fannie and Freddie, the Treasury will own the first equity in line to be paid off from future profits (assuming future profits). This makes the losses very unclear.

http://calculatedrisk.blogspot.com/2008/09/fannie-freddie-thoughts.html

The doom and gloomers said the same thing after they bailed out the S&Ls;.  Considering that F&F are 70% of the market share of loans underwritten, I expect that they will increase YSPs, and ultimately the government will be made whole.

What I would hope would happen would be more along the lines of what exists for farmers via the USDA, the FSA aka “Lender of Last Resort”.

http://www.fsa.usda.gov/FSA/webapp?area=home&subject=fmlp&topic=landing

But that’s just me, and I doubt it happens because too many folks are afraid of big government.  Right up to the point where those same folks need big G to come bail thier sorry butts out.

no_vaseline - 07 September 2008 06:55 PM

I respectfully disagree Awgee and defer to CR, who I agree with:

Even if the Treasury has to purchase $50 billion or $100 billion in senior preferred shares to maintain the positive net worth of Fannie and Freddie, the Treasury will own the first equity in line to be paid off from future profits (assuming future profits). This makes the losses very unclear.

Just curious, where will the Treasury Dept. get the $50 billion or the $100 billion or ... ?  Profits?  Like the USPS?  or Medicare, or ... ?  It is possible there will be profits, but what are the probabilities?  And how would they be discovered or measured?  Government accounting?

Near as I can tell, what’s busted F&F is undercapitalziation, brought on in no small part by congressional mandates that they remain that way.

Considering that they are almost the only show in town (70% market share), I’d think they can create profits out of thin air and customers will either pay up on not be financed.  Further, I have no idea what the exposure of thier loans going bad look like.  I’m not saying you’re wrong, I’m saying we have no way to judge it untill it comes out the other side.

(Many years ago, I did ‘special assets’ for a commercial bank.  Awgee already knows this, but some of the other members might not.)

In any case, the point is moot.  We were on the hook for the bonds long before they went busto.  They went busto because of undercolateralization (working capital).  While I find thier current plight distasteful as you do, what other line would you perfer the Feds do? 

Bust F&F and cause a 50% decline in property values almost overnight - or worse?  I can’t even imagine the counterparty risk, as F&F failure would destroy the book value of every bank, everywhere.  The liquidity squeeze would turn into the liquidity industrial bailer.

I edited this at 10:17 pm because CNBC World is running a banner that reads “American Socialism”, and Jim Rodgers from Rodgers Capital just got done lambasting just about the same line.  I reposted because for a minute I thought you lived in Coto, not Singapore.  Either that or you sure appear to be channeling him. 

I don’t get why Dow futures are up 2-3%.

This plan is going to cost money, and it’s either going to come out of taxpayers’ pockets in the form of either tax increases and/or increases in the % of tax revenues going to repay treasury interest, OR we can print more play money, make the USD even more worthless than it was before, and make $300/b oil a reality.

I read somewhere that the guarantee of the government is supposed to bring mortgage rates down. Yet I see spreads unchanged, worse yet even more. So much for the full faith and credit of the US government.

I find it really amusing that certain family members who own FNM common are actually optimistic that this conservatorship will result in profit for them. I pointed out that there are years worth of ARM and alt-A adjustibles resetting within the next two years and their belief is that come 10/1 the mortgage fairy will come and make everyone’s ARM a 30-year fixed at 90% of fair market value. Kool-aid?

I’m going to take advantage of this fool’s rally to sell some of my stuff. I have no desire to be the bagholder when the dust settles.

* * *
On the other hand, from where is this 10% preferred divvy going to go?

If the government can get the Frannie boat upright, they stand to reap a nice profit (80% of outstanding shares). So where does that go? Will it help us little people?

Stupid question, of course it won’t.

Fraychielle - 08 September 2008 12:10 AM

I don’t get why Dow futures are up 2-3%.

The stock market often does its own thing. Friday was the bottom of a short-term selloff. There was likely to be an oversold bounce to the upside today. The pundits will interpret the F&F news with this bounce, but there is no real correlation. It may be for some that this signals a stabilization in housing and lending, but that would be a false impression. Some will like that the government is “doing something.“ Don’t be surprised if the markets rally into some key resistance levels today or tomorrow then turn south and make new lows.

Fraychielle - 08 September 2008 12:10 AM

I don’t get why Dow futures are up 2-3%.

This plan is going to cost money, and it’s either going to come out of taxpayers’ pockets in the form of either tax increases and/or increases in the % of tax revenues going to repay treasury interest, OR we can print more play money, make the USD even more worthless than it was before, and make $300/b oil a reality.

I read somewhere that the guarantee of the government is supposed to bring mortgage rates down. Yet I see spreads unchanged, worse yet even more. So much for the full faith and credit of the US government.

I find it really amusing that certain family members who own FNM common are actually optimistic that this conservatorship will result in profit for them. I pointed out that there are years worth of ARM and alt-A adjustibles resetting within the next two years and their belief is that come 10/1 the mortgage fairy will come and make everyone’s ARM a 30-year fixed at 90% of fair market value. Kool-aid?

I’m going to take advantage of this fool’s rally to sell some of my stuff. I have no desire to be the bagholder when the dust settles.

* * *
On the other hand, from where is this 10% preferred divvy going to go?

If the government can get the Frannie boat upright, they stand to reap a nice profit (80% of outstanding shares). So where does that go? Will it help us little people?

Stupid question, of course it won’t.

Mortgage rates are down about .50% from Friday due to the decrease of the credit risk spreads.

PANDA - 07 September 2008 02:31 PM

USC, I think on Monday, things could get really ugly…...

Oops… Dow up 293, Nasdaq up 28, S&P up 28, and the dollar is up. Only ones getting killed are Pandas who bet against the US for the long term.

graphrix - 08 September 2008 06:50 AM

PANDA - 07 September 2008 02:31 PM

USC, I think on Monday, things could get really ugly…...

Oops… Dow up 293, Nasdaq up 28, S&P up 28, and the dollar is up. Only ones getting killed are Pandas who bet against the US for the long term.

LMAO ... the best part is for a guy who is sooo bullish on commodities and foreign currencies etc.. Panda never heard of Jim Rogers.  GO FIGURE!!!

optimusprime - 08 September 2008 06:54 AM

graphrix - 08 September 2008 06:50 AM

PANDA - 07 September 2008 02:31 PM

USC, I think on Monday, things could get really ugly…...

Oops… Dow up 293, Nasdaq up 28, S&P up 28, and the dollar is up. Only ones getting killed are Pandas who bet against the US for the long term.

LMAO ... the best part is for a guy who is sooo bullish on commodities and foreign currencies etc.. Panda never heard of Jim Rogers.  GO FIGURE!!!

I don’t think so.  I think he’s a hot money gambling degenerate action monkey who loves to chase big returns….......then complain about being busto later.

Anybody seen a chart of WaMu this morning?  Yowza.  F&F ain’t helping them.

no_vaseline - 08 September 2008 07:02 AM

optimusprime - 08 September 2008 06:54 AM

graphrix - 08 September 2008 06:50 AM

PANDA - 07 September 2008 02:31 PM

USC, I think on Monday, things could get really ugly…...

Oops… Dow up 293, Nasdaq up 28, S&P up 28, and the dollar is up. Only ones getting killed are Pandas who bet against the US for the long term.

LMAO ... the best part is for a guy who is sooo bullish on commodities and foreign currencies etc.. Panda never heard of Jim Rogers.  GO FIGURE!!!

I don’t think so.  I think he’s a hot money gambling degenerate action monkey who loves to chase big returns….......then complain about being busto later.

Anybody seen a chart of WaMu this morning?  Yowza.  F&F ain’t helping them.

Lehman isn’t doing so hot either….look out below.

Mortgage rates are down about .50% from Friday due to the decrease of the credit risk spreads.

My mortgage is with CFC.  I have a 6% 30 yr fixed.

Soooo, the above statement caused me to call them out of curiousity ..... This was my quote:

5.5% 30 yr fixed, 2.625 pts, estimated $3200 3rd party fees (title, appraisal, escrow fee, app + credit fee, etc)..... So, a total of around $8000 to refi. 

Uh, no…I don’t think so.

So if anyone can get me 5.5% with ONE point, at some point in the future, shoot me a PM.  Wishful thinking, I know….but a girl’s gotta dream !  Here’s to hoping rates drop like a rock.

815 FICO.  No debt.  180K refi, no cash out, verifiable income/assets.

Edit: Oh yeah, no pre-payment penalty either.

Trooper - 08 September 2008 07:43 AM

Mortgage rates are down about .50% from Friday due to the decrease of the credit risk spreads.

My mortgage is with CFC.  I have a 6% 30 yr fixed.

Soooo, the above statement caused me to call them out of curiousity ..... This was my quote:

5.5% 30 yr fixed, 2.625 pts, estimated $3200 3rd party fees (title, appraisal, escrow fee, app + credit fee, etc)..... So, a total of around $8000 to refi. 

Uh, no…I don’t think so.

So if anyone can get me 5.5% with ONE point, at some point in the future, shoot me a PM.  Wishful thinking, I know….but a girl’s gotta dream !  Here’s to hoping rates drop like a rock.

815 FICO.  No debt.  180K refi, no cash out, verifiable income/assets.

Edit: Oh yeah, no pre-payment penalty either.

I got my information from a mortgage broker I know on the wholesale rate…who knows how quickly lenders will adjust their retail pricing.  Also, bloomberg also indicates that the spreads between Fannie Mae MBS bonds and corresponding treasury spreads have decreased over 40bps.