Comments on: The Fannie and Freddie Bail-Out: Sooner Than You Think

By: Dana Swan

Dana Swan — Mon, 01 Sep 2008 16:11:53 +0000

All the recent Baillouts by the Fed recently have debased the value of the dollar. The Fed does not use tax money, they use fiat dollars that don’t exist. This expands the M-1 money supply in the economy and lowers the value of the Dollar worldwide. The Fed needs to back off and not be so quick on the trigger with their fiat money…

By: H

Wed, 27 Aug 2008 20:40:26 +0000

Some of you people need to take a deep breath and try decaf.

The problem with letting the Preferred securities of these two GSEs go down starts with bank regulation. Unlike other corporate preferred stock, banks can buy agency preferred stock without limitation. In effect, regulators gave tacit backing to the shares. Similar to the backing given their debt. If the government doesn’t back these securities, then what does the market see with the other GSEs? What is your FHLB bond worth?

If FNMA and FHLMC need saving, it will be expensive. However, it will be a lot cheaper than letting them default.

By: livedlong

livedlong — Wed, 27 Aug 2008 16:40:13 +0000

The author forgot few things:
- the government has no authority to intervene,unless explicitly asked by FNM or FRE
- 25% of FNM common stock is held by FNM employees; there is no way they would agree to anything that would depreciate their saving, already down 90%
- if any intervention takes place, which is not needed anyway, it will only prop the value of the common stock.
Treasury fully understands the negative impact of doing otherwise.

By: Greedom

Greedom — Wed, 27 Aug 2008 15:16:59 +0000

The medicated goo part of this I think points to asking whether any of this is enough to put the global economy into a tailspin mandating restructuring of nation state commerce interchange, or inter-commerce exchange within.

Or, is it to be put in perspective through some hard analysis of the books to show – no, fallout from this will resolve by 2017, etc.

By: Greedom

Greedom — Wed, 27 Aug 2008 15:13:26 +0000

from article:

“Reports indicate that the Federal Reserve has been pressuring the Treasury Department behind the scenes not to adopt a rescue plan for Fannie Mae and Freddie Mac that would zero out the value of their preferred shares, as doing so would ignite a cascading effect of losses at the regionals and the need to raise even more capital to fill the potholes blown open by the dramatic drops in value in the preferred shares. Moody’s slashed ratings on preferred stock of Fannie and Freddie last Friday, to Baa3 from A1 on Aug. 22″

No clue what that means there ! Just Kidding

But this makes me think

IF Fannie and Freddie are having to try to put their debt out to dry at crazy eddie’s high high rates that China says No to even ?

AND ? US Regional banks are backed in part through expectancy of Fannie and Freddie to have INTEGRITY ?

Then – won’t or shouldn’t we expect to see Crazy Eddie’s high high rates on debt airing to dry to show up for these regionals ?

Really, how will the regionals pass the buck.

Paulson is channeling the loss to the tax payers to pass the buck for F^2

but for the Regional banks ? Who don’t have Paulsons pipelines and or direct welfare check candidacy ?

how will THEY pass it ?

lower CD’s ?

no free toasters ?

higher service fee’s ?

Insufficient Fund charges at $120 ! lol

hmm – will be interesting.

What really blows is – you take solid integrity institutions that came through sub prime unscathed ?

Guess what – while THEY didn’t take any sub prime on ? as a bank ?

ouch – little did they know, they DID, through Fannie and Freddie.

And now ?

I do say, I think I foresee some bad news reports from US banks coming Q3 and Q4 who will be looking at their total dependency on Fannie and Freddie saying – yikes, we’re going to take a hit on this too!

Write downs for the little guy comin’ I bet

And you know ? Let’s look at Alabama just what ? 2 months ago ?

BAM – out of business. No WONDER FDIC is hiring out the wazoo.