U.S. Considers Taking Over Fannie Mae, Freddie Mac

[Jim Nickerson]

http://www.bloomberg.com/apps/news?p..._QM&refer=home

July 10 (Bloomberg) -- U.S. officials are considering plans to take over one or both of the nation's largest mortgage finance companies, Fannie Mae and Freddie Mac, if they continue to deteriorate, the New York Times reported.

The government is discussing placing them in a conservatorship, under which the companies' shares would be worth little or nothing and losses on mortgage holdings would be covered by taxpayers, the Times said, citing unidentified officials briefed on the matter. Their shares are plunging and their borrowing costs are rising as investors worry the companies will suffer losses larger than the $11 billion they have lost in recent months, the Times said.

The Bush administration is also considering offering an explicit government guarantee on the $5 trillion debt owned or guaranteed by the companies, the Times said. Such an option is less likely because it would double the public debt, the newspaper said.

Still, Fannie and Freddie aren't considered to be in a crisis, and no action is imminent, the officials told the Times.

If no crisis, why the discussion and commotion?

Edit: Find yourself some charts on these buggers FNM & FRE. It looks like the "crisis" was at least last Nov and Dec.

[FRED]

Re: U.S. Considers Taking Over Fannie Mae, Freddie Mac

http://www.bloomberg.com/apps/news?p..._QM&refer=home

July 10 (Bloomberg) -- U.S. officials are considering plans to take over one or both of the nation's largest mortgage finance companies, Fannie Mae and Freddie Mac, if they continue to deteriorate, the New York Times reported.

The government is discussing placing them in a conservatorship, under which the companies' shares would be worth little or nothing and losses on mortgage holdings would be covered by taxpayers, the Times said, citing unidentified officials briefed on the matter. Their shares are plunging and their borrowing costs are rising as investors worry the companies will suffer losses larger than the $11 billion they have lost in recent months, the Times said.

The Bush administration is also considering offering an explicit government guarantee on the $5 trillion debt owned or guaranteed by the companies, the Times said. Such an option is less likely because it would double the public debt, the newspaper said.

Still, Fannie and Freddie aren't considered to be in a crisis, and no action is imminent, the officials told the Times.

If no crisis, why the discussion and commotion?

Inevitable.

Massive new Gosbank USA formed, market soars

Today the GSEs Fannie Mae and Freddie Mac merged with the Federal Reserve Bank, the US Treasury Department, Goldman Sachs, Citigroup and JP Morgan Chase to form Gosbank USA. The DJIA rose 280 points on the news.

Capping a year of crisis in the credit markets and global financial system that led to the nationalization of banks in Europe and England, the US today consolidated and merged ownership of the nation’s largest banks under co-chairmen former Federal Reserve Chairman Ben Bernanke and former Treasury Secretary and ex-head of investment banking giant Goldman Sachs Henry Paulson. “We made lemons out of lemon-aid and turned a terrible crisis for the US economy and the American people into a golden opportunity to expand the power and reach of the State,” said Paulson in a speech made today from the new headquarters of Gosbank USA on Wall Street, the new administrative center for several recently created US government planning authorities, including Gosfin USA, the State Central Financial Regulatory Authority, and Gosrec USA, the State Central Housing Reconstruction Authority.

The new bank gets its name from the Soviet era Gosbank.

[Nervous Drake]

Re: U.S. Considers Taking Over Fannie Mae, Freddie Mac

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[GRG55]

Re: U.S. Considers Taking Over Fannie Mae, Freddie Mac

How could this ever been foreseen? Oh my goodness it just came out of nowhere. Well America, guess you gotta pay for your stability!

This is absolutely ridiculous.

My question is: When all this settles and the government is "in control" of every facet of our fake economy, will people accept it or realize the utter retardedness of it all?

Voters and their representatives on the Hill didn't seem to "realize the utter retardedness" of any of the things that are leading to the long recognized and inevitable bailout of Fannie, Freddie, and likely the Federal Housing Administration also, by the beleaguered US Taxpayer. Your elected representatives have been steadily cratering the already precarious balance sheets of these entities for some time now. A mere small, and recent sampling:

Paulson to Back Fannie, Freddie Buying Bigger Loans

By James Tyson
Sept. 19 [2007] (Bloomberg) -- U.S. Treasury Secretary Henry Paulson will tell Congress tomorrow that Fannie Mae and Freddie Mac should be allowed to temporarily package home loans above $417,000 into securities if Congress creates a tougher regulator for the two largest U.S. mortgage finance companies.

``There is little question that allowing the GSEs to securitize jumbo mortgages would give a short-term lift'' to the market for so-called jumbo home loans, Paulson will say, said a person quoting from his prepared remarks to the House Financial Services Committee in Washington.
Full Article...


Congress Drafting Bills for Fannie, Freddie to Buy More Loans

By James Tyson
Oct. 11 [2007] (Bloomberg) -- Congressional leaders are drafting legislation to allow Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, to expand their portfolios by $150 billion to help subprime homeowners refinance into more affordable loans.

Representative Barney Frank of Massachusetts, and Senator Charles Schumer of New York plan to introduce bills authorizing a 10 percent increase in the government-chartered companies' combined $1.5 trillion mortgage portfolios for a six-month period, the Democratic lawmakers said in separate statements today.

The legislation ``provides a lifeboat for the millions of homeowners left stranded by the Bush administration amid a sea of subprime turmoil,'' Schumer said. The senator plans to attach his measure to ``the first available legislative vehicle,'' he said... [How do you spell "Bandaid"?]
Full Article...


Freddie, Fannie Live Soft `Core Capital' Fantasy
Commentary by Jonathan Weil
Nov. 28 [2007] (Bloomberg) -- At Freddie Mac and Fannie Mae, there essentially are two kinds of capital. There's the kind they actually have on hand. And then there's the kind the government lets them claim they have.
Capital is supposed to measure a company's ability to survive losses and pay off creditors. It's normally a simple calculation: assets minus liabilities, also known as shareholder equity. However, that's not how the government measures capital at Freddie and Fannie.
Instead, its primary capital measure is something called core capital. It's possible a financial institution could be broke -- with liabilities exceeding assets -- and still pass the government's core-capital test...

...Some lawmakers are pressing to expand the size of the companies' portfolios, as a way to ease the mortgage crisis. The more pressing concern should be changing how the companies' minimum capital requirements are set and giving the companies' regulator the authority to define them...
Full Article...


Democrats Want FHA Bill in Stimulus Plan, Frank Says

By Alison Vekshin
Jan. 22 [2008] (Bloomberg) -- Congressional Democrats want to expand availability of federally insured mortgages for subprime borrowers as part of the economic-stimulus plan being negotiated with the White House, Representative Barney Frank said.

Frank, the chairman of the House Financial Services Committee, said today in a telephone interview it's ``very likely'' legislation to overhaul the Federal Housing Administration will be part of the $140 billion to $150 billion plan for jumpstarting the U.S. economy amid increasing signs of a recession. The measure would help homeowners refinance mortgages to keep from losing their homes, Frank said...

...Lawmakers are also considering a provision that would temporarily let Fannie Mae and Freddie Mac buy home loans above $417,000 for packaging into securities, Frank said. The language is part of a Senate bill that would create a tougher regulator for the two largest U.S. mortgage finance companies...
Full Article...

[phirang]

Re: U.S. Considers Taking Over Fannie Mae, Freddie Mac

Guys, don't you realize America is slowly being securitized for sale to the Arabs, brokered of course by Blackrock.

Can you imagine the fees Pete Peterson would make on that transaction...

[GRG55]

Re: U.S. Considers Taking Over Fannie Mae, Freddie Mac

Guys, don't you realize America is slowly being securitized for sale to the Arabs, brokered of course by Blackrock.

Can you imagine the fees Pete Peterson would make on that transaction...

Shows what I know. I thought it was being packaged for sale to the Chinese and the Russians, and brokered by experienced GS alumnus Paulson... :rolleyes:

MOSCOW, June 30 (Reuters) - Russia does not yet have a sovereign wealth fund (SWF) but is working to create one, Prime Minister Vladimir Putin told U.S. Treasury Secretary Henry Paulson on Monday.

Paulson, who is in Russia to discuss trade and investment, told Putin the United States welcomes Russian investment and both sides were working together to outline best practices for SWFs, owned by governments of cash-rich countries...

..."Since we do not have a sovereign wealth fund yet, you are confusing us with someone else," Putin told Paulson during a meeting in the Kremlin, adding that Russia had indeed created "various funds".

"But we are ready to do it (create a SWF), especially if you want us to," Putin said... More...



From The Sunday Times

June 22, 2008
China's sovereign wealth funds set for global spending spree
CHINA’S secretive sovereign wealth funds will help its state-owned companies to expand overseas in a shift of strategy after economic talks with America, according to analysts in Shanghai.

The negotiations, led on the American side by Treasury secretary Henry Paulson, ended with an agreement to open Chinese capital markets further to institutional investors by reducing the “lockup” period for investments. China’s aim is to secure reciprocal treatment to smooth the way for its own companies to build up their foreign holdings. More...

[The Outback Oracle]

Re: U.S. Considers Taking Over Fannie Mae, Freddie Mac

I'm watching CNBC. I don't know what is wrong with all you lot in this forum the answer is so simple. Just get the government to throw in whatever unlimited amount of money is required and in a few months all the problems will be over! (Shuts eyes and beats head on desk) Look I know Paulson is the worlds stupidest man. I suppose George Bush would make it a contest but that Cramer has to rate right up there!!!!

[LargoWinch]

Re: U.S. Considers Taking Over Fannie Mae, Freddie Mac

I Do NOT get it.

Why is the US Congress simply not mint a single $10 Trillion coin and hand it over to the Federal Reserve and voila?

Then enough $$$ will be left for the Freddie and Fannie...

[c1ue]

Re: U.S. Considers Taking Over Fannie Mae, Freddie Mac

"Since we do not have a sovereign wealth fund yet, you are confusing us with someone else," Putin told Paulson during a meeting in the Kremlin, adding that Russia had indeed created "various funds".
"But we are ready to do it (create a SWF), especially if you want us to," Putin said, noting that all of Russia's $8 billion investment in the U.S. economy was of private nature.

I wonder if Putin was inwardly grinning when he said that.

i.e. I would sooner poke my weenie into a lawnmower than give Russian SWF cash for US investments, but fortunately I don't even HAVE an SWF.

So sorry.:rolleyes: