freddie and fannie rescue announced!- ny times

[GRG55]

Re: freddie and fannie rescue announced!- ny times

http://www.nytimes.com/2008/07/14/wa...nieweb.html?hp

Rescue Sought for Fannie and Freddie


By STEPHEN LABATON
Published: July 14, 2008

WASHINGTON — Alarmed about the sharply eroding confidence in the nation’s two largest mortgage finance companies, the Bush administration will ask Congress to approve a rescue package that would give the government the authority to buy billions of dollars in stock in Fannie Mae and Freddie Mac and also lend to the companies to meet their short-term funding needs, people briefed about the plan said on Sunday.

Separately, the Federal Reserve voted on Sunday to also open a lending facility for Fannie Mae and Freddie Mac, if they need emergency capital. The two companies would be able to post their own securities as collateral.

The plan calls on Congress to give the government the authority over the next two years to buy an unspecified amount of stock in the two companies. Over the same period of time, it would permit the companies to have greater access to the Treasury, by expanding the credit line that each company has from the Treasury. Each company now has a $2.25 billion credit line, set nearly 40 years ago by Congress. At the time, Fannie had only about $15 billion in outstanding debt. It now has total debt of about $800 billion, while Freddie has about $740 billion.

Today the two companies also hold or guarantee mortgages valued at more than $5 trillion.


etc

Here's Jimmie...

Fannie Mae, Freddie Rescue a `Disaster,' Rogers Says
By Carol Massar and Eric Martin
July 14 (Bloomberg) -- The U.S. Treasury Department's plan to shore up Fannie Mae and Freddie Mac is an ``unmitigated disaster'' and the largest U.S. mortgage lenders are ``basically insolvent,'' according to investor Jim Rogers.

Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson's request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview...
More...

Quite a contrast compared to Goldman Sachs mouthpiece, Abbey Joseph Cohen, who is this very morning vigorously explaining how:

• "this is NOT a bailout";
• how Fannie and Freddie differ from IndyMac (the former are GSE's, the latter was a private company, don'tcha know?);
• how "good" all this is for the US economy;
• and no we are not really in a recession, but since people "think" the US is in a recession they are behaving as though its in a recession [sounds like Phil Gramm...it's all in your mind...:rolleyes: ]

[Southernguy]

Re: freddie and fannie rescue announced!- ny times

One way or the other, buying devalued assets by FED or any other Gov. agency is emitting money.
One way or the other that money goes into international markets.
So, today, tomorrow or the other day, oil, gold and other commodities go up further.
I donīt see how this can be avoided.
For me itīs clear, go on buying gold.
This is showing us that further rescues are on the way, LEH, other? I donīt know.
When shall this end?
Probably at some time inflation (world inflation) shall reach salaries, at last, workers are going to demand rises, and fight for them.
At such time, authorities shall say NO MORE.
Some guy like Paul Volcker will do the necessary job.
All shall begin again.......
S

[The Outback Oracle]

Re: freddie and fannie rescue announced!- ny times

Bewdy!!!!
It doesn't seem to matter how it is done, or how you slice and dice this, but one way or another the US Govt is going to buy crap they cannot afford, with money they don't have. Throw in a bit more regulation and oversight by the very mob that brought the US to the disaster table...the market goes up and everything is going to be hunkydory!!!! Gawd! 20 years of bad policy and over-extravagance all fixed in one morning!
Why is it that everyone thinks that a Government which is itself technically bankrupt, has unlimited money to rescue everything that is corrupt and broke! There is hardly a murmur about this aspect in the msm. Bloomberg's interviewer treated Jim Rogers like he was just a bit of a joke!!!!! He was saying something damned serious!!!!! Grrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
I dunno.....Either I am crazy, gravity has been rescinded, or is the rest of the world gone stark raving mad!!!!

Now!!! I dunno whether i feel better or not!!!!!!

[jimmygu3]

Re: freddie and fannie rescue announced!- ny times

Bewdy!!!!
It doesn't seem to matter how it is done, or how you slice and dice this, but one way or another the US Govt is going to buy crap they cannot afford, with money they don't have. Throw in a bit more regulation and oversight by the very mob that brought the US to the disaster table...the market goes up and everything is going to be hunkydory!!!! Gawd! 20 years of bad policy and over-extravagance all fixed in one morning!
Why is it that everyone thinks that a Government which is itself technically bankrupt, has unlimited money to rescue everything that is corrupt and broke! There is hardly a murmur about this aspect in the msm. Bloomberg's interviewer treated Jim Rogers like he was just a bit of a joke!!!!! He was saying something damned serious!!!!! Grrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
I dunno.....Either I am crazy, gravity has been rescinded, or is the rest of the world gone stark raving mad!!!!

Now!!! I dunno whether i feel better or not!!!!!!

I'm no doctor, but you seem to be hemorrhaging exclamation points.

[zoog]

SEC proposes limits on shorting Fannie, Freddie shares

SAN FRANCISCO (MarketWatch) -- Christopher Cox, chairman of the Securities and Exchange Commission, proposed limits on short selling of shares in Fannie Mae and Freddie Mac on Tuesday, according to CNBC. A spokesman for the SEC didn't immediately return a phone call seeking comment on Tuesday. Short selling is a way to bet against securities. Fannie and Freddie shares have slumped roughly 70% in the past month.


Think they'll really follow through with this? I kinda have my doubts. I think it's just talk to scare the weaker shorts. If traders feel like they're not going to have the opportunity to make "fair" bets, they're just gonna sell everything and go to cash. Who wants to play a game where you can only cheer for one team?

EDIT:

SAN FRANCISCO (MarketWatch) -- Christopher Cox, chairman of the Securities and Exchange Commission, said on Tuesday that the regulator will try to limit so-called naked shorting of shares in Fannie Mae, Freddie Mac and primary dealers including Lehman Brothers, Merrill Lynch, Morgan Stanley and Goldman Sachs. The SEC will issue an emergency order stating that all short sales of shares in these companies will be subject to a "pre-borrow" requirement, Cox explained. This will last for 30 days, he added. The SEC is also planning more rule-making focused on the broader market, Cox said. In a typical short sale, traders sell borrowed shares, hoping to buy them back at a lower price and return them to the lender. The difference is kept as profit. In naked shorting, a trader shorts a stock without first making necessary arrangements to borrow shares. That sometimes means the seller fails to deliver the stock to the buyer and the trade can't be settled, running afoul of securities laws.

Hmm, the plot thickens.

[Jim Nickerson]

Re: SEC proposes limits on shorting Fannie, Freddie shares

SAN FRANCISCO (MarketWatch) -- Christopher Cox, chairman of the Securities and Exchange Commission, proposed limits on short selling of shares in Fannie Mae and Freddie Mac on Tuesday, according to CNBC. A spokesman for the SEC didn't immediately return a phone call seeking comment on Tuesday. Short selling is a way to bet against securities. Fannie and Freddie shares have slumped roughly 70% in the past month.


Think they'll really follow through with this? I kinda have my doubts. I think it's just talk to scare the weaker shorts. If traders feel like they're not going to have the opportunity to make "fair" bets, they're just gonna sell everything and go to cash. Who wants to play a game where you can only cheer for one team?

EDIT:



Hmm, the plot thickens.

Anything that stops naked short selling would be the absolutely correct thing to do, and on that basis, I doubt it will happen.

[flintlock]

Re: freddie and fannie rescue announced!- ny times

Bewdy!!!!
It doesn't seem to matter how it is done, or how you slice and dice this, but one way or another the US Govt is going to buy crap they cannot afford, with money they don't have. Throw in a bit more regulation and oversight by the very mob that brought the US to the disaster table...the market goes up and everything is going to be hunkydory!!!! Gawd! 20 years of bad policy and over-extravagance all fixed in one morning!
Why is it that everyone thinks that a Government which is itself technically bankrupt, has unlimited money to rescue everything that is corrupt and broke! There is hardly a murmur about this aspect in the msm. Bloomberg's interviewer treated Jim Rogers like he was just a bit of a joke!!!!! He was saying something damned serious!!!!! Grrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
I dunno.....Either I am crazy, gravity has been rescinded, or is the rest of the world gone stark raving mad!!!!

Now!!! I dunno whether i feel better or not!!!!!!

Nope, its not you, the world really is crazy these days. The government continues to spend like a drunken sailor, all with the blessings of the dumb masses. All the grownups are gone and the children are now in charge. Amazing how fast a country can go down the tubes when nobody is minding the store.

[Nervous Drake]

Re: SEC proposes limits on shorting Fannie, Freddie shares

.

[zoog]

Re: SEC proposes limits on shorting Fannie, Freddie shares

Do unto others as you would have them do unto you, bitches.

I think this is a very funny development.

Anything that stops naked short selling would be the absolutely correct thing to do, and on that basis, I doubt it will happen.

What gets me though is this selective enforcement. Why not crack down on all naked short selling? To me this is like Bush and his signing statements... "Yeah I'm signing this bill into law... except the parts I don't like." How is that lawful or constitutional?:mad:

Jim Sinclair:

The bigger disappointment is in the mining share sector. Perhaps we could change the names of some of the mining issues to First Financial Gold Mine, or Federal Mining Association Inc, and then the SEC would get off their asses and crack down on the naked short selling in this sector. Folks - you are witnessing the utter corruption of our financial system where the US government decides to selectively enforce the current laws on the books regarding illegal naked short selling. What is happening is so blatantly corrupt that it rivals the kind of moral and ethical decay that marked ancient Rome as it went into its period of decline. Where in the US constitution does it confer the right upon governmental bureaucracies to subjectively enforce the laws that govern our system? Are we a nation of laws or of men? The answer, it would appear, is that we are no longer a nation of laws but one of men where certain industries or sectors have special rights and privileges conferred upon them while those of the less-fortunate, out of favor with the powers that be, apparently do not enjoy equal treatment under the law.

[GRG55]

Re: SEC proposes limits on shorting Fannie, Freddie shares

What gets me though is this selective enforcement. Why not crack down on all naked short selling? To me this is like Bush and his signing statements... "Yeah I'm signing this bill into law... except the parts I don't like." How is that lawful or constitutional?:mad:

Jim Sinclair:

I was stunned at this SEC announcement. I was under the impression that naked short selling was against SEC regulations. PERIOD. If you cannot find someone to lend you the stock to sell, you cannot short it. Isn't that the way it's supposed to be legally?

Now we have the SEC making an announcement that, defacto, seems to acknowledge they know there is widespread activity in the market that violates their own regulations. And further, outside of a few select listings, they aren't going to do diddly about it.

Wow. This is a mad, mad world. I never thought I would say this, but maybe Patrick Byrne isn't so crazy after all.

[Jim Nickerson]

Re: SEC proposes limits on shorting Fannie, Freddie shares

I was stunned at this SEC announcement. I was under the impression that naked short selling was against SEC regulations. PERIOD. If you cannot find someone to lend you the stock to sell, you cannot short it. Isn't that the way it's supposed to be legally?

Now we have the SEC making an announcement that, defacto, seems to acknowledge they know there is widespread activity in the market that violates their own regulations. And further, outside of a few select listings, they aren't going to do diddly about it.

Wow. This is a mad, mad world. I never thought I would say this, but maybe Patrick Byrne isn't so crazy after all.

I've never thought Byrne was crazy. What he says is so openly documented. I'm sure I don't understand much of the total about naked short selling, but it is clearly a black hole wrapped in secrecy, and I doubt that any one or organization is prepared to deal with what might cause endless misery in the markets.

What nekid short selling shows me is just how freaked up the US's supposedly developed market's protection are.

Edit: It is my impression if you personally wish to gain some insight into this problem, ask your broker can he guarantee you that all the shares listed in your account are actually held? To clarify, can he/she assure you that a position you "bought" does not represent shares sold short by some other individual or institution when that entity never borrowed the shares, i.e. naked short selling.

[rj1]

Re: SEC proposes limits on shorting Fannie, Freddie shares

Here's the full list zoog, courtesy of Reuters:

BNP Paribas Securities Corp
Bank of America Corp
Barclays PLC
Citigroup Inc
Credit Suisse Group
Daiwa Securities Group Inc
Deutsche Bank Group AG
Allianz SE
Goldman Sachs Group Inc
Royal Bank ADS
HSBC Holdings Plc ADS
JPMorgan Chase & Co
Lehman Brothers Holdings Inc
Merrill Lynch & Co Inc
Mizuho Financial Group Inc
Morgan Stanley
UBS AG
Freddie Mac
Fannie Mae

Surprised Wachovia is not on there.

[c1ue]

Re: freddie and fannie rescue announced!- ny times

Wow. This is a mad, mad world. I never thought I would say this, but maybe Patrick Byrne isn't so crazy after all.

GRG,

Have you listened to one of his interviews or to one of the Overstock.com conference calls?

You might get a very different picture than what the MSM paints.

Not that he's a saint or the last authority on anything, but it is clear that his comments have been taken out of context on several occassions.

[GRG55]

Re: freddie and fannie rescue announced!- ny times

GRG,

Have you listened to one of his interviews or to one of the Overstock.com conference calls?

You might get a very different picture than what the MSM paints.

Not that he's a saint or the last authority on anything, but it is clear that his comments have been taken out of context on several occassions.

I don't generally form my opinions about this sort of thing based on what MSM says.
The first Byrne interview I heard had him talking about Sith Lords. That was enough for me.

[rros]

Re: freddie and fannie rescue announced!- ny times

For those who would like to understand better how naked shortselling takes place here is a good presentation:

http://www.businessjive.com/