CRead writes:
1st - thank you and goodnight!
CRead | 03.18.08 - 10:26 pm | #

tranches of like writes:
"It wasn't that long ago when Fannie and Freddie were the problem, now they are the solution."

Funny how that works.
tranches of like | 03.18.08 - 10:29 pm | #

anonymous writes:
Jesus hates firsties.

Just sayin'
anonymous | 03.18.08 - 10:30 pm | #

REBear writes:
from cnn

funny - "Brother can you spare a euro"

http://i.a.cnn.net/cnn/POLITICS/...itchell/ 17a.gif
REBear | 03.18.08 - 10:30 pm | #

piter writes:
The FT had a great article commenting on how the memory span of US functionaries must now be akin to that of a fruit fly to essentially be prepared to make the same mistake twice in the span of a couple of years.
piter | 03.18.08 - 10:31 pm | #

Anonymous writes:
Nope the taxpayer will be the solution these guy's are just the middle men.
Anonymous | 03.18.08 - 10:32 pm | #

MiTurn writes:
Piter, post the link.
MiTurn | 03.18.08 - 10:34 pm | #

Allen C writes:
Now that all the more irresponsible lenders can't lend anymore, we want to enable you to fill in. Go go go...
Allen C | 03.18.08 - 10:38 pm | #

REBear writes:
200B is MEW for a quarter, right?
REBear | 03.18.08 - 10:38 pm | #

christofay writes:
Fannie should have been delisted when it couldn't publish its financials. We're in deep trouble, because we can't follow our own rules.

To create a short term fix we're laying the ground work for the next source of trouble. That's our current practice of central banking.
christofay | 03.18.08 - 10:42 pm | #

REBear writes:
I think the whole idea is to make sure we don't get into a technical recession at the of the 2nd qtr. We don't care much if qtr 3 and 4 turn out to be a recession.
REBear | 03.18.08 - 10:43 pm | #

Elvis writes:
Man, the government is full of great ideas these days.
Elvis | 03.18.08 - 10:45 pm | #

Drop-top Benz writes:
If that doesn't work, they can always drop the requirement to 10%, or 5%.....


By the way, the new Fannie jumbo loan rates really suck big time.
Drop-top Benz | 03.18.08 - 10:48 pm | #

Milkman writes:
OT but important: Imagine what the largest US stock market investors are thinking.

They see the market surge up (irrationally high for a day) but they know it's going to drop again. Soon.

They want to go out at a peak, to minimize their losses when they sell it all. (Well, they'll sell *most* of it). Right now, they want cash.

They'll buy back in when the Dow is at its lowest, which won't be until next year at the earliest.

That means that as the market goes higher, it increases the chance that there will be a massive sell-off.
Milkman | 03.18.08 - 10:51 pm | #

Anonymous writes:
"House discusses $15 billion mortgage bailout
Committee hears proposal to buy up to 1 million loans in next five years"

http://www.msnbc.msn.com/id/23359239/

Various financial houses
are now the biggest "socialists"
of all. In the last week or so,
I've seen the text of a speech
by Deutsche Bank's Josef Ackerman,
advocating world financial market
control and reform, and the surprising news that the actual
authors of Senator Frank's
mortgage relief bill were
economists at BAC and UBS.
Anonymous | 03.18.08 - 10:56 pm | #

4822 writes:
"House discusses $15 billion mortgage bailout
Committee hears proposal to buy up to 1 million loans in next five years"

$15,000 bailout per house?
4822 | 03.18.08 - 10:59 pm | #

probert writes:

"It wasn't that long ago when Fannie and Freddie were the problem, now they are the solution."

CR,

Do you mean that they SHOULD be the solution, or that they've been CHOSEN as the solution?

No one disputes that the FHA, GSEs and FHLB have been chosen as the solution, the question whether this will lead to a new problem.

FWIW Doug Noland argues that the GSEs cannot grow much if the growth continues at current rate.
probert | 03.18.08 - 11:00 pm | #

steelhead writes:
OT. This is so funny...


http://www0.gsb.columbia.edu/eve...du/everybreath/
steelhead | 03.18.08 - 11:01 pm | #

Anonymous writes:
"That means that as the market goes higher, it increases the chance that there will be a massive sell-off."

How many massice sel offs do you need I started buying puts last April and have doubled my money more times than I can figure. Sure there is more to come, nut you should be making money. Just on this board i took sugestions for BSC, ABK and FED. Thanks everyone.

On the other hand, I wish I did not kno how fu--ed this is.
Anonymous | 03.18.08 - 11:06 pm | #

Will writes:
Jeez, my typing sucks tonight.
Will | 03.18.08 - 11:08 pm | #

christofay writes:
I was gonna say market success does not depend on language fluency
christofay | 03.18.08 - 11:12 pm | #

Misean writes:
Wow, $5.8B in capital lever. That adds like what, 150-160B.

Really scrapping the bottom of the barrel at this point. Reminds me of German military planning for the Battle of the Bulge (Ardennes winter '44).

Cheers,
Misean | 03.18.08 - 11:15 pm | #

chickenlittle writes:
Can anyone tell me how this is going to help the borrower make his mortgage payment with milk at $5 per gallon, gas at $4, and bread at $3 bucks a loaf while almost every state in the country and now a bunch of business are laying off workers?

In the end, doesn't the borrower need to pay the loan to make all this financial engineering actually relevant?
chickenlittle | 03.18.08 - 11:19 pm | #

First Payment Default writes:
According to Denninger, the GSEs have about 0.4% of capital supporting their credit portfolio (200 X leverage):

http://market-ticker.denninger.n...red- credit.html

OFHEO wants the GSEs to lever-up in the face of:

1) A historic housing bust;
2) Illiquid credit markets;
3) US mortgagors seem to be increasingly OK with letting their homes go back to the lender;
4) The rest of the financial world rapidly de-levering.

Good grief. Some of the FNM '09 bankruptcy puts are starting to look tasty.
First Payment Default | 03.18.08 - 11:26 pm | #

bruiser writes:
So our best & brightest come up with the idea of robbing Peter to pay Paul, then 3 years from now robbing Mary to pay Peter, all while the U.S. Taxpayer is held hostage as the ultimate bagholder now or later.
bruiser | 03.18.08 - 11:27 pm | #

UnEasyOne writes:
Paul Volker is on Charlie Rose (PBS) tonight.
UnEasyOne | 03.18.08 - 11:27 pm | #

piter writes:
Link to FT article:
http://www.ft.com/cms/s/0/ f6d4e4...00779fd2ac.html
piter | 03.18.08 - 11:34 pm | #

christofay writes:
bottom of barrel scrapping

check this write-in at the Kunstler web-site:

March 17, 2008:

A correspondent working for the US Dept of Agriculture brings strange tidings about government solvency.

http://www.kunstler.com/

"I'm writing you this email to tell you something which I find pretty
disturbing. USDA is the second largest federal office building in D.C. It is
massive, with hallways that stretch for three city blocks on seven floors, and one block the other way on each floor. For the last few months, every other overhead light in the halls has had their bulbs removed. Sometimes, two lights in a row are dark.... Moreover, each floor has two banks of elevators at each end, with three elevators per bank. For the last few months, one elevator at each bank has been put out of commission...." etc, etc.

The USDA is the department that hands out the welfare in the form of crop price supports. One aspect of this shutting down the lighting/heating/air conditioning of the USDA is to try to make it uncomfortable for the workers there in order to force them out.

This isn't the first time either, check this "Iraq war's costs pinch stateside Army posts Bases' budget $530m short"

http://www.boston.com/news/natio...ide_army_posts/
christofay | 03.18.08 - 11:39 pm | #

Steven writes:
See? We made room for you
Now take the junk! You get bailed out next
Steven | 03.18.08 - 11:39 pm | #

sequoia512 writes:
Interesting thought on Bear Sterns that has been in the back of my head. Could they be a test case for market reaction to probable larger bailouts of Freddie and Fannie?
sequoia512 | 03.18.08 - 11:44 pm | #

REBear writes:
Also, MS reports earnings tomorrow morning.
REBear | 03.18.08 - 11:51 pm | #

Wild Country writes:
I see no point in volunteering to hold any part of the bag.

Elvis, great comment, where were all these geniuses five years or even eight years ago?

Why, waving flags and helping elect
the Current Occupant. And being good little cronies.

Such as shown on the clip from Steelhead. The chorus singing boo hoo hoo, too rich.
Wild Country | 03.18.08 - 11:53 pm | #

MiTurn writes:
Thanks, Piter.
MiTurn | 03.18.08 - 11:55 pm | #

Markel writes:
I don't see how the taxpayer will end up holding the bag. He can't afford it.

I'm waiting for the Wile E. Coyote moment when somebody realizes the US government is insolvent.

After all, what happens when you throw a Treasury auction party and nobody comes? It's already happened in Europe.
Markel | 03.19.08 - 12:05 am | #

fred writes:
Don't you see by allowing this and at 200:1 leverage (bsc was what, 35:1) there is no risk to the govt, ... you have to think like a politician.

If it "works" and the gses dont blow up then its a free lunch theyre all heroes.

If it doesn't work then the govt will tell the voters that "we have to come in and bail out the gses there are too many holders pension plans 401ks gray haired old ladies etc"

It's been calculated to stuff this into the gse's so that there is the ultimate bailout backstop but more politically disguised than if it went directly to homeowners or private lenders.

Of course even this only works to the extent that the loans to be guaranteed actually meet requirements; does anyone here have HARD info on what percentage of loans out there that MIGHT be, or PROBABLY will be, in trouble are loans for which it is both true that

(1) they qualify for gse insurance;

(2) the only reason they can't be insured off now is lack of free capital at a gse

my gut tells me this is not a huge number of the ones about to blow up or associated with houses about to go jingly
fred | 03.19.08 - 12:11 am | #

probert writes:
Volcker spoke to the heart of this thread tonight on Charlie Rose: he essentially said we should do something like extend infinite credit to GSEs, or make them a full-fledged government agency again. I think there are various factors pushing in this direction and I am ready to predict that this will be the next huge new economic policy/structure change. Will happen sometime during 2008.
probert | 03.19.08 - 12:33 am | #

probert writes:
The FT article above is an excellent summary
probert | 03.19.08 - 12:37 am | #

Wild Country writes:
Fred seems to approach this Loan
Re-Arranger rescue problem from the correct point of view, this is so obvious it must be easily overlooked. . .

In the present spiraling down economy, given all that has happened to J6P and the middle class in past five to six years, the number of solvent borrowers who have liquidity to continue paying loans is a dwindling number out of the total of present mortgage payers.
So the search for gse qualified loans to stuff in the bundle of "good" loans for the gse's
to absorb won't need to be a lengthy one.

If enough buyers of mortgages can be persuaded that loans being generated now are bona fide that is the borrowers are qualified and values are
realistic, the housing segment may stabilize. However, as many have pointed out in this blog over the past year, the meeting of buyer capacity and collateral price are
still way apart in many areas of the US.

It is when the gse's are required to catch falling knives that problems will persist. IMHO

Of course, my knowledge of these shenanigans is less than full story.
Wild Country | 03.19.08 - 12:51 am | #

fred writes:
anyone who believes that the gse's will get govt guarantees of their debt should i imagine go out and buy their plain vanilla paper at the current spreads.

what happens to their common is another question altogether, as i would imagine no one would guarantee their debt unless they went into crisis first? perhaps way out of the money puts (but the volatility smile would be killer i should think).
fred | 03.19.08 - 12:52 am | #

DrChaos writes:
"It wasn't that long ago when Fannie and Freddie were the problem, now they are the solution."

Now suppose for a moment, that in fact, they still actually are the problem?
DrChaos | 03.19.08 - 1:22 am | #

lost in space writes:
Ah Dizard.
I'm still chuckling at the August article about OFHEO:

At a time when America, or at least Wall St, needs a spineless hack as the head of a key agency, it is saddled with a credible man of principle: James Lockhart, OFHEO's director. Yale graduate, Harvard MBA, lieutenant in the nuclear navy, risk management software entrepreneur, senior insurance executive, and former head of the PBGC. "A real hard-ass" in the words of a mortgage finance executive. It doesn't seem as though he can be intimidated by the threat of being sent back to Plano, TX to work in his uncle's car dealership.
lost in space | 03.19.08 - 7:41 am | #

charlie writes:
It seems like our economy can't survive without shoddy lending practices. Now that the subprime lenders have disappeared, the US Gov't has stepped in and filled their shoes.
charlie | 03.19.08 - 7:42 am | #

zinc writes:
Look on the bright side.

By the time the neo-cons are done, the meddling government will be too weak to oppose bidness.
zinc | 03.19.08 - 8:06 am | #

Pondering the Mess writes:
Golly, gee - I wonder if the new capital requirements will be not needing requirements at all?

I am waiting for the inevitable: government-sponsered, tax-payer backed toxic loans. That is the only thing that will get the Housing Bubble rolling again. Take the money from savers via inflation and taxes and give it to the wreckless in the form of government backed toxic loans for their overpriced McMansions. The crooks get richer, the rest of us grow poorer.

Then, when the dollar crashes and the GSE's blow up, everyone will be running around saying "who coodadnode?!"
Pondering the Mess | 03.19.08 - 8:23 am | #

anoymous writes:
anoymous test
anoymous | Homepage | 03.19.08 - 9:15 am | #

Russ writes:
This amounts to "Fannie and Freddie - please buy more garbage."
Russ | 03.19.08 - 10:31 am | #

Russ writes:
In the end, doesn't the borrower need to pay the loan to make all this financial engineering actually relevant?

The accounts will be square whether the borrower pays it or YOU pay it.
Russ | 03.19.08 - 10:34 am | #