Le Roi Freddie Mac est mort. Viva Le Roi Mac Gee!
Fred is dead, long live MacGovernment!
I think we have seen this movie already, just recently, it doesn't have a happy ending. Same private profits, losses are socialized by government / taxpayers guarantees. "Good bank" assets and profits go to private investors, "Bad bank" assets and liabilities stay with taxpayers.
MacGovernment and crony socialism at its worst!
posted on 09/02/2009 11:43:00 PM PDT
Calling it Fibber McGee would probably be lost on most people.
Correction: author's name is Diana Glick.
Like I said, it's careful, but it would also involve dismantling the behemoths, Fannie and Freddie, and transferring the intellectual capital there, as well as the servicing relationships and the systems, i.e. the good assets, to the MCGEs and cordoning off the bad assets to be dealt with otherwise. Sort of like the good bank, bad bank model of the S&L crisis.
"Good bank, bad bank" idea has been bandied about earlier in the year and had been (thankfully) rejected because it's a bad idea, will not do anything to spur the housing market, and may even delay the recovery as someone has to unbundle, separate and evaluate / put the price on the $Trillions of "good" and "bad" MBS.
By the way, I'd recommend mostly excellent 4-part TV series by historian and author Niall Ferguson Ascent of Money from the unexpected source (PBS) http://www.pbs.org/wnet/ascentofmoney/ for a historic overview of booms and busts, disfference between private insurance and government welfare (sold by politicians in all countries as "social insurance"). You can watch all videos online, but if you only have one hour to spare, Part 3: Risky Business is a must see. Particularly, it deals with Milton Friedman and Chicago Boys experiment in pension reform in Chile, and has an interview with George Soros...
posted on 09/03/2009 12:12:13 AM PDT
(If you don't ask the right questions you may not get the right answers)
Would that take the place of Ginnie Mae Securities?
I’ve got $300k in CDs coming due in a couple of weeks and was thinking of putting it into a GNMA fund that is paying 3.96% currently.
CD rates suck now and I don’t want to lock anything up long term as I think that interest rates will climb in the near future.
posted on 09/03/2009 12:19:05 AM PDT
Berman says the MCGEs would be highly regulated, kept to a certain size, and would use other tools to manage their risk, like private mortgage insurance, credit default swaps, etc
Then what is the need for a government entity? If regulation is supposedly needed to "reign in" bad private mortgage companies then, theoretically, the regulations need to be changed. But once again we're promised that a new government entity will be successful because it's...a government entity in charge.
posted on 09/03/2009 12:26:43 AM PDT
(Sam opens bar late: "If the Post Office ran its business like yours...never mind." - Cliff Clavin)
Simply put, the MCGE buys mortgages from banks, pools them into securities, pays an insurance premium to a new government fund and then sells them to investors with government guarantees against the default of those securities. So the investors take the interest rate risk but they are not taking a credit risk. How is this different then FANNIE MAE? A FANNIE MAE FUND is made up of government securities and government backed securities which back mortgages.
posted on 09/03/2009 2:25:29 AM PDT
(OBAMA- THE OPIATE FOR THE DUMB ASSES)
Lets see, they did not get it right the first several times, could not fix the problem they created, the tax payer had to pay all the Friends of Government off, without any returns. And now they want another corner operation with a Three Card Ponzi scam. So how many times does it take to get beaten like a whore before they call you the stupid ones here?
posted on 09/03/2009 3:01:09 AM PDT
(I am not so sure about this misdirection!)
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