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Fannie, Freddie insolvent, Poole tells Bloomberg
Reuters ^ | Thursday July 10, 8:58 am ET

Posted on 07/10/2008 7:07:50 AM PDT by BenLurkin

Reuters) - Mortgage lenders Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News) are "insolvent" and may need a U.S. government bailout, former St. Louis Federal Reserve President William Poole was quoted as saying in an interview with Bloomberg.

"Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer," Poole was quoted as saying in an interview held on Wednesday.

Chances are increasing that the government may need to bail out the two mortgage companies, Poole was quoted as saying.

Shares of the two companies have taken a beating recently on worries about whether they can withstand more losses and support housing as well as concerns that they may need to raise massive amounts of new capital.

Freddie Mac shares tumbled 23.8 percent to $10.26 on the New York Stock Exchange on Wednesday, while Fannie Mae shares sank 13.1 percent to $15.31.

(Excerpt) Read more at biz.yahoo.com ...


TOPICS: Business/Economy
KEYWORDS: bailout; bearstearns; fannie; fanniemae; fed; fnm; fre; freddie; freddiemac; govwatch; mortgage; poole
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1 posted on 07/10/2008 7:07:51 AM PDT by BenLurkin
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To: BenLurkin

Freddie is sitting at 7.50 at the moment.Down over 26%.


2 posted on 07/10/2008 7:19:10 AM PDT by quack
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To: BenLurkin
Congress is suggesting that failing housing mortgages should be taken over by Fannie Mae, whose share price has dropped from about $70 to about $15 over the past year.
Fannie Mae will need tons of money and a huge gush of money to bail out Fannie Mae will see the value of the dollar drop producing more inflation.
3 posted on 07/10/2008 7:22:42 AM PDT by count-your-change (you don't have to be brilliant, not being stupid is enough.)
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To: BenLurkin

Why isn’t Harold Raines in prison?


4 posted on 07/10/2008 7:40:20 AM PDT by Ron Jeremy (sonic)
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To: BenLurkin
bastions of privilege, financed by the taxpayer

Somebody needs to explain to me how an organization that buys and guarantees home mortgages is a "bastion of privilege." Between the two of them, Fannie Mae and Freddie Mac are involved in half of the mortgages in the country. Is this guy saying that owning a home in America is a privileged state that needs to be abolished?

The quote doesn't sound like something that a former Fed bank president would say. It sounds more like what a doofus reporter would tell us he said.


5 posted on 07/10/2008 7:40:46 AM PDT by Nick Danger (www.swiftvets.com)
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To: Ron Jeremy

Odd co-inky dink - just last night we were have the bar argument about Why is Harold Baines in the Hall of Fame


6 posted on 07/10/2008 7:42:02 AM PDT by Hegewisch Dupa (The goo on John Kerry's flip-flops)
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To: BenLurkin

Whats wrong with making banks stand by the home loans they make? Allowing them to immediately dump them on somebody else obviously doesn’t work.


7 posted on 07/10/2008 7:44:22 AM PDT by skeeter
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To: BenLurkin

The warning has been given.


8 posted on 07/10/2008 7:53:23 AM PDT by hripka (There are a lot of smart people out there in FReeperLand)
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To: count-your-change

Congress is wrong. These people in trouble would have never under normal circumstances been approved for a loan in the first place.


9 posted on 07/10/2008 8:00:21 AM PDT by television is just wrong
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To: Nick Danger

These two institutions have been “rewarding” ex-government officials / politicians with very cushy jobs and rich perks (stock options, bonuses, etc), mostly Democrats by the way.


10 posted on 07/10/2008 8:00:37 AM PDT by fatez ("If you're going through Hell, keep going." Winston Churchill)
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To: fatez
These two institutions have been “rewarding” ex-government officials / politicians with very cushy jobs and rich perks

Oh, so what. In a country of 350 million people and 80 million homeowners, worrying about the perks provided to a couple dozen — or even a couple hundred — fat cats is a waste of time.

Class envy speeches don't cut it for me. "These guys make more money than we do! We must bring them down!" How did America ever come to that?


11 posted on 07/10/2008 8:13:26 AM PDT by Nick Danger (www.swiftvets.com)
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To: BenLurkin

Fannie and Freddie are not mortgage lenders. They buy (invest) mortgages from other lenders so technically Rooters gets it wrong from the get go.


12 posted on 07/10/2008 8:13:39 AM PDT by steveo (Time flies like an arrow, fruit flies like a banana.)
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To: Ron Jeremy

It’s Franklin Raines. And don’t forget Jamie Gorelick, she of Clinton’s DOJ who constructed ‘the wall’ between FBI and CIA pre-9/11 costing us a chance to prevent the entire disaster. Gorelick who was ‘somehow’ on the 9/11 Commission investigating the cause of our failure (investigating herself) made ten’s of millions of dollars just sitting on Raines’ Board at Fannie Mae while all along they were cooking the books.


13 posted on 07/10/2008 8:16:46 AM PDT by masadaman
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To: masadaman

Franklin. Right, thanks.


14 posted on 07/10/2008 8:18:01 AM PDT by Ron Jeremy (sonic)
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To: Nick Danger

Over the years, FNMA and FHLMC have contributed a ton of money to Democrats in Congress. Now, the last thing Congress wants is for that piggy bank to go away. Congress will do whatever they can to keep FNMA and FHLMC afloat, hoping that Obama will be elected and then Congress can pump money back into them.

Essentially, FNMA and FHLMC are enormously leveraged hedge funds that are financed at rates slightly higher than US Treasuries. They got in trouble for the same reason that banks, dealers, and hedge funds did...they chased higher yields in the wonderful world of subprime mortgages. If they would have stuck with their mission of guaranteeing prime conforming mortgages, they would not insolvent.


15 posted on 07/10/2008 8:24:28 AM PDT by Raster Man
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To: Nick Danger

OK, open up your check book and pay for the bailout, because as a taxpayer, you will be bailing them out. Since you seem to be OK with the corruption and the decisions they made...


16 posted on 07/10/2008 9:25:17 AM PDT by fatez ("If you're going through Hell, keep going." Winston Churchill)
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To: fatez
Here's something else to consider: Since Fannie and Freddie carry a few trillion dollars of mortgages what will happen if they are forced to write those mortgage values down to their market value? Then watch what happens when the feds. ride to the rescue with tons of cash or some pseudo buyer of their bonds.
A gush of fresh money and the value of the dollar falls. Guess what happens to crude prices with more dollars dumped into the economy. Congress is voting soon on a mortgage “fix”, stay tuned, you won't need to open your check book, just hand it over and the gas station will fill in the amounts.
17 posted on 07/10/2008 10:35:08 AM PDT by count-your-change (you don't have to be brilliant, not being stupid is enough.)
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To: Nick Danger
It's the institutions that are ‘privileged’ not the homeowners involved.
The supposedly private enterprises have a virtual monopoly along with special government credit and the implicit backing of the fed. gov.
HUD is supposed to supervise them and we know what an able and competent organization that is! (ahummm-choke).
18 posted on 07/10/2008 10:44:41 AM PDT by count-your-change (you don't have to be brilliant, not being stupid is enough.)
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To: count-your-change
The supposedly private enterprises have a virtual monopoly along with special government credit and the implicit backing of the fed. gov.

We all have to pick our battles. You take the one about getting politicians to stop subsidizing home ownership, and I'll work on RKBA or taxes.


19 posted on 07/10/2008 11:21:44 AM PDT by Nick Danger (www.swiftvets.com)
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To: Nick Danger

No one is going to touch the country’s favorite couple, Freddie and Fannie or crimp their style. Just ain’t gonna happen.


20 posted on 07/10/2008 11:34:41 AM PDT by count-your-change (you don't have to be brilliant, not being stupid is enough.)
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