Posted on 09/07/2008 9:02:41 AM PDT by CodeToad
NEW YORK (CNNMoney.com) -- Federal officials unveiled an extraordinary takeover on Sunday of troubled mortgage giants Fannie Mae and Freddie Mac, signaling the most dramatic move to date aimed at shoring up the nation's housing market.
(Excerpt) Read more at money.cnn.com ...
Great read.
I heard that Wachovia is loaded up with shares and will be in some real trouble next week.
I suppose ot should be noted I don't live at my computer. Post 16 is good info. Then add the following info:
Clinton vowed to veto the Senate version of the deregulation bill unless it was re-written to include "requirements that banks make loans to minorities, farmers, and others who have had little access to credit." Once added, he signed it. Those changes brought about the subprime.
I’ve never look at who owns what with these guys but I bet we start hearing of major losses and bank failures, which will lead to bank bailouts.
Thanks. Good read.
Bullish! Best time to buy... EVER!
Now that I’ve got my sarcastic response out of the way, I’ll say anybody who can’t see the deep problems in our economy is flat blind, or just can’t handle the truth, or they are too busy to bother even following the problems.
Our economy is in deep snow. It won’t last forever. It won’t be TEOTWAWKI. But it will be worse than a lot of people think it will be. Tough times are coming and I hope they aren’t too tough or too long. I’m glad I have job security. I hope those who may not are taking measures to save or cut spending or get out of debt now and not waiting before they lose a job.
The 40-year debt binge had to be paid off sometime. This might be the time, or maybe the powers that be will find a new bubble to blow and keep the dishes of credit spinning on top of the sticks. This credit crisis is for real. It is not just made up by the evil MSM to get Hitlery elected.
The world is starting to feel the effects of it now, decoupling be damned. Fake 3.3% GDP numbers be damned. Huge amounts of debt are being destroyed. Deflation is real.
Disclaimer: Past performance does not guarantee future results.
“is a “market clearing” move or is a “preserve biz as usual” move.
“
I don’t think it is either. I see it this way: The feds and the markets have conspired for various reasons using various means over a number of years (75+) to create a housing market by which people must take loans or else least be unable to afford a house. Now that those practices have resulted in a negative outcome for both the markets and the feds, we are treated to the announcement that credit shall be dried up considerably and that we must now pay the price; not the markets pay the price, homeowners and taxpayers will pay the price.
I totally agree that the hmortgage market has been out of control and we consumers are to also blame, but, why should private industry not also take the rap for their own actions?
What was his name???
“Bullish! Best time to buy... EVER!”
I totally agree. People with the money and credit will make out like fatcats. I was just talking to the better half and she agrees that as we have been waiting for the right time to buy a better property the wait is still worth it. Home prices will no doubt drop as that 20% equity position rule kicks in. We are already seeing $700k homes go for $550 and $450k go for $325, so this hopefully will drop everything into the $275to $575k range, which is perfect for what we are looking at.
It should be noted that the Republicans OWNED the house and Senate at the time. It should be noted that the repeal of Glass-Steagall was sponsored by REPUBLICAN Phil Gramm in the Sentate and REPUBLICAN Jim Leach in the House.
It should be noted that the REPUBLICANS caused the subprime mess. Thank you very much. All Clinton did was Co-opt everything the Republicans were pushing for and make it sound like his own idea, so he could take credit for it. Without doubt, Clinton signed the repeal. He is partly to blame. Without doubt, the repeal of Glass-Steagall was written and sponsored by REPUBLICANS in both the House AND the Senate.
The idea from both Donkeys and Elephants is to make Wall Street rich and to rape the little guy of his money. Works great, don’t it?
Thanks for the post. I didn’t realize that this was uniquely a Republican made catastrophe. I assumed some Democrats voted to repeal Glass-Stegall. Thanks for the vote tally that this is SOLELY a Republican made mess. This doesn’t make me very proud to be a Republican. Indeed, the Democrats have more skeletons in their closet as far as I am concerned, but actions like this really give credibility to the leftist claims that Republicans only help the wealthy fat cats and don’t give a crap about regular people.
I don’t know how the markets could predict anything without knowing the details of the bailout — who gets repaid and who’s shares go to zero. I think everyone assumed that the preferred shares would get repaid, but without knowing the details of the bailout, there was a lot of guessing if buying Fannie and Freddie last week was worth it or not. Shares jumped up in value last week, so somebody was guessing that their common shares would be bailed out. I guess we’ll see...
We are talking about 6 trillion dollars here. Not billions!
These or a lot of the mortgages were secondary market loans!
It is the leading market-maker in the U.S. secondary mortgage market, which helps to replenish the supply money for mortgages and enables money to be available for housing purchases.
Pump it into the billions and I’m sure they will. Otherwise, you are SOL.
But... but... but... only 14 banks have failed to date and GDP was 3.3% in 2Q. Times are good. Ignore the man behind the curtain.
Shop! Spend! Get more credit cards! Tap ALL the equity in your home. Life is good.
Best time to buy... EVER!
“This plan should lower interest rates, thus increasing # of home loans and stimulating building activity...hopefully.”
Mortgage rates are very high, compared other interest rates right now.
This could drop rates a bunch, which potentially could get the housing market unfrozen.
If that happens the taxpayer outlay would be much less.
Time will tell.
It means the credit crisis is worsening. It means a recession is all but guaranteed. It means, the economy won’t turn around any time soon. It means housing isn’t bottoming, or those who hold bad loans wouldn’t be seeing increasing losses. It means we still lack transparency in banking and we still have no clue how much toxic paper is out there or where it is. Having Freddie and Fannie fess up to their toxic paper probably identifies a huge portion of it, since they hold half the nation’s mortgages. But where is the rest of it? Who knows? So the credit crisis just worsens and deepens and deflation keeps spreading.
It means, it is not a good time to blow your wad, but it is a good time to get out of debt and save a little in case you are one of those caught in rapidly rising unemployment.
This is very bad news if it is true that banks keep their capital reserves in instruments that are hemorrahging. Very bad news.
Wachovia may hold FNM shares, but at the same time they are one of the ones who will benefit the most from this action, since they have tremendous exposure to the mortgage industry (remember they bought Countrywide) and stand to gain much of the mortgage business that FNM now controls.
True.
http://solari.com/blog/?p=1407
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