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Fannie and freddie...govt taken over
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Anonymous Coward
User ID: 192197
9/7/2008 3:24 PM | | Re: Fannie and freddie...govt taken over | Quote |
"As I understand it, whatever proposal Secretary Paulson is going to make is a proposal to get us over this hump of instability and uncertainty," said Vice Presidential hopeful Sen. Joe Biden on NBC's Meet the Press television program on Sunday.
"It's not an official reorganization. It will be left to next administration and Congress to make those judgements," he added.
[link to www.forbes.com]
"It's not an official reorganization. It will be left to next administration and Congress to make those judgements," he added.
Scary...
"The issue of economics is not something I’ve understood as well as I should,” McCain said in December 2007. “I’ve got Greenspan’s book.”
And here's what he told the Wall Street Journal's Stephen Moore in 2005: “I’m going to be honest: I know a lot less about economics than I do about military and foreign policy issues. I still need to be educated.” |
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383623
User ID: 383623
9/7/2008 3:51 PM
 | | Re: Fannie and freddie...govt taken over | Quote |
U.S. seizes Fannie and Freddie
Treasury chief Paulson unveils historic government takeover of twin mortgage buyers. Top executives are out.
Last Updated: September 7, 2008: 2:24 PM ED
NEW YORK (CNNMoney.com) -- Federal officials on Sunday unveiled an extraordinary takeover of Fannie Mae and Freddie Mac, putting the government in charge of the twin mortgage giants and the $5 trillion in home loans they back.
The move marks Washington's most dramatic attempt yet to shore up the nation's housing market, which is suffering from record foreclosures and falling prices.
The sweeping plan, announced by Treasury Secretary Henry Paulson and James Lockhart, director of the Federal Housing Finance Agency, places the two companies into a "conservatorship" to be overseen by the Federal Housing Finance Agency. Under conservatorship, the government would temporarily run Fannie and Freddie until they are on stronger footing.
"A failure [of Fannie and Freddie] would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance," Paulson said at a press conference in Washington. "And a failure would be harmful to economic growth and job creation."
Freddie (FRE, Fortune 500) and Fannie (FNM, Fortune 500), which were created by the U.S. government, have been badly hurt in the last year by the sharp decline in home prices and the rise in mortgage delinquencies and foreclosures, racking up about $12 billion in losses.
On Sunday, officials stressed that both Fannie and Freddie will be open for business on Monday morning, although the firms will have undergone a dramatic facelift.
Freddie CEO Richard Syron and Fannie CEO Daniel Mudd will no longer run the agencies, while the FHFA will assume control of the boards of both companies. Regulators took care not to foist blame on the two men, adding that they would remain with the firms to help with the transition.
Syron and Mudd will be replaced by two finance veterans charged with restoring the mortgage titans to health. Herb Allison, the former chairman and CEO of pension provider TIAA-CREF, will head Fannie Mae. Allison formerly served as president of Merrill Lynch.
David Moffett, who served as vice chairman and chief financial officer of U.S. Bancorp until early 2007 and then joined the Carlyle Group private-equity firm as a senior advisor, will take over Freddie Mac.
At the same time, dividends on both common and preferred shares will be eliminated in an effort to conserve about $2 billion annually. All of the firms' lobbying and political activities will be halted immediately and charitable activities reviewed.
In addition, the Treasury Department announced a series of moves targeted at providing relief to both housing and financial markets.
Paulson said Treasury would boost mortgages by purchasing mortgage-backed securities from Freddie and Fannie, as well as offering to lend money to the companies and the 12 Federal Home Loan Banks. The home loan banks advance funds to more than 8,000 member banks. (Read what Paulson said)
The Treasury, with fellow regulator FHFA, will also buy preferred stock in Fannie and Freddie to provide security to the companies' debt holders and bolster housing finance.
How we got here
Sunday's decision culminates weeks of meetings and analysis by top federal regulators and management teams assessing the health of the companies.
"We examined all options available, and determined that this comprehensive and complementary set of actions best meets our three objectives of market stability, mortgage availability and taxpayer protection," Paulson said.
The two firms buy loans, attach a guarantee, then sell securities backed by the loans' income stream. All told, they own or back $5.4 trillion worth of home debt - half the mortgage debt in the country.
At the same time, Fannie and Freddie have become virtually the only source of funding for banks and other home lenders looking to make home loans. Their ability to do so is crucial to the recovery of the battered home market and the broader U.S. economy.
In mid-July, the Treasury Department and Federal Reserve announced steps in to make funds available to the firms if necessary and Congress approved the sweeping proposals later that month.
Shares of both companies are down more than 80% so far this year.
Unanswered questions
The cost of the government intervention remains unclear. Experts argue that it will depend in large part on the structure of the rescue, the direction of home prices and mortgage default rates.
Still it seems almost certain it will run into the billions and will most likely eclipse such other high-profile government bailouts including than the Federal Reserve's $29 billion backing of Bear Stearns assets when it was taken over by J.P. Morgan Chase.
In his remarks, Paulson said that the cost to taxpayers would largely depend on how Freddie and Fannie perform.
Another unintended yet unavoidable consequence may be the impact to the nation's banks.
Some of the nation's largest financial institutions including JPMorgan Chase (JPM, Fortune 500) and Sovereign Bancorp (SOV, Fortune 500) own a big chunk of the estimated $36 billion in preferred shares of Fannie and Freddie, which are at risk of being wiped out should Fannie and Freddie do end up getting a cash infusion from the Treasury Department.
First Published: September 7, 2008: 11:38 AM
Highway to Hell |
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383623
User ID: 383623
9/7/2008 3:53 PM
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Anonymous Coward
User ID: 375101
9/7/2008 4:07 PM | | Re: Fannie and freddie...govt taken over | Quote |
David Moffett, who served as vice chairman and chief financial officer of U.S. Bancorp until early 2007 and then joined the Carlyle Group private-equity firm as a senior advisor, will take over Freddie Mac. |
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Anonymous Coward
User ID: 338226
9/7/2008 4:24 PM | | Re: Fannie and freddie...govt taken over | Quote |
[link to www.carlyle.com]
David M. Moffett
Senior Advisor
Fund : Global Financial Services Buyout
Industry : Financial Services
David Moffett is a Senior Advisor focused on opportunities in the global financial services sector.
Mr. Moffett retired as Vice Chairman and Chief Financial Officer of U.S. Bancorp in 2007 having served the company in this capacity since 1993. Moffett was responsible for all the company’s financial management responsibilities including corporate accounting and reporting, tax credit investments, insurance, real estate, purchasing, treasury, venture capital, corporate real estate, media and investor relations, strategic planning, pension management, and mergers and acquisitions. From 1998 to 2001 he was also responsible for the company’s asset management, wealth management, trust, and fiduciary activities.
Prior to joining U.S. Bancorp, Mr. Moffett was a Senior Vice President and Assistant Treasurer in Corporate Treasury at BankAmerica Corporation, San Francisco, CA. Moffett joined BankAmerica in 1992 as a result of the merger with Los Angeles-based Security Pacific Corporation where he served as Senior Vice President and Director of Corporate Treasury since 1990. He joined Security Pacific National Bank in 1989 as a Senior Vice President responsible for the lead bank’s domestic and international treasury group.
Mr. Moffett was ranked among the top three CFOs in the banking industry in Institutional Investor Magazine, Feb. 2005.
Previously, Mr. Moffett was Chairman of the CFO Council of the Financial Services Roundtable in Washington, D.C., a Financial Services Industry Advisor of Standard & Poors Rating Service in New York, a Financial Services Industry Advisor of Moody’s Rating Service in New York and a member of the CFO Roundtable, Bank Administration Institute in Chicago.
Mr. Moffett holds a bachelor's degree in economics from the University of Oklahoma and a master's degree in business administration from Southern Methodist University. He is also a graduate of the Stonier Graduate School of Banking, Rutgers University. Mr. Moffett serves on the Boards of Directors of eBay, Inc., MBIA Insurance Corporation, E.W. Scripps, Inc., and Building Materials Holding Corporation. He is also affliated with the Board of Advisors of the Michael F. Price School of Business, University of Oklahoma. |
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Anonymous Coward
User ID: 498206
9/7/2008 5:23 PM | | Re: Fannie and freddie...govt taken over | Quote |
the only people hurt will be common folk |
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Anonymous Coward
User ID: 447567
9/7/2008 5:48 PM | | Re: Fannie and freddie...govt taken over | Quote |
Where did the Gov't get the money? |
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Quadrillion $ Liabilities/Geod
User ID: 397067
9/7/2008 6:23 PM | | Re: Fannie and freddie...govt taken over | Quote |
I have seen in several credible articles that the USA's liabilities now total over $1 quadrillion. To put this astronomical number into very personal terms, that equates to $10 MILLION per household in the USA(1,000,000,000,000,000 divided by 100,000,000 households = 10,000,000 per household!!!!!)!!!
Would one be reasonable to consider a nation that has liabilities that are 100-1,000 times greater than the true assets of their entire population to be BANKRUPT????? Would it take a century of scrimping and saving to save up $10,000,000 to repay this debt?
And to make things even more insane, consider the fact that the cost of financing these funds considering compounding would multiply this debt just like with a mortgage where over a 30 year loan payback amoritization schedule one pays many times the initial cost of the home in interest. So, the $10,000,000 would require adding on another $50 million in interest over a 100 year payback schedule. So in order to payback $60 million including interest over a 100 year "mortage" period would require $600,000 per year payments per household or $50,000 per month. Does this look feasible???
The only way people could pay $50,000 per month to pay back the debt would be to hyperinflate the currency which would lead to even higher percentage interest charges(20% like 1979, or 100% like Argentina etc.) on each household's loan, making the $600,000 yearly payments into $6 million, then $60 million etc. Collapse would obviously occur in a Weimer Republic sort of way very quickly if they go the hyperinflationary route, so it looks like we are cooked geese either way!!!
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Anonymous Coward
User ID: 498206
9/7/2008 6:26 PM | | Re: Fannie and freddie...govt taken over | Quote |
the only question I have is "Is america bankrupt? or are
all of the countries that finaced our debt?" |
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Anonymous Coward
User ID: 495603
9/7/2008 6:50 PM | | Re: Fannie and freddie...govt taken over | Quote |
this is huge....I believe the two entities control
over 1.5 trillion in real estate...this is gonna hurt
Over 5 trillion, and IIRC they are 1.4 Trillion Negative Equity on much of these assets........ Quoting: Omega
Omega, when I see that avatar pic pointing that heat at me, it makes me want to duck & cover, haha.  |
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Anonymous Coward
User ID: 464327
9/7/2008 7:28 PM | | Re: Fannie and freddie...govt taken over | Quote |
no black monday from looking at futures. Let a corrupt system fall imo. I Think investors are in a state of relief with this news. Everyone knew it would happen, but when was the question.
no doom right away folks, except the ass raping you will be paying the next decade. |
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starlight_afar
User ID: 489136
9/7/2008 7:30 PM
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So the American people go broke then what? |
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Anonymous Coward
User ID: 499200
9/7/2008 7:47 PM | | Re: Fannie and freddie...govt taken over | Quote |
"David Moffett, who served as vice chairman and chief financial officer of U.S. Bancorp until early 2007 and then joined the Carlyle Group private-equity firm as a senior advisor, will take over Freddie Mac."
Do all the Freddie Mac assets go to the Bush gang? |
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Anonymous Coward
User ID: 499200
9/7/2008 7:50 PM | | Re: Fannie and freddie...govt taken over | Quote |
The way it's looking to me, is that the country just went socialist with taxpayer backing of preferred stockholders, the elitist right. |
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starlight_afar
User ID: 489136
9/7/2008 7:51 PM
| | Re: Fannie and freddie...govt taken over | Quote |
The agenda is to destroy the Middle Class, when are folks going to see this. |
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Anonymous Coward
User ID: 499200
9/7/2008 8:20 PM | | Re: Fannie and freddie...govt taken over | Quote |
Yup, Bush gets Freddie Mac and all the assets with taxpayer government backing to make sure he gets his money:
[link to www.hereinreality.com] |
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Anonymous Coward
User ID: 499200
9/7/2008 8:24 PM | | Re: Fannie and freddie...govt taken over | Quote |
May God damm the Bushes (and Cheney and the others) for stealing the inheritance I had worked for my grandchildren.
God damm then all. |
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Anonymous Coward
User ID: 493598
9/7/2008 8:27 PM | | Re: Fannie and freddie...govt taken over | Quote |
May God damm the Bushes (and Cheney and the others) for stealing the inheritance I had worked for my grandchildren.
God damm then all. Quoting: Anonymous Coward 499200 |
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Anonymous Coward
User ID: 493598
9/7/2008 8:27 PM | | Re: Fannie and freddie...govt taken over | Quote |
May God damm the Bushes (and Cheney and the others) for stealing the inheritance I had worked for my grandchildren.
God damm then all. Quoting: Anonymous Coward 499200 |
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Anonymous Coward
User ID: 493598
9/7/2008 8:27 PM | | Re: Fannie and freddie...govt taken over | Quote |
May God damm the Bushes (and Cheney and the others) for stealing the inheritance I had worked for my grandchildren.
God damm then all. Quoting: Anonymous Coward 499200
I'm fairly certain that your wish will be granted. |
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Dr_Kynes
User ID: 499234
9/7/2008 8:37 PM | | Re: Fannie and freddie...govt taken over | Quote |
So the gov't takes over Freddy and Fannie.
Then the Monday dow futures go up 232 points.
WTF ? So does this make any sense......or will the dow
go up for 2-3 days only to come crashing down thursday |
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Anonymous Coward
User ID: 419054
9/7/2008 8:41 PM | | Re: Fannie and freddie...govt taken over | Quote |
WonbyOne is correct.
The change.
The greatest change of All History is already in process.
The Return of Christ Jesus to take possession of earth from God's enemy.
Yet, before this occurs in about 3.5yrs, God's enemy, satan, will attempt to destroy all life on earth to thwart God's plan.
satan controls/appoints power and wealth on this earth. he offered such even to Christ Jesus, if The Lord would only worship him. The power and wealth is the enemy's domain to appoint.
the minions of satan operate at different levels.
those who have betrayed America believe they will have the greatest payday in all history. Yet satan is not called "the deceiver" for nothing. America is Mystery Babylon the city/state that will fall/be-gone in one hour per Revelation ch 18.
Point is, all the financial machinations are deliberate.
America will be finished and not only in the financial sense.
All will happen suddenly.
Unless you have given your life to God, you will be on your own.
Doesn't matter what you "believe".
All that matters is what you Know.
If you are not prepared to provide Shelter/Warmth, Food/Water, and Security to your loved ones; you will suffer.
If your aren't Guided by God's Holy Spirit, Abiding With HIM, you will suffer the failures of self. The failures of self in prior history have been the cause of all human suffering. It will be no different in the days ahead, only the scale will be worldwide and on levels beyond imagination.
Just realize that there is no accidental cause to this financial debacle which will trigger nuclear war and America's demise. All has been planned for and carried out purposefully. Our Nation looted, scuttled, wrecked with deliberate purpose and profit was the motive. Quoting: Lester
And who do you support for President? Which of the candidates will hasten your apocalypse? |
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Anonymous Coward
User ID: 495507
9/7/2008 8:43 PM | | Re: Fannie and freddie...govt taken over | Quote |
meeting was at 11 o clock....11  |
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Anonymous Coward
User ID: 419054
9/7/2008 8:48 PM | | Re: Fannie and freddie...govt taken over | Quote |
May God damm the Bushes (and Cheney and the others) for stealing the inheritance I had worked for my grandchildren.
God damm then all.
I'm fairly certain that your wish will be granted. Quoting: Anonymous Coward 493598
I pray to God. My aunt and uncle, both in their 80's (both still working!!), Catholic parents of 10, grandparents of 14, great-grandparents of four, had most of their life savings for the past 20 years in Fannie Mae, having been told that it was a relatively safe investment because it was a GSE (government sponsored enterprise). Their investment is now gone. Somebody has to pay!! How did this happen? There is a scandal here, but not the one we are being fed.
But thanks to Bush, Cheney and the rest of the neocons, they have drowned these once secure institutions "in a bathtub."
Bastards.
When we refinanced in 2006, our credit union made us go through Fannie Mae, for the first time in over 20 years of home ownership and more than six mortgages. Why did that happen? Bush' "Ownership society," that's how. Look it up. It was all planned. |
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Anonymous Coward
User ID: 419054
9/7/2008 8:50 PM | | Re: Fannie and freddie...govt taken over | Quote |
So does that mean rent will go up now? In other words just how will they get it from the tax payers, rent, food, utilities would be my guess. How about more taxes on booze and cigarettes. Why not tax the rich now, then it would get paid off quicker. Quoting: starlight_afar
We are already paying for it in higher gas prices. The "Sovreign wealth funds" of Saudi Arabia and UAE own us. Didn't you know that? Bush should hold hands with these guys some more. It feels really good!! |
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Anonymous Coward
User ID: 419054
9/7/2008 8:50 PM | | Re: Fannie and freddie...govt taken over | Quote |
So does that mean rent will go up now? In other words just how will they get it from the tax payers, rent, food, utilities would be my guess. How about more taxes on booze and cigarettes. Why not tax the rich now, then it would get paid off quicker.
We are already paying for it in higher gas prices. The "Sovreign wealth funds" of Saudi Arabia and UAE own us. Didn't you know that? Bush should hold hands with these guys some more. It feels really good!! Quoting: Anonymous Coward 419054
(If you like getting B. F'd. |
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Anonymous Coward
User ID: 419054
9/7/2008 8:52 PM | |
Anonymous Coward
User ID: 300370
9/7/2008 8:55 PM | | Re: Fannie and freddie...govt taken over | Quote |
ok I've read thru this whole thread and have no complete understanding of EXACTLY what is to occur tomorrow? All I see is super high interest rates for next decade? |
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Anonymous Coward
User ID: 486529
9/7/2008 8:55 PM | | Re: Fannie and freddie...govt taken over | Quote |
considering the govt is already broke and is having
a harder and harder time financing its debt, combined with
the loss of faith in govt...and that this will send
shockwaves throughout the financial district.. Quoting: Anonymous Coward 494206
The government has an unlimited supply of money and never has to pay it back or pay interest on it. All we have to do is list it as Interdepartmental Loans. We have been doing that for the past six years and have not had to replay a cent. In fact, we have not had to reply interest on the Four and a half Trillion that the Bush administration has borrowed. It is all free money and it is a miracle from God. |
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Anonymous Coward
User ID: 486529
9/7/2008 8:58 PM | | Re: Fannie and freddie...govt taken over | Quote |
You are obviously mentally ill. All of our money is free and there is no obligation any more. We can pay back all debt with money borrowed from Interdepartmental Funding.
It works. It is Free. We do not have to pay interest on it. Once we have spent the money we can forgive the interdepartmental loan.
It is all FREE! Amen Hallaluia!
I have seen in several credible articles that the USA's liabilities now total over $1 quadrillion. To put this astronomical number into very personal terms, that equates to $10 MILLION per household in the USA(1,000,000,000,000,000 divided by 100,000,000 households = 10,000,000 per household!!!!!)!!!
Would one be reasonable to consider a nation that has liabilities that are 100-1,000 times greater than the true assets of their entire population to be BANKRUPT????? Would it take a century of scrimping and saving to save up $10,000,000 to repay this debt?
And to make things even more insane, consider the fact that the cost of financing these funds considering compounding would multiply this debt just like with a mortgage where over a 30 year loan payback amoritization schedule one pays many times the initial cost of the home in interest. So, the $10,000,000 would require adding on another $50 million in interest over a 100 year payback schedule. So in order to payback $60 million including interest over a 100 year "mortage" period would require $600,000 per year payments per household or $50,000 per month. Does this look feasible???
The only way people could pay $50,000 per month to pay back the debt would be to hyperinflate the currency which would lead to even higher percentage interest charges(20% like 1979, or 100% like Argentina etc.) on each household's loan, making the $600,000 yearly payments into $6 million, then $60 million etc. Collapse would obviously occur in a Weimer Republic sort of way very quickly if they go the hyperinflationary route, so it looks like we are cooked geese either way!!!
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