November 20, 2007

FLASH: Freddie Mac one step closer to insolvency. Meanwhile, Ben Bernanke and Chuck Schumer want to double down.

Time for the revolution anyone?

Fannie and Freddie will implode. The US taxpayer will take on the burden. Banks will shut down. The printing presses will go into overdrive. And Ben Bernanke and Chuck Schumer should be tried for corruption and treason.

Freddie Mac has hired Goldman Sachs and Lehman Brothers to help it look into raising capital and said it is seriously considering cutting its fourth-quarter dividend in half.

The quasigovernmental company, which buys residential mortgages and mortgage-related securities, made the announcement as it reported a loss of $2 billion for the third quarter ended Sept. 30. Freddie Mac attributed the loss to a higher provision for credit losses and a markdown in the value of its assets.

And From CNN:

Mortgage financing firm Freddie Mac rocked the credit markets further Tuesday as it reported a large loss along with an $8.1 billion drop in the value of its assets, as it set aside $1.2 billion to cover credit losses.

The firm reported a net loss of $2 billion, or $3.29 a share, in the period, wider than the loss of $715 million, or $1.17 a share, a year earlier.

49 comments:

Marky Mark said...

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Chuck Schumer. Chuck Schumer. Hmmmm, where do I know that name from...oh yeah - Democrat. No - a leader of the Democrat party. He is pretty much a socialist and you are surprised?

And funny how his party affiliation is AWOL from your blog.

Democrats - the party that this blog wants to run America...

Marky Mark

keith said...

Sorry Marky - anyone who reads this blog knows that I think Democrats suck as much as Republicans.

Our leaders are corrupt. And anyone clinging to the Democrats or Republicans as the solution is misguided. They're the problem. Both stinking corrupt parties.

The housing and financial collapse underway will help destroy the two party system.

Watch for an independent to win the White House in 2008. Someone who'll promise to clean up the stench coming from these corrupt parties.

westwest888 said...

Why do we even need Fannie and Freddie going forward? Why not just freeze their portfolios and let them burn out over the next 30 years as they're fully repaid or written off.

We have two agencies who only buy the best-of-the-best home loans. Well if they're so great, why can't other investors hold them? They're certainly be able to account for them better.

Aren't Fannie and Freddie responsible for too much supply in mortgages? Maybe if the rates were more market driven, we wouldn't have gotten in as deep a mess. I say let them go, they're too incompetent. To quote DeNiro in Casino, "either you're incompetent or you were in on it--either way you're out of here!"

Anonymous said...

Oh yeah, nothing says market rally like today's headlines:

1. Freddie Mac: $8.1 billion writedown

2. Housing permits drop to 14-year low

3. Target's profits miss estimates


It's all rigged!

Anonymous said...

Hitlary/Obsama will win the White House in 2008. Trillions will be pumped into Fannie/Freddie and they will buy all of the toxic loans out there. CFC will be bailed out along with the pigmen of Wall Street. Upchuck Schumer will retire and get a seat on the BOD of several Wall St firms where he will make tens of millions for doing nothing as the pigmen continue to plunder the 401k's and IRA's of the dying middle class.

Hitlary/Obsama will keep our troops in Iraq but have them as part of a UN peacekeeping force. They will have their helmets painted bright blue, which will make a perfect target for insurgent snipers. Our air force will also be grounded, as Obsama was complaining that there was collateral damage(as if there wasn't any in WWII). LBJ all over again. Our troops will return home to be spat upon and attacked.

From this, there will rise a revolution.

Marky Mark said...

Watch for an independent to win the White House in 2008. Someone who'll promise to clean up the stench coming from these corrupt parties.

It has already happened - Perot - which gave us Clinton for 8 years (even though Clinton never won over 50% of the vote)

Anonymous said...

And yet, the market is up this AM

Anonymous said...

I think I see my future and it contains a nice warm cozy jail cell, 3 squares a day and some fresh air from time-to-time, maybe in a nice new Bush-Cheney FEMA camp. I'll want to be on the INSIDE, because after the sheeple wake from their consumption/credit coma and realize what has happened and their future is over, it will be safer to be INSIDE than OUTSIDE with the m/asses...

The Game is over, the jog is UP.
America is a turd world nation and we deserve every bit of what is about to happen. Don't like it, tough luck, buster. Look in the mirror, that's who to blame...

Shakespeare was RIGHT.

Anonymous said...

Democrats - the party that this blog wants to run America...

If that were to be true, which is not, why are you here all the time? Don't you think it's better for you to hang out at the GOP sites?

die w/ a hard on said...

I have heard that ross perot is considering a run for president again.He is in talks w/ ron paul to team up w/ him and take control of the country again.

Peter T said...

Keith, I always thought that the name of your blog was funny but a bit over the top. Now I think you might have been right: If Freddie and Fannie fall, there will be panic in the housing market. It seems just a matter of time that even the higher quality mortgages of Fannie and Freddie will loose enough value to eat Fannie's and Freddie's capital.

westwest888 said...

Oh don't worry. We'll legislate our way out:

House Passes Mortgage Reform Bill

On Thursday, by a vote of 291-127, the House passed H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, sponsored by Representative Brad Miller. The bill would enact standards on mortgage brokers, lenders, and Wall Street companies. Brokers and lenders would be responsible for guaranteeing that borrowers will be able to repay "adjustable rate" mortgages that will reset to higher payments in the future. They would also have to show that refinancing is to the borrower's advantage. Mortgage brokers and loan officers would have to be licensed and registered with the government.

Supporters of the bill say that it will help homeowners and protect the economy, with some predicting that over 2 million families could lose their homes from now through the end of 2008 due to mortgage resets. Opponents argue that the bill does nothing to help homeowners currently in trouble and restricts the ability of future borrowers to receive home loans.

westwest888 said...

About This Legislation:
10/22/2007--Introduced.
Mortgage Reform and Anti-Predatory Lending Act of 2007 -- Amends the Truth in Lending Act to set forth a duty of care standard for residential mortgage loan originations.
Prohibits steering incentives to mortgage originators, including incentive compensation and any yield spread premium based on, or varying with, the terms of a residential mortgage loan.
Directs the Secretary of Housing and Urban Development and other specified federal banking regulatory agencies to prescribe jointly regulations to prohibit mortgage originators from steering any consumer to a residential mortgage loan that is not in the consumer's interest (loans with predatory characteristics).
Sets forth licensing and registration requirements for mortgage originators.
Sets forth minimum repayment standards for residential mortgage loans. Requires creditors to determine, based on verified and documented information, that a consumer has a reasonable ability to repay the loan, according to its terms, and all applicable taxes, insurance, and assessments.
Prohibits creditors from extending credit for residential mortgage loans that involve refinancing of a prior residential mortgage loan unless the creditor determines that refinancing provides a net tangible benefit to the consumer.
Subjects assignees and securitizers to liability for certain violations in connection with residential mortgage loans.
Sets forth defenses to foreclosure.
Proscribes certain practices, including: (1) certain prepayment penalties; (2) single premium credit insurance; (3) mandatory use of arbitration; and (4) negative amortization mortgages.
Redefines high-cost mortgages. Prohibits balloon payments for such mortgages.
Revises requirements governing prepayment penalties. Prohibits lending without due regard to repayment ability.
Prohibits certain creditor practices with respect to high-cost mortgages, including: (1) recommending default on an existing loan or other debt before and in connection with closing of a high-cost mortgage that refinances all or any portion of such existing loan or debt; (2) imposing late fees except according to specified requirements; (3) exercising sole discretion to accelerate indebtedness; (4) financing points and fees; (4) structuring certain transactions and reciprocal arrangements to evade the requirements and prohibitions of this Act; and (5) charging certain modification or deferral fees, and fees for notification of payoff information.
Requires pre-loan counseling.

Anonymous said...

Freddie Mac scrambles for cash
Finance company's shares plunge on news that it has turned to Wall Street and may cut dividends as losses cut deep into capital.


http://money.cnn.com/2007/11/20/news/companies/freddiemac/index.htm?postversion=2007112011

Anonymous said...

>> The housing and financial collapse underway will help destroy the two party system.

Here's hoping, Keith...

Try harder said...

anon 2:45
calling Obama "Obsama" is just stupid.

Anonymous said...

Next shoe to drop: Consumer Credit

Anonymous said...

I don't understand why those nincompoops pop up here and accuse Keith of supporting the Democrats. Clearly, as he states, he recognizes that the entire polictical system is extremely corrupt, and both parties are two sides of the same coin.

Alex said...

THIS IS IT. I am not a constant reader of this blog, but this announcement is the BREAK POINT. Lenders now know that if they can't sell to FM, that puts the ending period.

Things won't be as bleak as told here and Keith is no genius. Economies have cycles and this is the start of the down cycle. Nothing to PANIC about, just something to prepare for.

Anonymous said...

Supporters of the bill say that it will help homeowners
---------------------------------

how exactly does mortgage reform help home owners?

I really hate how the media keeps perpetuating that someone with a zero down arm owns their home.

Anonymous said...

I have heard that ross perot is considering a run for president again.He is in talks w/ ron paul to team up w/ him and take control of the country again.
------------------------------

RP & RP in 08?


Seriously, though, who would be a possible VP for Ron Paul?

I think Perot would be a great Sec Treas or put Perot in charge of the Federal reserve to clean house... Perot would be a great hatchet man.

Anonymous said...

">> The housing and financial collapse underway will help destroy the two party system."

GOOD RIDDENCE !!!!!

Lets HOPE it happens SOONER rather than LATER....

Anonymous said...


If that were to be true, which is not, why are you here all the time? Don't you think it's better for you to hang out at the GOP sites?


Except for a few wacko socialists and marxists, this has never been a democrat site either.

Anonymous said...

Democrats and Republicans are stooges of the big money. Why do you think Soros and Buffett support Clinton and Obama?

Anonymous said...

Ah,,, I have held Fannie Mae bonds for some time now. They were suppose to be one of the safest investments for the return. Do you HPer's think I should get out of them now?? (Seriously)

Anonymous said...

Whoa! Couldn't see that one coming!!

NOT!!!

westwest888 said...

Jim Rogers pwns Fannie and Freddie, says he is still short.

http://tinyurl.com/yvmeq7

``I'm still short those companies, they both have a long way to go as far as I'm concerned,'' Rogers said in an interview. ``Neither one has a clue what's on their balance sheets.''

Rogers also said he is still shorting shares of investment banks and Citigroup Inc., the largest U.S. bank by assets.

``There are huge numbers of writedowns still coming,'' Rogers said.

Yoski said...

While I hate Schumer, Hillary, Edwards and the likes, let's not forget that this fiasco is unfolding under the Republican watch. 8 years of Republican rule have driven this country to the brink of the Abyss. I am sure the Democrates will find a way to push it over the edge.
8 billion here, 12 billion there and before too long you're talking about real money.

Andrew Hac said...

Tuesday 11/20/2007

OIL(NYM)
+3.39 98.03 +3.58%

Go baby ! I love it when I see Americano squirmed on their fat-ass driving that monster SUV Ford Expedition, the cow-hauling F350 truck. This nation is now comprised 99.99% of ignorant, greedy, materialistic, cheating, lying, self-righteous prick S.O.B.

The "Day of Judgment" has come to judge the Americano !!!

Anonymous said...

Except for a few wacko socialists and marxists, this has never been a democrat site either.

You guys call anyone who doesn't buy the GOP Kool-Aid or refuse to be a sheeple, a socialist or marxist. That doesn't mean we are democrats either. I'm surprised that you guys don't call us terrorists because we don't buy into your Republican bull$hit. Not everyone in America is a hick, you know? You Republicans are a disgusting bunch.

Anonymous said...

FRE showed a $1.2B foreign currency loss...

http://www.freddiemac.com/investors/er/pdf/financial-statements_112007.pdf

what's that about?

brokersleaveyoubroke said...

"I think Perot would be a great Sec Treas or put Perot in charge of the Federal reserve to clean house... Perot would be a great hatchet man."

I disagree. I was a big Perot fan when he first ran but then seddenly he dropped out of the race and left his supporters scrambling to replace him. Then, after a few months he suddenly jumps back in. His excuse for quitting the race was totally lame and hard to believe. His erratic actions squashed any faith I had in him.

Anonymous said...

EXTREMELY IMPORTANT!!

Not many people know this, and I have been trying to alert as many as I can: The Fannie and Freddie have been hiding under the guises and false pretenses of "tight standards" for a very long time.

1.) They both underwrite subprime mortgages. They used to do STATED income for subprime borrowers, but now only do full-doc subprime. Subprime is still subprime, regardless if they make money of not.

2.) Conforming loans can be 5,7, and 10 year ARMS. They can also be interest only.

3.) Fannie and Freddie have what's called "fast forward documentation" This is where the borrower qualifies for a WAIVER of employment and income verification!!! I personally now of loans where the borrower was unemployed, but the loan officer put a fake job on the 1003 application. The borrower ends up with a full-doc rate, and the investors end up with a AAA rated ticking time bomb of a Mortage bond.

I am thinking of emailing this info to Cuomo in NY.

Tabasco said...

One would think the Federal Reserve Chairman would know that if Fannie Mae had it's own capital financing issues, suggesting that they get into the game of providing financing for $1 Million houses might not be the most realistic idea.....one would think....

Edgar said...

Yeah BLB, I agree, Perot's family could not possibly have been threatened by the thug licken goons. Right... [/sarcasm]

why is bush out of prison? said...

Dick Cheney was seen packing up his bags today in DC.

GOP [is] the new term for "wackos."

And when they get sent to prison: "GOP prison wackos."

Their membership is getting smaller each week, some defect, some jump ship, while some get run over by garbage trucks in Iraq. Bush said he is talking to Jesus about the issue.

I WAS planning to vote for H Clinton, until I found out she voted for the bush-co war.

She is toast, Bye, bye. Done deal.

I'm voting for Dr. Paul. 100%.

back in black said...

Freddie and Fannie failed long ago, but the Fed and Congress are hiding the weenie. An outside consultant estimated it would take 2500 man years to prepare conforming audits for the GSEs -- their books are that screwed up. This mess was the result of years of mismanagement and graft by a clown named Franklin Raines -- appointed to the cush job by Bubba Clinton to buy his silence.

Congress gave oversight responsibility for the GSEs to the Fed in 2003 so they wouldn't have to deal with the ugly mess, and they hoped Greenspan could sweep the massive problems under the rug.

Weenies don't stay hidden forever.

Anonymous said...

Can you say Weimer Germany?

Anonymous said...

This poster above forgot to mention this about conforming loans:

Fannie will also purchase 40 year fixed-rate mortgages and 40-year hybrid adjustable rate mortgages (ARMS) with initial fixed periods of three, five, seven, or ten years.

Anonymous said...

GOOD RIDDENCE !!!!!

Lets HOPE it happens SOONER rather than LATER....

Dude, You've been all over the blog saying the same thing ("G0OD RIDDENCE"). Learn to spell "RIDDENCE" It is "RIDDANCE"
That's R-I-D-D-A-N-C-E Got it,now? Jeesh

she blinded me with science said...

Why in the world is bushy boy and slicky dicky still out of prison?

********************************
The republicans must be giving out lots of free blow jobs is all I can think of. Most of the republicans who support bush have been getting busted in bathroom sex activites and molesting little boys at church and republican meetings, but I think its time we build a massive maximum GOP security prison for these republican weenie suckers.

Paying all Interest up Front is a SCAM said...

I just have to say it...The traditional home mortgage is one of the biggest scams ever unleashed on mankind.They fine tuned it over decades into a lean & mean...keep the working mans @ss in debt machine. Then the greed reached a new level with the interest only & teaser rate loans of the past 5 - 10 years.It is ironic that the same greed will be the straw that breaks the bank.The way loans were structured may have worked 30 years ago on a $40K homes but in todays market of $250K & up McMansions...They had better devise a new scheme because the sheeple cannot afford this one any longer.

ohhhhhhhhhhmyyyy said...

"I disagree. I was a big Perot fan when he first ran but then seddenly he dropped out of the race and left his supporters scrambling to replace him."

Dennis Kucinich upset people when he supported Kerry even though Kerry said: "If I'd known back then-- what I know today, I still would have voted for the war."

As far as I can tell, the unions probably told Kucinich to back off since they endorsed Kerry and they wanted unity.

Of course, nobody knows what happens under-the-covers but Ross Perot might have been "gotten to."

Peter T said...

> Do you HPer's think I should get out of them (Fannie and Freddie bonds) now?

I don't know, as nobody does. If you stay in, you gamble that the bonds will be guaranteed by the US treasury. Many people believe that this is a likely outcome, if Fannie and Freddie fail, which I believe they will. I chose not to gamble and never invested in them in the first place. But I recently feared that my money market fund is not so sure either. Good luck!

Anonymous said...

Didnt both agencies start under FDR to help Americans purchase homes, and later under the amazing free market guru's these agencies were "privatized" for the greater good of public enemy #1 Wall Street.

Anonymous said...

DemoCrook sheeple have nothing to say about Schumer? It figures that they protect their own kind

Anonymous said...

>> The housing and financial collapse underway will help destroy the two party system.

========

And replace it with what exactly? Italy has lots of parties, and they also have governments that last 6 months at a time. Thanks but no thanks.

If you look at any long term democracy historically it is a 2 or occasionally 3 party system. US, UK, Canada, France, Australia all have 2 major parties that more or less swap power every 10 years or so.

It isn't perfect, but it's better than the alternatives. Just like capitalism.

Anonymous said...

Try harder said...
anon 2:45
calling Obama "Obsama" is just stupid.
November 20, 2007 4:41 PM
-----------------------------------
Hah. Lot of stupid middle class Americans on this site think Bush, Reagon, etc, were just great for them. Thats why they're going broke, and joining the black underclass.

Anonymous said...

Anonymous said...
>> The housing and financial collapse underway will help destroy the two party system.
November 20, 2007 4:13 PM
-----------------------------------
Be careful what you wish for. Your new masters may not be as incompetant as the silly righwingnut Republicans.