September 06, 2008

FLASH: FANNIE & FREDDIE FAILURE FINALLY HERE: Reports have US taxpayers taking over the failed housing ponzi scheme enablers

We said this day would come.

And then it came.

Your children, and their children, and their children, and their children, and their children will hate you. They'll hate this generation of Americans who rang up trillions of dollars in debt in their name without their consent in a self-centered unethical and immoral orgy of greed, consumption and fraud.

Fannie and Freddie have finally failed. And every incumbent in DC - Democrat, Republican, Independent, it doesn't matter - EVERY FLIPPING INCUMBENT IN DC SHOULD BE BLAMED FOR THIS FIASCO, AND PROMPTLY VOTED OUT OF OFFICE THIS NOVEMBER.

AND THE SCREWED TAXPAYERS SHOULD DEMAND AN INDEPENDENT INVESTIGATION INTO THIS MESS - INCLUDING CORRUPTION, INCOMPETENCE, MALFEASANCE AND BRIBERY AT THE HIGHEST LEVELS OF POWER.


Government may soon take over troubled mortgage finance giants Fannie Mae, Freddie Mac


WASHINGTON (AP) -- The government is expected to take over Fannie Mae and Freddie Mac as soon as this weekend in a monumental move designed to protect the mortgage market from the failure of the two companies, which together hold or guarantee half of the nation's mortgage debt, a person briefed on the matter said Friday night.

Some of the details of the intervention, which could cost taxpayers billions, were not yet available, but are expected to include the departure of Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron, according to the source, who asked not to be named because the plan was yet to be announced.

Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and James Lockhart, the companies' chief regulator, met Friday afternoon with the top executives from the mortgage companies and informed them of the government's plan to put the troubled companies into a conservatorship.

The news, first reported on The Wall Street Journal's Web site, came after stock markets closed. In after-hours trading Fannie Mae's shares plunged $1.54, or 22 percent, to $5.50. Freddie Mac's shares fell $1.06, or almost 21 percent, to $4.04. Common stock in the companies will be worth little to nothing after the government's actions.

Critics say the open-ended nature of the rescue package could expose taxpayers to billions of dollars of potential losses.

Supporters, however, argue the Bush administration had little choice but to support Fannie and Freddie, which together hold or guarantee $5 trillion in mortgages -- almost half the nation's total.


More late breaking details from Bloomberg here



38 comments:

Anonymous said...

I hold the National Association of Realtors liable for this. They should be shut down as a criminal organization

toby said...

If done correctly this won't cost the taxpayers a dime. F&F have long term value. They would be able to weather the storm if they could only get cheap capital. Not happening in the private sector. The best scenario for the taxpayer is to run F&F for 5 or 6 years and then break them up into smaller GSEs. Maybe 8 or 10 and sell them off. This would maximize value to the taxpayer and limit the concentration of financial liability that we find ourselves in today. They would still be heavily regulated too. It really depends what party is in power when the sell off occurs. Democrats will demand fair value payment. Republicans will sell it to their cronys for pennies on the dollar.

Noodles said...

Welcome to Rome.

Anonymous said...

Greed disgusting disgusting
I am so disgusted..But if the Americans vote the Republicans back into office November 4th they deserve what they get.
Don't you get the media its all about ratings and Palin is banging that out..Scandle, unwed mother..praise for keeping the baby...If it were Obama's daughter the outrage would be over the top. I would bet my yearly salary you will never see Obama's daughters unwed and pregnant never....
So I am not going to care anymore..I am not going to read the negative ignorant comments regarding this country.
Grow the hell up..Vote for whoever who the hell cares..But you will get the country you truly deserve.
Keith...You have been on since day one...

Anonymous said...

Should read "Your Children will Hate Us" Common anyone who sold at the top is part of the problem.

RockyPoint said...

Hey Americanos !:

Bend over and open wide...your country is quickly sinking to second world status.

Saw this coming years ago and carefully planned my escape from Wal-Mart and Republican "values" that have infected a once great country.
Ex-pat now and the best move of a lifetime.

Last one out there, turn off the lights!

Anonymous said...

I love how they make these announcements over the weekend because they know the roasted Americano snapper turtle is too busy swilling sh*tty American piss beer and shouting at the football on TV to notice that he's being raped in the ass.

By Monday the Americano snapper turtle will be back in his cubicle or back on the factory assembly line and too busy to worry about his children's future or the future of the country.

As long as we're safe from "the terrorists" right?

ksfq said...

Toby,
yes - if done correctly this won't cost the taxpayers a dime.
But, Paulson is going to provide a bail out that will cost the taxpayers hundreds of billions, but he will do it in pieces and hide the real story until he is long gone. The scheme will be to enrich his Pals (John Mack, Vikram Pandit, Bob Steel, Jamie Dimon, Lloyd Blanfein, Bill Gross, John Thain and their counterparts throughout the Goldman Sachs).

Of course, the market will rally hundreds of points on Monday, as Paulson's Pals force the market higher to give the world a false sense of security. Paulson does not care about the public, the taxpayer or the how this effects the world. He is simply under too much pressure from his Pals.

I hope I'm wrong.

michael said...

"EVERY FLIPPING INCUMBENT IN DC SHOULD BE BLAMED FOR THIS FIASCO, AND PROMPTLY VOTED OUT OF OFFICE THIS NOVEMBER."

except for obama and biden. we want them promoted!!!!!

Andrew from Russia said...

Take care to preserve these two mummies for posterity. A story of failed GSEs gives hope that there won't be another "investment game" in housing for many decades to come.

Andrew from Russia said...

Take care to preserve these two mummies for posterity. A story of failed GSEs gives hope that there won't be another "investment game" in housing for many decades to come.

Lost Cause said...

This means that Hurricane Ike is going to strike the US mainland. You do realize that, don't you? They are just waiting for the appropriate disaster, so they can bury the story.

keith said...

Good point Michael, and you're right, McCain and Biden were around DC for all of it

Palin and Obama were not.

So.... what to do? The two parties have rigged the game to ensure that they're the only two viable parties come November. Outside of well-funded independent bid, America has to make a choice - the best of the worst.

This year would have been the year for an independent to win. Bloomberg could have been President. And if Ron Paul had run as an independent he'd have gotten at least 10% I think.

So, given the choice of McCain or Obama, I chose, and you know my reasons.

That said, McCain and Biden could have done something on Fannie and Freddie years and years ago, and they didn't.

I'd love to see where the investigation heads. If there is an investigation.

don_oc said...

Here in Aliso Viejo and Laguna Hills, I see properties selling for more than 6 months ago. For example, properties (in condo complex with about 250 homes) went for about 300K then, and same ones now go for about 345K.

My guess that Fed is pumping money again (meaning printing). Indicators are either lagging, or they are outright illegally (or through some financial instrument) outright making money out of thin air (not even as debt).

Suddenly money is appearing for people I know shouldn't (and don't) have it.

Very strange, or is it??

Skaven said...

So Keith, does this mean you are back on the deflationary bandwagon again. Like I have told you ad naseum, this is capital disappearing. The government will try desperately to prop it back up, but it's like throwing money into a black hole.

BTW see my comment on your "got gold" post when it was at $950. Deflation is what's coming, and it's an order of magnitude worse a problem than inflation.

Get out of all asset classes, including precious metals.

Laura's BUSH said...

KEITH!!!!!



WE IMPLORE you to KEEP THIS BLOODY BLOG ALIVE!!

YOUR WORK HERE HASN'T ENDED, BY ALL ACCOUNTS, IT HAS JUST BEGUN!!!

les said...

Cronies

Bush helps his oil buddies

Cheney helps his defense industry buddies

Paulson helps his wall street buddies

keith said...

Skaven - go read the posts over the past month or two - I'm on deflation now, after the inflation. Most HP'ers for years predicted wild inflation followed by deflation. Looks like that'll be exactly the case.

The commodity meltdown over the past few weeks was important. But watch for Iran to create some drama to try to get the oil price back up.

Next rate move is down by the way, not up, now that deflation has set in and job losses mount.

As for gold, currency debasement as the Fed cranks up the presses protects it, while deflation huts it. It's a wash I'd think.

It'll be interesting how the market reacts to the gov't takeover of fnm and fre. I think it rallies on the news. Markets hate uncertainty. Now we know.

gw said...

Anyone cares to elaborate what is the long term value of F&F? Can't see what they can do more or better than any other specialized and capitalized enterprise.

Annie C said...

According to the latest CNN Map, for what it's worth, Hurricane Ike looks to be hitting....insert drum roll here...New Orleans by Friday. And rolling over all those oil and gas platforms on the way.

Now, back to the topic at hand, will someone please explain to someone who has little if any economic knowledge, what all this Fanny/Freddy buy out will do, anyway? I'm just a renter, with little in the bank, more in silver, who worries about the cost of gas and groceries every month. How could this affect me?

LoneLibertarian said...

If I recall McCain was making fun of Paris Hilton in one of his ads.

As far as I know Paris did not have a child at age 17.

Who's the bigger whore now McCain?

And remember to vote NObama in election 2008!

Ponzi victim said...

I guess that is about it for the house-selling game. With Fannie and Freddie under new and supposedly responsible management, say goodbye to stupid $0 down, no-doc loans.

Or am I just naive?

What do the crooked CEOs' contracts say about a severance package? I'll bet they walk with millions more in stupid-money -- except that we are the stupid ones because we get to pay it.

vanilla ice said...

Well, it's happening pretty much like we thought. F&F fail but not really. All the mortgage bond holders, preferred stock owners don't miss a beat. Common stock owners, Americans, take one for the team.

What kind of free market is this? There should be rioting in the streets.

Lost Cause said...

Shareholder value will be wiped out, doncha' know. I am practicing my Canadian accent. How am I doin', eh? Call me a reverse frostback.

Anonymous said...

Keith,
Please keep this blog until the election....I beg you...It is the voice of reason...
At least consider it. Keep us updated..
You need to run for office.

Anonymous said...

Well I'll take a bet here:
Whenever they've made plans over the week-end, it most of the time ended up with a different company failing. So I guess their move is mostly to divert investor's attention from the real shares at risk.
Plus, this time, there ain't anything really new, since it was pretty clear this was gonna happen.
Finally, today's my birthday, so I can't be wrong. I say WAMU fails in a matter of days.

Anonymous said...

apparently paulson and ben are technicians. these rescue actions keep happening coinkadently at the same look out below support level. hmmmmmm.... something for you traitors ummm traders to think about.

Anonymous said...

Saw this coming years ago and carefully planned my escape from Wal-Mart and Republican "values" that have infected a once great country.
Ex-pat now and the best move of a lifetime

You truely are a moron. Good luck in any anglo western country with a democratic goverment. If your thinking third world will be safe a year from now you are denser than you sound. They will kill you and eat you you dumbass. How did Europe and the rest of the world do the last time devil and the dogs of war were loosed upon the world. Most turds like you have no idea whats coming. Run bitch, no one will have your back where you are.

Lost Cause said...

Tropical Storm Hanna strikes Washington DC and New York today. Communications disrupted, power failures predicted. Film at 11.

Anonymous said...

There was a time where debtors who did not pay went to jail.

Later, they no longer went to jail, but their other assets could be seized, as it should be.

The single reason for the meltdown of the US housing market (and eventually the whole economy) is the ridiculous American system where debtors can kiss good-bye to the debt they owe and walk away from their mortgages with absolutely no consequences.

I am sick of the United States preaching to be the land of the free. Freedom comes with responsibility, and this country does not know the meaning of that word any more.

Anonymous said...

The Democrats took over Congress 2 years ago, just about the time real estate started going crazy.

eric in vegas said...

"The Democrats took over Congress 2 years ago, just about the time real estate started going crazy."

This is it, the most retarded post of the day.

Synanon said...

You may build your castle in the sky.

Now is the time to put the foundation under it.

We would like to thank all of you who have attended our programs whether you knew it or not.

Anonymous said...

Everything that's wrong with current US "market capitalism" laid out bare right here... Privatized gains and nationalized losses...

It really is no great wonder why everything the government is supposed to take care of is falling apart in this nation.

Paul E. Math said...

With all due respect, these actions confirm my belief that the USD will resume its downward spiral in the not-too-distant future. I believe commodities will regain strength as well.

The takeover of F&F is another form of taxpayer subsidy of housing.

F&F do not have enough income to pay their obligations, to pay the bonds that they have issued against themselves and the mortgage backed securities they own or packaged and sold. They will not default now though because the taxpayer is there to make up for any income shortfall.

I see this as creating more money with no underlying value and that is inflationary.

I predict a big rally Monday in financials as wall street realizes they'll get paid by the taxpayer for all their low-quality assets.

We are all working for the banks now.

Paul E. Math said...

Watching this live on CNN. Ali Velshi is an idiot.

You think F&F were poorly run before? Imagine how poorly run they will be when they are run by the government.

This is great news for mortgage brokers though. They'll be able to write any kind of mortgage and F&F will buy it from them.

Wahoo! Free money!

Anonymous said...

I am so disgusted..But if the Americans vote the Republicans back into office November 4th they deserve what they get.
Don't you get the media its a

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come on, the democrats have been in power in congress for 2 years now. what have they done to clean this mess up?

How am I suppose to believe that by voting another democrat in (obama) that this will make things better?

Anonymous said...

"The Democrats took over Congress 2 years ago, just about the time real estate started going crazy."

This is it, the most retarded post of the day.

-----------------------------------

is it retarded to expect that the democrats do something, anything, to address the real estate issues? In 2 years! Perhaps this is what the poster was getting at. They have had 2 YEARS and have done nothing.