Jim Cramer thinks Fannie and Freddie may fail (i.e. be bailed out by you the taxpayer) by the weekend

Could be yet another historic (and busy) weekend, as Fannie, Freddie, WaMu and Lehman all get taken out?

Buckle up. Get some popcorn. And get ready for Ben and Hank to tell us more wonderful plans Sunday night.

FLASH: Fannie Mae and Freddie Mac Will Fail. (Oops, we wrote that three years ago. But here's the latest on Fannie and Freddie failing...)

First they ignore you,
then they laugh at you,
then they fight you,
then you win.

P.S. Hey, America, ya got another trillion or so to bail out the lobbyist-and-executive-bonus-fueled, corruption-enabled, mortgage-fraud-powered debacle at Fannie and Freddie? I mean, who needed kids to be educated? Who needed new bridges and roads? Who needed food for the poor? Who needed health care? Who needed jobs? Who needed retirements?

Silly Americans.

WAKE UP AMERICA!!! Vote 'em all out. Every REIC corrupted pig in DC who let this happen. Democrat. Republican. It doesn't matter.

And think about what the trillion-plus for Fannie and Freddie, and the trillion-plus for the Iraq Debacle could have done for America.

Fannie and Freddie shares hit 18-year low

NEW YORK (Reuters) - Shares of Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News) dove to their lowest levels in more than 18 years on mounting fears of a government bailout that would wipe out shareholders of the two U.S. housing finance giants.

The two federally chartered companies own or guarantee almost half of all outstanding U.S. mortgages. The government is relying heavily on them to step up mortgage purchases and help stabilize the worst U.S. housing market since the Great Depression.

FLASH: THE UNITED STATES TAXPAYER HAS JUST BAILED OUT THE KINGS OF THE GREAT HOUSING PONZI SCHEME - FANNIE MAE AND FREDDIE MAC

* US Treasury increases credit lines, backed by mortgages that haven't been marked-to-market
* Government to buy shares, existing shareholders to get diluted
* Fed to open discount window and lend money directly to Fannie and Freddie at near 2% that we all know will not get paid back. Loans backed by dodgy mortgages
* Changes to be added to disastrous Dodd/Shelby Housing Gambler Bailout bill
* Senator Dodd's "everything's OK" statement from yesterday looking even more clueless or corrupt tonight
* This is the beginning, the first steps. As home prices keep dropping and people keep walking away from their depreciating debt-traps, it'll only get more interesting from here. Especially if Fannie or Freddie had to mark to market.
* Got gold?

Treasury, Fed move to rescue Fannie and Freddie

WASHINGTON (MarketWatch) -- The White House and the Federal Reserve moved Sunday to prevent Fannie Mae and Freddie Mac from failing.

In a statement, Treasury Secretary Henry Paulson said the global reach of Fannie and Freddie necessitated unprecedented action.

The Treasury has moved to increase its existing line of credit to Fannie and Freddie. In addition, Treasury have been given the power to buy the two companies stock.

In a separate vote, the Fed board of governors voted to open its discount window lending facility to Fannie and Freddie. In return, Paulson asked Congress to rework a measure in the housing bill moving through Congress to give the Fed a formal role to work with the new GSE regulator that the legislation would create.

Here's the latest on the upcoming taxpayer bailout of Freddie and Fannie

Meanwhile word on the street is that Bennie and the InkJets are gonna let Fannie and Freddie borrow directly from the Fed.

Ho.

Ly.

Crap.

Folks, you're looking at the China Syndrome of finance. A meltdown like the world has never seen. We're not talking millions anymore. We're not talking billions.

We're talking trillions. Trillions and trillions.

Where it stops, nobody knows.

Get some popcorn.

HousingPANIC Laughable Quote of the Day By a Bush Administration Official

"Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission"

- Hank Paulson, Goldman Sachs CEO (oops, I mean US Treasury Secretary), July 2008



Bonus:

Is Hank Paulson stupid, or is he just lying because that's what he has to do otherwise the sh*t would hit the fan even faster?

FLASH: FEDERAL RESERVE'S POOLE ADMITS FANNIE MAE AND FREDDIE MAC ARE INSOLVENT, MASSIVE TAXPAYER FINANCED BAILOUT LIKELY

Ho.

Ly.

Crap.

We saw it coming HP'ers, but then to see it come, that's another thing...

The US Taxpayer will in the end pick up the tab for the rampant mortgage fraud and housing speculation. Your income will be taken by the government to pay for the misdeeds of Angelo Mozilo, David Lereah, Michael Perry and Casey Serin. Your hard earned income will go toward bailing out failed housing gamblers and incompetent banks.

And that should piss you off something fierce.

Here's former Fed governor Poole, telling it like it is...

Fannie, Freddie insolvent, Poole tells Bloomberg

(Reuters) - Mortgage lenders Fannie Mae and Freddie Mac 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.

I'm back... I see toxic lender IndyMac is toast, laying off 1/2 their staff, and Fannie and Freddie are likely insolvent. So what else did I miss?

Ho-hum, another day, another corrupt housing-bubble-company meltdown. Or two. Or three.

Goodbye Indymac employees. Thanks for orchestrating one of the greatest financial frauds in American history. Thousands more of you lost your jobs today, but like Angelo Mozilo at Countrywide, your kingpin of fraud (aka "liar's loans"), CEO Michael Perry, still walks the earth a free man.

Hopefully not for much longer.

The Great Unwinding is here folks. Right on schedule.

See it live. Right before your eyes. Every day. For a long, long time to come.

FLASH: When you're the US and you find yourself in a massive mortgage hole, why of course, you keep digging. And digging. And digging.

To watch the government stupidly, wrongly and feebly attempt to prop up home prices for housing gamblers in an election year is just plain sick. Sick, sick, sick.

The latest stupidity from DC is to force the regulator to drop Fannie and Freddie's reserve requirement drastically, from 30% down to a shocking 20%, so when the fail, and yes, they will fail, the US taxpayer will be even deeper in the hole. So now Fannie and Freddie can buy up an addition $200 billion in sh*t loans this year.

We are so f*cked HP'ers. Our government is making a bad situation even worse. The taxpayer will be on the hook for trillions. Fannie and Freddie will fail. The lenders will fail. The investment banks will fail. The banks will fail. The FHLB will fail. The Fed may even fail. And nobody cares. What's on Idol?

You know what's coming. Somehow, get yourself and your family to safe shores.

Mortgage lenders to pump $200 billion into markets

WASHINGTON (Reuters) - The two largest U.S. mortgage finance companies on Wednesday won approval to pump up to $200 billion into the distressed U.S. mortgage market, the latest step in government efforts to stabilize credit markets and save the economy from recession.

Policy-makers at the Federal Reserve, regulatory agencies and the Treasury Department have let loose a flood of measures to battle rising home foreclosures and stabilize shaky markets, but some still see the need for a more direct government hand.

The Office of Federal Housing Enterprise Oversight said it was immediately easing restrictions on Fannie Mae (FNM.N) and Freddie Mac (FRE.N) to give them a bigger role in settling queasy mortgage markets. It said they should be able to buy or guarantee about $2 trillion total in mortgages this year.

"All hands are on deck to try and prevent this U.S. situation from becoming a dire crisis," said David Watt, a currency strategist with RBC Capital Markets in Toronto. "They're doing everything they can, making policy on the fly."

Ending one of the classic government clusterf*cks of all time, the boobs running the UK are humiliated, nationalize failed bank Northern Rock

No matter how they try to spin this one, Gordon Brown and the keystone cops running the UK just f*cked up big-time.

I hope this serves as a lesson to the US, UK and all other countries about to experience bank failures:

LET THE MARKET CLEAN UP ITS OWN MESS AND GET THE HELL OUT OF THE WAY.

Because their government panicked, the UK taxpayers now own a bottomless pit in Northern Rock, already out over $100 billion in loans that likely won't get paid back. The Labor Party says all is fine, but it's not. Loans backed by falling real estate are turds and will become even bigger turds. Just ask the FHLB in a few months in the US.

The Northern Rock bank is to be nationalised, according to reports.

The taxpayer has leant the bank around £55bn in recent months since it first ran into trouble last year.

FLASH: If you're the US government, when you find yourself in a hole, keep digging. Congress to raise Fannie and Freddy loan limits

The taxpayer bailout of these two corrupt and mismanaged organizations will now be even bigger, thanks to Congress and the NAR's lobbyists.

We are truly run by corrupt monkeys who will if left unchecked destroy America. Let's see if Bush, who seems to understand the mess Fannie and Freddy are in, signs this trash. It's sad when Bush is the only hope.

Remember this day.

Both sides agreed to allow Fannie Mae and Freddie Mac — government-sponsored companies that are the two biggest U.S. financiers and guarantors of home loans — to buy loans much larger than the current $417,000 limit, aides and lobbyists said.

Frank said that lending cap might reach as high as $700,000 in areas with the highest home prices.

Chew on this: "Fannie and Freddie pullback would devastate economy"

Too big to fail?

Not when you see the stench being hidden in the books of these out-of-control disasters-in-the-making.

And think it's bad now? Just wait until conforming start melting down. It's not just subprime. It's not just Alt-A. It's everything. And Fannie and Freddie are holding the stinking bag.

Now watch your clueless and corrupted Congress try to prop up these disasters. And watch Ben Bernanke freak out, slash rates and absolutely destroy the US dollar - anything to prevent Fannie and Freddie from imploding.

WASHINGTON (Reuters) - If anyone thinks the current U.S. housing downturn is bad now, things would get far worse if Fannie Mae or Freddie Mac were to suddenly stop buying mortgages, a move that would drive up the costs of home loans and devastate the economy.

Fannie Mae and Freddie Mac, the nation's two largest sources of mortgage finance respectively, recently reported combined losses of $3.5 billion. Borrowing costs have skyrocketed and investors have erased billions of dollars in each company's equity market capitalizations.

Few think the two companies are likely to pull out of the housing market, even temporarily. However, if the stream of home loan failures were to force the companies to suspend new mortgage investments, the market for mortgage bonds would "freeze up," said Tom Sowanick, chief investment officer of Clearbrook Financial LLC

Fannie Mae and Freddie Mac own or guarantee a combined $4.8 trillion of U.S. home mortgage loans of more than 40 percent of the total outstanding

This should scare you. Or at least wake you up a bit.

Close your eyes and picture the day the US defaults on its debt. Or has to print so much currency to compensate for this housing disaster that the value of the dollar goes from laughable to downright disgusting.

The biggest bagholders aren't the banks folks. Nope, they're Fannie and Freddie. And because of their implied government guarantee, after all loans melt down and not just subprime and Alt-A, that means, drumroll please, that the ultimate housing crash bagholder is, are you ready for it? Are you ready? The ultimate bagholder is...

You.

From the reform hearings on Fannie and Freddie:

The housing GSEs are among the largest borrowers in the world. A comparison I like to make is when you add Fannie’s and Freddie’s outstanding debt of almost $800 billion each, with the FHLBanks’ debt outstanding of $900 billion, and Fannie’s and Freddie’s net guaranteed MBS of $2.9 trillion, it comes to $5.4 trillion. That is bigger than the $4.9 trillion publicly held debt of the U.S.

Like other financial institutions, the housing GSEs face a full range of risks, including market risk, credit risk, and operational risk -- only on a much larger and more concentrated scale than other financial institutions.

Fannie Mae, Freddie Mac and some of the FHLBanks have each experienced serious difficulties handling those risks over the years. Current remediation efforts will help reduce operational risks, in particular, but all three risks will continue into the future.