Fannie and Fred on the Brink

#1
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WA_Vol

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#1
http://money.cnn.com/2008/07/11/news/economy/fannie_freddie.fortune/index.htm

They own or guarantee $5 trillion worth of mortgages­ - nearly half of all the country's outstanding home loan debt - and they're crashing. Big time.
If Fannie Mae and Freddie Mac go under, it will wreak yet more havoc on an already wrecked housing market - making loans tougher to come by and possibly pushing hundreds of billions of dollars in cost on to U.S. taxpayers.
How could such a disaster have come to pass?
Click to expand...

Fannie, Freddie plunge continues - Jul. 11, 2008

More bad news for the housing segment. I wonder if McCain economic advisor Phil Gramm thinks this is part of the "mental" recession too.
 
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#2
#2
oklavol said:
More bad news for the housing segment. I wonder if McCain economic advisor Phil Gramm thinks this is part of the "mental" recession too.

Fannie, Freddie plunge continues - Jul. 11, 2008
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Mental recession or just a matter of housing lenders overextending themselves? Which came first here the chicken or the egg. I would argue that the housing market is just correcting itself at a bad time when oil is peaking (I hope).
 
#3
#3
KB5252 said:
Mental recession or just a matter of housing lenders overextending themselves? Which came first here the chicken or the egg. I would argue that the housing market is just correcting itself at a bad time when oil is peaking (I hope).
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IMO the Bush Administration was warned and did nothing. From the above article:

Some saw the crisis coming before this week. For example, Alan Greenspan famously warned in 2004 that Fannie and Freddie's rapid growth needed to be curbed because their expansion threatened the financial markets.
Still, the cocktail of high credit ratings, domination of the mortgage securities market, and preferential government treatment led to the sort of shenanigans that go hand in hand with excessive privilege.
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#4
#4
Not to worry, the US govt will bale them out and if they play their cards right, could make a tidy sum in the process.

Oh W and Cheny wanted Freddie and Fannie to fall on their face as its run by a bunch of democrats
 
#5
#5
oklavol said:
IMO the Bush Administration was warned and did nothing. From the above article:
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So W and company are to blame over the these companies and people taking huge risks on homes that were way over their heads?
 
#6
#6
VolsNSkinsFan said:
Not to worry, the US govt will bale them out and if they play their cards right, could make a tidy sum in the process.

Oh W and Cheny wanted Freddie and Fannie to fall on their face as its run by a bunch of democrats
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What about the 5 trillion taxpayers will have to pay for the bailout? Just print more money?
 
#8
#8
KB5252 said:
So W and company are to blame over the these companies and people taking huge risks on homes that were way over their heads?
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When Alan Greenspan has been saying specificly for 3 years their growth needs to be curbed, and the Bush Adminstration does nothing, yes they are to blame for allowing it to continue to the state it is now, on the verge of being insolvent.
 
#9
#9
oklavol said:
When Alan Greenspan has been saying specificly for 3 years their growth needs to be curbed, and the Bush Adminstration does nothing, yes they are to blame for allowing it to continue to the state it is now, on the verge of being insolvent.
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Was Bush the only one who could have addressed it?
 
#10
#10
oklavol said:
What about the 5 trillion taxpayers will have to pay for the bailout? Just print more money?
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$5 Trillion?? Freddie and Fannie can be bailed out for $100 Billion easy, add in some sort of stock options and or warrants in the deal and the govt could make some good money off this. Unfortunately the current shareholders are screwed.
 
#15
#15
OrangeEmpire said:
Bush causes high gas prices, Bush even wiped out the corn fields in Iowa!
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For such a terrible public speaker and all around ignorant person he sure was able to pull of some impressive feats like destroying the WTC complex, personally causing hurricane Katrina, Duping the world into war, making gas prices go sky high and now making every American buy a home they couldn't afford. Wow he is amazing, I guess he is only good at dastardly work!
 
#16
#16
I can't wait for the National Church of Obama....... every one will have to pray to him three times a day!
 
#17
#17
KB5252 said:
For such a terrible public speaker and all around ignorant person he sure was able to pull of some impressive feats like destroying the WTC complex, personally causing hurricane Katrina, Duping the world into war, making gas prices go sky high and now making every American buy a home they couldn't afford. Wow he is amazing, I guess he is only good at dastardly work!
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It is all a ploy!

He was cloned from Albert Einstein, Adolf Hitler, Joseph Stalin and Nikola Tesla.
 
#18
#18
Bush isn't to blame for anything, invading Iraq on sketchy intelligence, enormous deficit spending, U.S. energy policy, etc. He's just the sitting President, we can't expect him to address any of the nation's problems.

Not listening to Alan Greenspan on economic issues who can blame Bush for that? What kind of record does Greenspan have on the economy.
 
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#21
#21
oklavol said:
Bush isn't to blame for anything, invading Iraq on sketchy intelligence, enormous deficit spending, U.S. energy policy, etc. He's just the sitting President, we can't expect him to address any of the nation's problems.
.
Click to expand...

Did you actually type that one with a straight face?
 
#24
#24
oklavol said:
Bush isn't to blame for anything, invading Iraq on sketchy intelligence, enormous deficit spending, U.S. energy policy, etc. He's just the sitting President, we can't expect him to address any of the nation's problems.

Not listening to Alan Greenspan on economic issues who can blame Bush for that? What kind of record does Greenspan have on the economy.
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Good grief.

You asked above 'what about the $5 trillion that could go bad' and that number could not be futher from the truth. $5 billion is the face value of the notes they've underwritten, all of them. CNN, in their typical way, said it could be in the hundreds of BILLIONS, but even that number is misleading. This is a fed driven pile of writedowns causing many of the capital requirements. While default levels are high, they are still manageable in light of the capital bases of the two companies.

What in the world can the president do to stop exuberance in the market? Especially in housing, when the libs at Fannie and Freddie view it as their function on earth to provide housing, the basis of wealth in their view, to everyone, regardless of the borrowers' wherewithal. The day the president sticks his head into that mess is the day that we need a new one.

Bash Bush for the uncontrolled spending (but don't leave out the congress) and for the Iraq war (though the jury's still out for those not wrapped into the 24 hr news cycle). But what do you know of US energy policy and how might that have helped? If you're going to suggest that he should have helped develop something else, you're deranged and if you think he should have made us less dependent upon foreign oil, he's in the process.
 
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