Goverment to Seize Fannie and Freddie

(Don't bash me on title as that is what is says on yahoo front page.)

I posted this on another thread but thought it was relevant enough to have it's own.

Goverment to Seize Fannie and Freddie

This is not what people were expecting going into the weekend. Wholesale takeover and conservatorship by the goverment. Shareholders and most likely preferred holders as well will be wiped out. Not good news for stock investors on Monday.

Fill your tanks over the weekend before energy soars on a weak dollar.

reply to post by disgustedbyhumanity



This will officially lead to the bottom dropping out.


People in mortgages have been speculating this for about a year now, and it looks like they finally moved forward. This is so huge I dont think most people really understand the gravity of what it means.

...beginning of economic collapse, agreed. Although, when more private banks go, is the main event. 'Hedge funds' and other 'derivative' scams of modern stock markets are worth in the triple digit trillions, (US$) whereas this, this is 'only' about five tril... sure, the 'interest rate' potential hyperinflation (a la Nazi Germany) probably occurs with F/F bursting a bubble of middle-class (lack thereof) homeownership into New bankruptcy... time will tell soon enough should this break Wall St. It may, combined with a quickly rising unemployment rate of over HALF A MILLION JOBS LOST LAST MONTH... from the NY Times article on OP:

...shareholders have already lost billions of dollars as the stocks have plunged more than 80 percent this year.

For months, administration officials have grappled with the steady erosion of the books of the two mortgage finance giants, created during the Depression and converted to public companies in the 1960s.

A fierce behind-the-scenes debate among policy makers has been waged over whether to seize the companies or let them work out their problems. Even after the companies are put under government control, debates will continue over whether they should be independent and how they should operate over the long term.

www.nytimes.com...

...edit: here's the total 'quoted' value of mortgage 'companies' -- this could become frightening envisioning homelessness in post-modern age:

The government-sponsored mortgage giants Fannie Mae and Freddie Mac, which together hold or guarantee nearly half of the country's $12 trillion in mortgages.

[edit on 5-9-2008 by arktkchr]

I'm not seeing alot of detail yet about the Treasury plan. IMHO both the common and prefered of these two companies post any taxpayer bailout should be---ZERO. What happens to the debt issued by the GSEs is orders of magnitude more important than what happens to stockholders. Stockholders, both common and prefered, should have seen the writing on the wall months ago and got the hell out. If the .gov backs the GSE debt at face value, I can see the national debt rising 25-50% basically overnight. If there is a substantial "haircut" to pre-bailout debt, they will probably be able to walk the tightrope a little longer, maybe even till November.

Originally posted by jefwane
I can see the national debt rising 25-50% basically overnight.

...let us check in on that number, and for the kids who have not learned to count this 'high' -- this is nine plus trillion dollars. I doubt we'll see food on 'the' shelves soon should this continue:

$ 9 , 6 7 0 , 6 5 3 , 2 2 2 , 7 7 3 . 1 5

www.brillig.com...

The National Debt has continued to increase an average of $1.93 billion per day since September 28, 2007

[edit on 5-9-2008 by arktkchr]

Hi Everyone!

I don't like to quote REM, BUT...."It's the end of the world as we know it (I just want some time alone..)". How's everyone's farming, bartering, and trade skills? How do you say, "may I shine your shoes sir?" in Cantonese? This is an ugly, ugly mess up. We are all to blame (even the savers who didn't make a stink about fiat currency....100 years ago), and we are all in grave danger. All it takes is one pissed off 'Cartman' type to start lobbing nukes around while screaming "I'm taking my toys and going home!".

On the bright side, I did plant a garden this year and discovered what I did wrong.

Peace, G.

banking and loan bailout = dollar deeper down the drain in the toilet = your dollar will buy even less. Thanks stupid clueless central financial planning politicos. We now are worth even less. Wow we can spend more and buy less then ever before oh boy!



[edit on 9/6/2008 by UFOTECH]

reply to post by disgustedbyhumanity


Jesus, I didn't think we would move into socialism so quick. This is a sad state of affairs...

Fortunately I have found I can live on one can of spaggetios a day. With a few spring dandelions salads. Just boil them for a minute takes out the bitterness and the bugs. Just for a microsecond lately I've been looking at my dogs and get a cloud popup of a steamed roasting turkey.

This is a very serious sit. The street better be wearing depends on Monday.

[edit on 9/6/2008 by jpm1602]

I am NOT comfortable with this...

www.msnbc.msn.com...

U.S. nears rescue plan for Fannie and Freddie

The government has formulated a plan to put troubled mortgage giants Fannie Mae and Freddie Mac under federal control, dismiss their top executives and prop them up financially, federal officials told the two companies yesterday, according to three sources familiar with the conversations.

This is ridiculous. The government should not bail out failing private businesses. In this case, I don't think the mortgage industry will ever fail... bad lenders will burn at the stake and good lenders will get better profits. Plus, high-risk people won't get loans... and they shouldn't.

This is a terrible idea. I have no faith that anything remotely good will come from this.

I'm not comfortable with this-----

From the NY Times

The proposal to place both companies, which own or back $5.3 trillion in mortgages, into a government-run conservatorship also grew out of deep concern among foreign investors that the companies’ debt might not be repaid.

This is what happens when the .gov must borrow hundreds of billions from foreign interests to conduct day to day business. They can force you to cover debt that specifically stated it wasn't the governments responsiblllity.
The prospectus for Fannie Mae debt says specifically, " The Certificates and payments of principal and interest on the certificates are not guaranteed by the United States and do not constitute a debt or obligation of the United States or any of its agents or instrumentalities other than Fannie Mae."

Oh and from the same NY Times article

Then, last week, advisers from Morgan Stanley hired by the Treasury Department to scrutinize the companies came to a troubling conclusion: Freddie Mac’s capital position was worse than initially imagined, according to people briefed on those findings

The CEOs of Fannie and Freddie shouldn't be fired, they should be jailed!

Why do they not bail out those that are in trouble with there mortgage instead?

Most that are in trouble are not in exotic mortgages or because they cannot afford they're home. Most were talked into it by slick sales people or have a unique situation and then fell down while they were in the ARM.

My wife and I had to relocate because of her job. We had already owned a home and never missed any payments in our lives on anything. We had to get an ARM because we had to buy a second home. We were going to sell the first home but our children got evicted and they had our three grandchildren to take care of. We let them live in our first home and pay us rent. They never payed us a dime, then ran the electricity bill from $100 per month to over $400 per month. Being in our name still we had to pay it and both mortgages. Before we knew it we could not afford to eat anymore and ended up having the first home foreclosed. Now we cannot refinance our home we live in and our rate is going through the roof.

We are facing foreclosure again and may become homeless. Our dreams are shattered and we are too old to start over.

A suicide pact is starting to look like our only option. We will soon have nothing and do not have the means to survive this.

To all those stating its the peoples fault you should walk in my shoes. We tried doing the right thing and no one is there to help us. I am a Firefighter and have always been there to help those in trouble, but there is not a 911 to call to help us in our time of need.

Wish us a safe crossing.





[edit on 6-9-2008 by LoneGunMan]

reply to post by LoneGunMan


Walk away my friend.

Nothing binds you to your home except the dreams of a nice credit score. One home was already foreclosed, so # the bank and walk away! .. Go live in an apartment, try anything you can do to get custody of your grandkids from your worthless children who screwed you over.

There is no reason for you to suffer paying ARM rates to a bank that invented ARM's to screw people over.

So go live somewhere else, and in 6 years your foreclosures will be off your credit rating and you can start fresh.

Here is the press release from Treasury about what's going on with Fannie and Freddie

Treasury Press Release

I'm still digesting it and looking for commentary. Looks like common and prefered shareholders are toast.

Should be interesting one way or another in markets tonight and into tomorrow. Currencies start trading first followed by futures followed by Asian markets.

I am already planning on the US Dollar to depreciate because of this..

John McCain had some comments, apparently the company is to be under federal control for about a year or so until the markets bounce back, then it will be private once more. The company is supposed to pay back all debts to the US Tax Payer. BS. Won't happen.

McCain said we should be happy because we will all be paid back when the market is fixed and our houses are "worth more" because of it. That's about when I threw my shoe at the TV.

I must say I was a little bit shocked by this. I expected one to fail but not both.

I think it gives some creditbility to this post though: www.abovetopsecret.com...

More than likely this one: www.abovetopsecret.com...

This one also: www.abovetopsecret.com...

This one: www.abovetopsecret.com...
Note: this one was for late July so it is off by a month or so.

And this post, from 07: www.abovetopsecret.com...


I fully expected one to collapse or to merge with another bank, but apparently they've both messed up more than we know. I wouldn't be suprised if Citi had more to write off either. The Lehman Brother's will probably be hit as well as JP Morgan. You'll probably see Wachovia take another hit as well as Wells Fargo.

I think Bank of America and Goldman Sachs will make it out ok, but there stocks will fall tomorrow just like every thing else. Oil could make a rebound though with Hurricane Ike possibly doing more damage in the Gulf.

I posted this about the problem, and Phil Gramm, a little while back. If you want to look at someone that has caused this problem, then look no further than him. www.abovetopsecret.com...

Recently the Dollar has been doing well but this could hinder that progress. Things could get really bad, but I think it depends on how the government handles the situation.

As one poster put it, why doesn't the government help the people with the bad mortgages? They shouldn't; and they shouldn't help these banks out either. It's a process that both sides are guilty of manipulating. The banks taking on and giving out shady loans. The people for not caring about their bills that they have to pay.

I've watched numerous houses get foreclosed around me. One lady didn't pay for a year before they kicked her out; she drove a new Lincoln Navigator too. I wonder sometimes if I'm not the normal American anymore; the person that pays their bills on time and tries to make it honestly. All I see now are people who don't care if they pay or not; don't care if they lose their house. They don't cut back on anything and keep living like nothings even happend.

Honestly, I think some people think a credit card is like cash; and it's not. While the banks should be held responsible for their actions, so should people. It's not the banks fault that people aren't paying their house payment, it's the banks fault for giving loans too people who they know won't pay back the loans. I do feel sorry though for the people who are trying to make it and can't. It's sad to see those people ruined because of the bad apples out there.

If indeed we are in a recession as everyone likes to say, well, these are the companies that are suppose to fail and go away because they were not efficient. Bear Stearns should have failed, Country Wide should have failed, and now these to giants should fail as well.

There were laws inacted in the 80's to PREVENT this from happening. Some on here probably remember those banking crisis. That's where we get the term "Too Big to Fail". But, apparently lack of requirements and greed have got us into a jam. I still blame Phil Gramm, but thats just me. One thing to remember is that its not just the banks, its the consumers. Both sides must be responsible or else we will continue to have this problem.

I can now confirm that once again the little guy will be screwed, blued and tatooted.

news.yahoo.com...

Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing," Bush said in a statement released Sunday afternoon.

This means that he is prepared to cover someone elses butt with yours.

Treasury Secretary Henry Paulson said the actions were being taken because the failure of either of the mortgage companies "would cause great turmoil in our financial markets here at home and around the globe."

This is where Paulson says we will keep/make the foreign investors and banks whole, even though these investors knew it was a risk.

The huge potential liabilities facing each company could cost taxpayers tens of billions of dollars. But Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious.

OW my butt!
Serious only for Global Banks and investors in these companies. In the end this only serves to agravate the situation and bring us toward a greater collapse of the entire world financial system.

Bush said the federal regulator for Fannie Mae and Freddie Mac determined they could no longer operate safely and conduct their public mission. He said that posed "an unacceptable risk to the broader financial system and our economy."

Funny ... lots of people knew that years ago ... freaking moron.

Okay folks you better spread the word, remove as much cash as you can from your bank accounts, do it in small amounts, if anyone asks, just tell them you have a 'little' drug problem or something. Cash will be king by this time next year. Actual Gold and Silver will be better. All other paper will be worthless.

Special note to Lonegunman:
Hang in there, and search the site for what to do if forclosure happens, if your loan was sold to another investor/bank/entity they might not have the Title/Deed, they might not have the original loan documents, in fact they may have paid your loan completely to your loan issuing agency because they were defrauded by your Lender's re-packaged loans, and if they can't present those documents in court then they don't get squat.

Oh yes, once the economy completely fails ... all laws are unenforceable.


[edit on 7-9-2008 by 2stepsfromtop]

reply to post by ChrisJr03


Stock futures are up around 250pts .. guess we are the only ones seeing this as a bad thing..........

reply to post by Rockpuck


Well its good for them because many people will get a nice bailout. The preferred shareholders like China and what not will not take any losses. I wonder if I can sue the government for the losses Ive taken in the stock market. I should say if China and everyone else gets a bailout then I need one too. But hey who cares if the taxpayers have to pay for it right?

Welcome to the Union of Socialist America, or U.S.A. for short, nobody is saying anything about this except a few good patriots...look at what the investor Jim Rogers is saying.