Fannie/Freddie Chatter - Something Big is Brewing

[beast]

   
   
4:20 PM (8 hours ago)
Fannie/Freddie Chatter - Something Big is Brewing
from Mr. Mortgage's Guide to the TRUTH! by admin

I am hearing chatter something is about to go down soon. Who knows if this will be a bailout, but rest assured the tax payer will likely beon the hook for something.

The options market is confirming something is brewing with the XLF put-call ratio out of control. There have been approx 500k at or near the money front-month calls and 250k for next month. Put volume is a paltry 110k front month and about 45k next month. Several other indicators of ‘news pending’ are flashing.

Being the contrarian I am, I would view this action as bearish for financials. We will see soon. -Best, Mr Mortgage

Earlier today I discussed why keeping them private will be bad for housing. But who the hell knows what the solons have up their sleves.  Link below.


Source: http://mrmortgage.ml-implode.com/2008/08/28/fanniefreddies-survival-spells-big-trouble-for-housing-market/

 

[Anonymous]

I was talking about this with my cfo/accountant friend and I said how Paulson warned that he would probably have to borrow from the Treasury to pay off all the FDIC depositors when the upcoming banks fail.

What does that mean for the common man? and my buddy said: "Oh, great, The Treasury...they'll just print more money and inflation will skyrocket."

 


remember, it's Friday...and the Friday before the last weekend holiday of the summer.... perfect time for a 4pm News Dump!

[beast]

yep, another bank failure.

Integrity Bank of Alpharetta, Ga., with $1.1 billion in assets and $974 million in deposits, was closed Friday by the Georgia Department of Banking and Finance and the Federal Deposit Insurance Corp.

[Anonymous]

9-5-2008

There's some news about to break about Fannie and Freddie today... Friday news dump probably

[beast]

i was wondering what ban was going to fail today

[beast]

FROM WIRE REPORTS The Wall Street Journal, The Associated Press

WASHINGTON – The Treasury Department is putting the finishing touches on a plan to help shore up mortgage giants Fannie Mae and Freddie Mac, according to people familiar with the matter. Such a move would essentially amount to a government takeover of the mortgage giants.

The plan is expected to involve putting the two companies into the conservatorship of their regulator, the Federal Housing Finance Agency, said several people familiar with the matter. That would mean the government would take the reins of the companies, at least temporarily.

It is also expected to involve the government injecting capital into Fannie and Freddie.

That could happen gradually on a quarter-by-quarter basis, rather than in a single move, one person familiar with the matter said. In addition, the Treasury's plan includes a top-level management shake-up at both companies, according to people familiar with the plans. Daniel H. Mudd, chief executive of Fannie Mae, and Richard Syron, his counterpart at Freddie Mac, are expected to step down from their posts. An announcement could come as early as this weekend. Some details are still being worked out.

Any move by the Treasury would be one of the most significant interventions by the government in the financial industry since the housing bust touched off turmoil in the credit markets a little more than a year ago. From the $168 billion economic-stimulus package in February through the bailout of investment bank Bear Stearns Cos., the Bush administration and the Federal Reserve have taken an aggressive stance in attempting to respond to what has become one of the worst financial crises in decades.

Fannie and Freddie are vital cogs in the U.S. housing market. A Treasury intervention could help borrowers by keeping interest rates on mortgages lower than they would be in the event of continued instability.

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.

Fannie Mae shares jumped 62 cents to $7.04 in regular trading but plunged 21 percent to $4.59 after hours on worries that a government rescue might wipe out equity holders.

Freddie Mac shares rose 15 cents to $5.10 in regular trading but fell 18 percent to $4.18 after hours.

The Wall Street Journal,

The Associated Press

Source: http://www.dallasnews.com/sharedcontent/dws/bus/stories/090608dnbusfreddiefannie.1aabae1.html

[beast]

On September 5, 2008, Silver State Bank, Henderson, NV was closed by the Nevada Financial Institutions Division and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.  No advance notice is given to the public when a financial institution is closed.

The FDIC has assembled useful information regarding your relationship with this institution.  Besides a checking account, you may have Certificates of Deposit, a car loan, a business checking account, a commercial loan, a Social Security direct deposit, and other relationships with the institution.

[beast]

i don't understand it but,
seems to me we just became a socialist country with the government owning half the homes in america 

[Anonymous]

okay, now I am totally cornfoosed

I thought that if the US government bailed out Fannie and Freddie, they would have to 'borrow' money from the Treasury, which means that the government would just print more money

that would mean alot of inflation

but Mike posted at cba that if the bailout goes through, the stock market could gain 1,000 points...

I don't understand...
 

[beast]

i'm confused too.  the only way the market should go up on this is the same way a loaf of bread doubles in price when the money supply doubles.


they say if the fed takes them over then that will free up mortgage money again.


what would that really mean?

 business as usual as the banks write loans they shouldn't?


    in mho i think the fed should try the trickle up theory instead of the trickle down.

they are bailing out the wrong people and no matter what in the long run it's the little guy that is going to suffer and pay this way.

[beast]

News is hitting the wires that Fannie Mae (FNM) and Freddie Mac (FRE) may be headed under federal control.

In a plan that is being proposed, the company’s top brass and their boards would be replaced and shareholders would be virtually wiped out, but that the companies would be able to continue functioning with the government generally standing behind their debt.

The Bottom Line
It appears that this potential plan will cost taxpayers tens of billions of dollars. The common and preferred shares of Fannie and Freddie would be reduced to little or nothing, and any losses on mortgages they own or guarantee could be paid by taxpayers. We have been warning about bottom-fishing in these particular names. Monday’s market open does not look good for either stock.

Source: http://www.dividend.com/blog/?p=1277

[beast]

The U.S. Treasury is expected to announce early Sunday afternoon details of a plan under which regulators will effectively take temporary control over government-sponsored mortgage investors Fannie Mae and Freddie Mac.

The Treasury won't necessarily make a large injection of capital immediately into the ailing companies, which provide the bulk of funding for U.S. home mortgages. But people familiar with the plan said the Treasury will stand ready to provide capital as needed, depending how quickly losses deplete the companies' meager capital holdings.


Reuters
Rep. Barney Frank and Treasury Secretary Henry Paulson speak after a hearing of the House Financial Services Committee on July 10, 2008.
The Federal Housing Finance Agency, Fannie and Freddie's regulator, is to use its legal powers to put the companies under conservatorship. Those powers allow the FHFA to run the companies indefinitely, under certain conditions, such as when the regulator finds that they are likely to be unable to meet their financial obligations. Fannie and Freddie have run up combined losses totaling about $14 billion over the past four quarters and face heavy additional losses amid the worst surge in U.S. home-mortgage foreclosures since the 1930s.

Fannie and Freddie own or guarantee more than $5 trillion of U.S. home mortgages, nearly half of the total outstanding.

Dividends on the companies' preferred stock are likely to be suspended, people familiar with the plan say, and those on common shares to be eliminated. Any injection of capital by the Treasury would likely greatly reduce or wipe out the value of common shares currently outstanding.

The conservatorship will involve the departure of Daniel Mudd, Fannie's chief executive officer, and Richard Syron, Freddie's chairman and chief executive, though they may not leave immediately and could help with the transition. The FHFA will have to appoint conservators to run the companies and try to restore them to financial health. Officials of the companies were meeting Saturday with regulators to learn more details of the plan, which appears to have come as a surprise to their senior executives, who were summoned Friday to meetings with top officials from the Treasury, FHFA and Federal Reserve.

The longer-run future of the companies will be up to Congress, which created both of them to support the housing market, as well as the next administration.

Treasury Secretary Henry Paulson briefed Sen. Barack Obama, the Democratic presidential nominee, on Friday and spoke on Saturday with Sen. John McCain, the Republican nominee.

In a statement Saturday, Sen. Obama called the situation "extremely serious" and said it affects "our entire economy." He added: "Any action we take must be focused not on the whims of lobbyists and special interests worried about their bonuses and hourly fees, but on whether it will strengthen our economy and help struggling homeowners."

Sen. Obama said the rescue also "must protect taxpayers, not bail out the shareholders and management of Fannie Mae and Freddie Mac."

Alaska Governor Sarah Palin, the Republican nominee for vice president, said during a rally Saturday afternoon in Colorado Springs, Colo., that Fannie and Freddie have "gotten too big and too expensive to the taxpayers." She added: "A McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help."

The plan will also likely face immediate scrutiny from Congress as it returns from a lengthy recess next week.

House Financial Services Committee Chairman Barney Frank (D., Mass.) said he was "pleased" after a conversation he had late Friday with Mr. Paulson about Treasury's "strong reaffirmation that the vital roles these institutions play in our nation's housing markets must continue."

Mr. Frank said he would evaluate any plan by how it protects taxpayers, restores stability to financial markets and ensures the availability of affordable housing.

Speaker of the House Nancy Pelosi (D., Calif.) said she would work "in a bipartisan manner" with Mr. Paulson, other Bush administration officials and congressional leaders to review the plan "to ensure that the interests of taxpayers and the broader economy are protected."


Source: http://online.wsj.com/article/SB122073255846107191.html?mod=hpp_us_whats_news


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 i don't think the story will be over when the story is over.