Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 07-15-2008, 09:09 AM   #61
Full time employment: Posting here.
Retire Soon's Avatar
 
Join Date: Nov 2005
Posts: 655
[quote=al_bundy;683029]
Quote:
Originally Posted by Retire Soon View Post

most of the NINJA loans didn't have anything to do with Fannie or Freddie. Once in a while i visit the mortgage broker board at creditboards. when this first started last year the resident subprime mortgage brokers said that in the last few years FHA and GSE loans were a small part of their business. Now it's going to be the opposite.

Even through the nonsense of the last few years fannie still had pretty good underwriting standards. the loony loans were mostly originated, packaged and sold by the investment banks
Fannie and Freddie do not have the high underwriting standards that they once had. Since 2000 they have invested $717 Billion in subprime and Alt-A loans. I do not consider this competent underwriting or sound business practice by any stretch of the imagination.

Why the Fannie Mae and Freddie Mac can't be allowed to fail. - By Daniel Gross - Slate Magazine


Worries grow over big backers of U.S. mortgages - International Herald Tribune
__________________

__________________
Retire Soon is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-15-2008, 09:22 AM   #62
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
the standards may have dropped, but they were still a lot higher than what the investment banks let through. one of the best things about GSE's and FHA ruling the mortgage market is the government can regulate it. Greenspan testified a few years ago when the investment banks started with the NINJA loans that the government had almost no regulatory power with them
__________________

__________________
al_bundy is offline   Reply With Quote
Old 07-15-2008, 09:39 AM   #63
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
government loan, government loan, government loan (3 times) - South American yet.

I bought my bank DRIP Plans back in the 90's coming out of the default fiasco.

After mergers, name changes and passage of time:

J P Morgan Chase, Bank America, Citigroup, United Bank of Switzerland.

Since I don't want to pay taxes on the profit and down from their peak - I shall continue to hurry up and wait - see how this crisis plays out - buy more in the strech??

heh heh heh - wait til snow and football gets here.
__________________
unclemick is offline   Reply With Quote
Old 07-15-2008, 09:41 AM   #64
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,685
Quote:
Originally Posted by audreyh1 View Post
Considering that Fannie and Freddie were intially created by the US government in order to foster a liquid mortgage market and enable average Joe to buy a home, it would be ridiculous for the same government to stand by and do nothing while these companies faltered and became impaired to continue to issue mortgage backed notes.

It's been a wild ride, and the panic has seemed ridiculous when the default rates on Fannie and Freddie mortgages are at only 0.8% in one case, and 1.2% in another. Yet the equity markets have become totally panicked on these companies, coming to believe that the Bush government would allow shareholder equity in these companies to be wiped out. There has been quite a little ideological war going on between the markets and the Bush goverment's desire to somehow distance themselves from the "implied" government backing of these agencies. This has resulted in the equity of these companies going into free fall.

The Bush government finally blinked.

Since Freddie needs to auction notes on Monday to continue it's role as a mortgage provider, the government had to at least provide some confidence that it would facilitate whatever was needed to allow these agencies to continue their traditional role.

Anything else would shut down the mortgage market far worse than the subprime fiasco ever did.

It's been yet another wild confidence game (in the literal sense).

It's probably true that there are things about the Fannie and Freddie structure that could be improved, and it does seem odd that they operate as private companies with shareholders getting the benefits of taking risks, yet the US taxpayer potentially ultimately liable for the downside, but the whole process to get to this point seemed like a pretty insane drama.

Audrey
I think the receivership option for Freddie and Fannie as outline in the Wall Street Journal is what is ultimately going to happen and any equity holders are going to be wiped out. Taxpayers are going to be placed above shareholders in any interest in Fannie and Freddie which is going to result in zero for current shareholders.
__________________
Running_Man is offline   Reply With Quote
Old 07-15-2008, 10:10 AM   #65
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by Running_Man View Post
I think the receivership option for Freddie and Fannie as outline in the Wall Street Journal is what is ultimately going to happen and any equity holders are going to be wiped out. Taxpayers are going to be placed above shareholders in any interest in Fannie and Freddie which is going to result in zero for current shareholders.
This had better be true. Anything else would be a travesty.

I sold this piece of junk (FRE) at $28 only a couple monnths ago. I don't normally do quick trades, but I did a few this past year-FRE, USB, BAC--and am I ever glad I did!

I only wish I had been clever and sold all the other stuff that is happily settling to the bottom of the ocean today. My investments like most I guess are taking a pretty good pounding.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 07-15-2008, 10:46 AM   #66
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,446
Quote:
Originally Posted by Running_Man View Post
I think the receivership option for Freddie and Fannie as outline in the Wall Street Journal is what is ultimately going to happen and any equity holders are going to be wiped out. Taxpayers are going to be placed above shareholders in any interest in Fannie and Freddie which is going to result in zero for current shareholders.
I suppose you're right. Certainly if the govt steps in to put money down, the taxpayers had better be put ahead of the shareholders!

Audrey
__________________
audreyh1 is offline   Reply With Quote
Old 07-15-2008, 10:49 AM   #67
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by audreyh1 View Post
I suppose you're right. Certainly if the govt steps in to put money down, the taxpayers had better be put ahead of the shareholders!
I don't think the government should do squat for stockholders. A collapse of FRE and FNM stock to zero will not be crippling. A default or collapse on their *bonds*, on the other hand, would be devastating.

So the taxpayers, in the end, should be in line behind the bondholders and ahead of the stockholders.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 07-15-2008, 10:53 AM   #68
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by ziggy29 View Post
I don't think the government should do squat for stockholders. A collapse of FRE and FNM stock to zero will not be crippling. A default or collapse on their *bonds*, on the other hand, would be devastating.

So the taxpayers, in the end, should be in line behind the bondholders and ahead of the stockholders.
Which argues for the gubmint buying senior preferred stock from these entities, assuming that they need to buy anything from them. I remain completely unconvinced that either entity actually has a solvency problem.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 07-15-2008, 12:10 PM   #69
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Quote:
Originally Posted by brewer12345 View Post
Which argues for the gubmint buying senior preferred stock from these entities, assuming that they need to buy anything from them. I remain completely unconvinced that either entity actually has a solvency problem.
The only capital being raised here is "political capital".

I feel sorry for whoever's in charge of this year's "October Surprise"...
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 07-15-2008, 12:14 PM   #70
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by Nords View Post
The only capital being raised here is "political capital".

I feel sorry for whoever's in charge of this year's "October Surprise"...

Personally, I would like to see Chuck Schumer and Mr. Ackman of Pershing Square rubbed with raw fish and tossed into the shark tank at Sea World.

I suppose I will have to settle for hoping for a scandal and an SEC investigation, respectively.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 07-15-2008, 01:08 PM   #71
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,406
Quote:
Originally Posted by ziggy29 View Post
I don't think the government should do squat for stockholders. A collapse of FRE and FNM stock to zero will not be crippling. A default or collapse on their *bonds*, on the other hand, would be devastating.

So the taxpayers, in the end, should be in line behind the bondholders and ahead of the stockholders.
No problem is so bad that it can't be made worse by our elected political leadership. As taxpayers we will be in line - to pay for the privilege of cleaning up the mess.
__________________
MichaelB is offline   Reply With Quote
Old 07-15-2008, 01:17 PM   #72
Full time employment: Posting here.
CitricAcid's Avatar
 
Join Date: May 2008
Posts: 546
As a shareholder, you take on the risk directly of the underlying company, so if it goes to 0... it has to be part of the risk involved. Taxpayers who are not burdened with the risk of owning their equity should not be used as a crutch to those who actually DID take on the risk.
__________________
CitricAcid is offline   Reply With Quote
Old 07-15-2008, 02:59 PM   #73
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
Quote:
Originally Posted by Nords View Post
The only capital being raised here is "political capital".

I definitely agree!
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 07-15-2008, 03:00 PM   #74
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
Quote:
Originally Posted by brewer12345 View Post
Personally, I would like to see Chuck Schumer and Mr. Ackman of Pershing Square rubbed with raw fish and tossed into the shark tank at Sea World.
Now that I would pay to see.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 07-15-2008, 03:02 PM   #75
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Schumer is such a damn grand stander. Ive watch him take Bernanke to task for nothing he could possibly have control over. I suppose all politicians do this though. But Schumer just seems excessive.
__________________
Notmuchlonger is offline   Reply With Quote
Old 07-15-2008, 03:04 PM   #76
Thinks s/he gets paid by the post
OAG's Avatar
 
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,598
Put it on Utube many would enjoy seeing it.
__________________

__________________
Vietnam Veteran, CW4 USA, Retired 1979
OAG is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
The sky really is falling... REWahoo Other topics 53 02-21-2008 02:16 PM
Is the sky falling? Dow is way down any hope Sunny101 FIRE and Money 45 11-14-2007 08:53 PM
The sky is McCulleying, the . . . . greg FIRE and Money 11 09-02-2005 10:04 AM
The sky is falling, the sky is falling greg FIRE and Money 110 08-24-2005 02:17 AM
Re: The sky is falling wabmester Other topics 28 04-21-2004 08:21 AM

 

 
All times are GMT -6. The time now is 03:37 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.