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07-15-2008, 08:09 AM
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#61
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Full time employment: Posting here.
Join Date: Nov 2005
Posts: 655
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[quote=al_bundy;683029]
Quote:
Originally Posted by Retire Soon
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
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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
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07-15-2008, 08:22 AM
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#62
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Thinks s/he gets paid by the post
Join Date: Jun 2005
Posts: 1,543
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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
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07-15-2008, 08:39 AM
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#63
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2003
Location: Kansas City
Posts: 7,968
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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.
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07-15-2008, 08:41 AM
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#64
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Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 2,844
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Quote:
Originally Posted by audreyh1
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
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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.
__________________
But then what do I really know?
https://www.early-retirement.org/forums/f44/why-i-believe-we-are-about-to-embark-on-a-historic-bull-market-run-101268.html
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07-15-2008, 09:10 AM
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#65
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Quote:
Originally Posted by Running_Man
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.
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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
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07-15-2008, 09:46 AM
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#66
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,139
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Quote:
Originally Posted by Running_Man
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.
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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
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07-15-2008, 09:49 AM
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#67
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by audreyh1
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!
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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)
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07-15-2008, 09:53 AM
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#68
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by ziggy29
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.
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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.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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07-15-2008, 11:10 AM
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#69
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
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Quote:
Originally Posted by brewer12345
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.
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The only capital being raised here is "political capital".
I feel sorry for whoever's in charge of this year's "October Surprise"...
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Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
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07-15-2008, 11:14 AM
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#70
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by Nords
The only capital being raised here is "political capital".
I feel sorry for whoever's in charge of this year's "October Surprise"...
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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.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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07-15-2008, 12:08 PM
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#71
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,703
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Quote:
Originally Posted by ziggy29
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.
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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.
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07-15-2008, 12:17 PM
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#72
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Full time employment: Posting here.
Join Date: May 2008
Posts: 546
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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.
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07-15-2008, 01:59 PM
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#73
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Posts: 1,901
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Quote:
Originally Posted by Nords
The only capital being raised here is "political capital".
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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
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07-15-2008, 02:00 PM
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#74
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Posts: 1,901
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__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
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07-15-2008, 02:02 PM
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#75
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Thinks s/he gets paid by the post
Join Date: Dec 2007
Posts: 4,764
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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.
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07-15-2008, 02:04 PM
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#76
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Thinks s/he gets paid by the post
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,635
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Put it on Utube many would enjoy seeing it.
__________________
Vietnam Veteran, CW4 USA, Retired 1979
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