FNM - Page 2

brewer12345 · 07-12-2008, 07:54 AM

Quote:

Originally Posted by Hamlet

Didn't they just deny this?

Honestly, though, I can't imagine the government not backing their bonds. They've let people think that they would for so long, that I think letting FNM or FRE default would be about the same as the government defaulting on treasuries. End of the world kinda thing.

I wouldn't touch their stocks though. What is their debt/equity ratio? Isn't it about 60:1? No thanks, I'll stick to WFC and USB.

They did deny it after all. But its inconceivable that they would not stand behind fannie & freddie if needed. Thus far, at least, the damage seems to beconfined to the GSE's shareholders, since the bond market continues to play with Freddie and Fannie. If the debt market stops playing with them, we have a problem that discount window access would probably solve pretty much instantaneously.

After all, if the Fed will open the window to the brokers, Fannie & Freddie are a cinch for access if they need it.

al_bundy · 07-12-2008, 07:57 PM

Quote:

Originally Posted by Hamlet

Didn't they just deny this?

Honestly, though, I can't imagine the government not backing their bonds. They've let people think that they would for so long, that I think letting FNM or FRE default would be about the same as the government defaulting on treasuries. End of the world kinda thing.

I wouldn't touch their stocks though. What is their debt/equity ratio? Isn't it about 60:1? No thanks, I'll stick to WFC and USB.

when did a government official say they would rescue fannie or freddie in case of failure? it has always been implied as far as i know

Art G · 07-14-2008, 01:30 PM

This is an interesting discussion. Actually, the government has always stated that the loans were "backed" by the government. They never said anything about the company itself. Therefore, they can take over the loans thus making the company a government entity, keep the loans secure, but thusly, screw over the shareholders.

FinanceDude · 07-14-2008, 01:41 PM

Quote:

Originally Posted by Art G

This is an interesting discussion. Actually, the government has always stated that the loans were "backed" by the government. They never said anything about the company itself. Therefore, they can take over the loans thus making the company a government entity, keep the loans secure, but thusly, screw over the shareholders.

SO the govt line is: "Well, we always said "implied", which meant unless you screwed the pooch we wouldn't need to bail your sorry a*s out, but since you got greedy and stupid, we're taking you over, but your shareholders are SOL. Have fun explaining that at the annual shareholder meeting".............

Texas Proud · 07-14-2008, 01:47 PM

FD... well, in a word YES....

They are backing the debt that is backed by mortgages... not the shareholders of the company... so both Fannie and Freddie could indeed go bankrupt and all the negatives that attach to that... but the FNMA bond are 'good'...

FinanceDude · 07-14-2008, 03:14 PM

Quote:

Originally Posted by Texas Proud

FD... well, in a word YES....

They are backing the debt that is backed by mortgages... not the shareholders of the company... so both Fannie and Freddie could indeed go bankrupt and all the negatives that attach to that... but the FNMA bond are 'good'...

And the beat goes on............

Art G · 07-14-2008, 03:55 PM

Hey, imagine if the government decided to renege on their promise with the loans! The decision blows, but what else are they to do?

Hal3 · 07-14-2008, 04:55 PM

Quote:

Originally Posted by ziggy29

Well, all you have to "read" is the chart which tracks the U.S. dollar.

Ben has a red phone to the bureau of printing and engraving.

No problem.

al_bundy · 07-14-2008, 07:43 PM

Calculated Risk: The Times: Treasury rescue for Fannie and Freddie

Hal3 · 07-14-2008, 11:12 PM

"The capital injection would also see both lenders granted permission to use the Federal Reserve’s discount window."

Everyone on mainstreet knows that the wrong side of these mortgage transactions is getting the bailout.

Bernanke's response: "Let them eat cake."

al_bundy · 07-15-2008, 07:23 AM

why should the "homeowners" be the ones bailed out?

CitricAcid · 07-15-2008, 02:31 PM

Brewer put it best I feel... if they give access to capital to the brokerages, why would they not do it for the GSEs? Yes, it was always implied and not explicit but it never was logistically tested, until recently.

07-14-2008, 11:12 PM	#30
Hal3 Recycles dryer sheets Join Date: Jun 2008 Posts: 64	How about a "discount window" for mortgage holders? "The capital injection would also see both lenders granted permission to use the Federal Reserve’s discount window." Everyone on mainstreet knows that the wrong side of these mortgage transactions is getting the bailout. Bernanke's response: "Let them eat cake."

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07-14-2008, 01:30 PM	#23
Art G Thinks s/he gets paid by the post Join Date: Nov 2007 Posts: 1,052	This is an interesting discussion. Actually, the government has always stated that the loans were "backed" by the government. They never said anything about the company itself. Therefore, they can take over the loans thus making the company a government entity, keep the loans secure, but thusly, screw over the shareholders.

07-14-2008, 01:47 PM	#25
Texas Proud Thinks s/he gets paid by the post Join Date: May 2005 Posts: 3,052	FD... well, in a word YES.... They are backing the debt that is backed by mortgages... not the shareholders of the company... so both Fannie and Freddie could indeed go bankrupt and all the negatives that attach to that... but the FNMA bond are 'good'...

07-14-2008, 03:55 PM	#27
Art G Thinks s/he gets paid by the post Join Date: Nov 2007 Posts: 1,052	Hey, imagine if the government decided to renege on their promise with the loans! The decision blows, but what else are they to do?

07-14-2008, 07:43 PM	#29
al_bundy Thinks s/he gets paid by the post Join Date: Jun 2005 Posts: 1,424	Calculated Risk: The Times: Treasury rescue for Fannie and Freddie

07-15-2008, 07:23 AM	#31
al_bundy Thinks s/he gets paid by the post Join Date: Jun 2005 Posts: 1,424	why should the "homeowners" be the ones bailed out?

07-15-2008, 02:31 PM	#32
CitricAcid Full time employment: Posting here. Join Date: May 2008 Posts: 546	Brewer put it best I feel... if they give access to capital to the brokerages, why would they not do it for the GSEs? Yes, it was always implied and not explicit but it never was logistically tested, until recently.

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