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Old 07-12-2008, 07:54 AM   #21
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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.
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Old 07-12-2008, 07:57 PM   #22
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Quote:
Originally Posted by Hamlet View Post
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
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Old 07-14-2008, 01:30 PM   #23
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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.
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Old 07-14-2008, 01:41 PM   #24
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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".............
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Old 07-14-2008, 01:47 PM   #25
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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'...
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Old 07-14-2008, 03:14 PM   #26
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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............
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Old 07-14-2008, 03:55 PM   #27
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Hey, imagine if the government decided to renege on their promise with the loans! The decision blows, but what else are they to do?
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What is the price of oil in Euro?
Old 07-14-2008, 04:55 PM   #28
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What is the price of oil in Euro?

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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.

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Old 07-14-2008, 07:43 PM   #29
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Calculated Risk: The Times: Treasury rescue for Fannie and Freddie
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How about a "discount window" for mortgage holders?
Old 07-14-2008, 11:12 PM   #30
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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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Old 07-15-2008, 07:23 AM   #31
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why should the "homeowners" be the ones bailed out?
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Old 07-15-2008, 02:31 PM   #32
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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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