madasiwannabe

Did the FDIC Sabotage WaMu's Management and Erode Investor Confidence?

WM had a $17 Billion run that was facilitated by the media. Couldn't believe the media was standing out front of a branch asking customers if they new the bank was about to go under.

JPM knew what WM was worth and took advantage of the situation to take anything of value for free. They knew there was a plan in the works that would give them the opportunity to offload the mortgages they told the FDIC they would have to write down. As soon as congress signs, JPM can move a big chunk of the 30 Billion from the loss column to the profit.

Shareholders in the mean time get wiped out and debt holders get nothing. The 30 Billion would have allowed most that lost to walk away with their dignity. This is criminal and even the most casual observer knows it.

Time Not for a Bailout, But for Nationalization

Amazing how Kimberly Peacock can so clearly articulate a position that McCain cannot. After listening to him the position I can definitively say he has is that against Obama. What was his position when he was involved in the Keating 5 scandal? How was that looking out for small business and taxpayers?

Nationalization worked great for the GSE's. A lot of shareholders lost their money, but not one nickle will go towards fixing Fannie or Freddies financial woes. It all just changed hands from longs to shorts. Net result is the taxpayers will now have to pay back the money the shorts pocketed and then figure out how to pay for the losses.

WM worked out great too. JPM got 310 Billion in assets for free. FDIC got 2 Billion for their trouble and the shareholders transferred their money to the shorts. Net result is 8 billion worth of debts will not be paid back, and JPM will sell the 30 Billion they just wrote down for 50 cents on the dollar and make 15 Billion for their trouble.

Doing nothing, means all of the US assets will change hands and we the American people will end up with nothing. Sounds like everything from here is a little too little and a little too late. Thanks Hank and Ben for your bringing your experience to DC. Without you we would have never been able to find our way over the cliff so quickly.

Negative Return on Investment on Paulson’s Moral Hazard

The GSE takeover was an orchestrated power play. The downward spiral started when Paulson announced his plan for a backstop. Once in place, PIMCO did their best to shake investor confidence so they could buy government backed securities at Junk bond rates. One of their point men was non other than Greenspan. He's been on PIMCO's payroll for a while now as a consultant. He's also on the other big winner of Sept 8th's payroll, Pershing Square. They racked up a whopping 8 Billion.

The takeover also took, by my estimates, 36 Billion in shareholder/investor value out of the GSE's in a single day. We now know where 10 Billion of it went. Now the taxpayers will have to put it back before we can even start paying the rest of the tab. If we can use the S&L bailout as a benchmark, this will cost the taxpayers many Trillions before it's over.

Fannie and Freddie: Finally a Light at the End of the Tunnel?

The run up started due to short covering and continued to rally when day traders jumped in for the ride. When reality set in Thursday, the stock started drifting back and my guess is it will continue.

The takeover of the GSE's will go down as the biggest mistake in the Treasuries history. Not only is it costing the taxpayers, but it cost the shareholders 36 Billion in value, wiped out corporate and mutual fund investors, and destroyed the worlds confidence in the US banking system.

The government stake in the GSE's is pure profit for the taxpayers at the shareholders expense. This is what we call "socializing profits and privitizing losses". Kind of like what Joseph Stalin did, but this time there was no blood shed, only dollars. The whole mess is shameful

Another Day Without Precedent

Hate to say I told you so, but the wheels went in motion when Paulson announced the backstop for Fannie and Freddie. All of the up movement was just irrational, wishfull thinking.

Next we will see a collapse of the dollar and 20% interest rates. A bailout will downgrade the US to junk status (if not on paper, in the worlds mind). No action will collapse banks and run the US debt through the roof, which will downgrade the US to junk status. Check Mate Hank and Ben.

On WaMu's Birthday, JPMorgan Takes the Cake

This is a shame. JPM gets another great deal and shareholders get screwed. This isn't a buyout, JPM gets 32 Billion in assets for free which makes it white collar theft. Sure they pick up 30 Billion dollars in what they say are bad debts and have to pay FDIC 2 Billion, but any bailout plan will take that off their hands. They are already talking about making profits.

Wonder when Hank Paulson is going to start getting paid for working for these guys? He's proven to be a real money maker.

FBI Investigates Victims of the Financial Fallout

apppro is correct about Pershing, but they were not alone. When the backstop was announced, the risk went to zero and rewards through the roof for another group; bond and securities brokers like PIMCO. Drive down credibility, drive down ratings, drive up returns. Pure Ponzi; get the markets addicted to credit and then milk them for all the interest they can get. Gross and Ackman announced they made $10 Billion when Paulson stepped in. The biggest one day profit for both companies.

The common thread is Greenspan. He created the mess through policy and then gets a job as a consultant with both Pershing and PIMCO. PIMCO sponsors CNBC programming and for their investment, they get all the airtime they want. Sounds like the perfect place for the FBI to start looking.

PIMCO is drooling right now because they know the bailout will adversly effect the government's ability to attract additional investors (someone has to buy the bonds to pay for the plan). That means even more money. Seen this coming from miles away.

FBI Investigates Victims of the Financial Fallout

The whole GSE takeover was a smoke screen to divert attention away from the other 50% of the mortgage market. The reason the banks are holding to maturity is because they couldn't get them past Fannie and Freddie screeners. That's why their default rates are 1/5th of the industry average. The whole MBS market is exactly what took down the S&L's. We learned nothing.

I'm sure the originators wrote BS contracts so they could get their commissions, but the banks are not totally victims either. They never took the time to look at the loans or provide any oversight to the LLC trusts that sprang up to get into the cash stream. Many of these guys are now gone and we the taxpayers are getting stiffed with the bill.

Economic Data: Something Positive - For a Change

Buffett took advantage of a cash strapped, publicity ravaged company. Before the ink even dried, he already made 20% on his investment. I'm sure everyone wishes they had a couple billion handy to make that kind of return even once.

Even if this is the bottom, it's going to take a while to get nervous investors to put their money back in the pot, and it's going to take even longer for that investment to have any effect on Main St. We are looking at another year minimum before Joe six pack can start smiling again.

Again ... It Wasn't Fannie and Freddie

Wefwef, There is such an idea, it's just not overtly stated. The media has been quick to point out the GSE's grew too big out of greed and that Bush wanted to do something about them years ago. They grew rapidly to bail out the failing S&L's.

Don't forget your history. In the 1980's, the S&L's were in trouble because of mortgage exposure. Sounds very familiar. Remember Silverado's Neal Bush and McCain's involvement in the Keating 5? Also don't forget the original sin that plotted our course to today's crisis, the bailout initiated by President Bush Sr.

With encouragement from Fed Sec Greenspan and the Bush administration, banks went on a lending spree to get the economy rolling after 9/11. The money was so good, no one wanted to stop it from going out of control. If something goes wrong, Uncle Sam will bail us out just like he did with the S&L's.

Why doesn't anyone talk about why Greenspan resigned 2 years into a 5 year appointment, started his own consulting company and has contracts with two of the most vocal companies; PIMCO and Pershing Square. The same two companies that made a total of 10 Billion the day the government took control of the GSE's.

Too Big to Fail, or Too Metastatized?

GM painted themselves into a corner. They produced an inferior product for many years and failed to remain competitive. They were virtually shut out of the daily driver market and were more than content to rely on the truck and gas hog SUV market. Better option would have been listening to the market and learning from their competitors. GM also makes a slew of hybrid/electric/hydrog... vehicles that are not available in the US. Now they want the taxpayers to give them 25 Billion for research? Give me a break.

GM came up with creative incentive and financing programs over the years to get people behind the wheel. These same programs destroyed resale value, further chasing away the market. Now it has come to the point where they can't sell a vehicle without slashing the price. Not a liquidity issues; it's a stupidity issue.

The market is not crule, it's darwinian. If you fail to evolve or forget why your in business, prepare to become extinct.

How Did We Get to This Point?

Are you sure it was the GSE's got greedy? Remember the are federally regulated by congressional mandates. There's a lot of people in the loop that would have to turn a blind eye for Fannie and Freddie to get greedy.

Something is not right with this whole mess. A government takeover when the stock was going up and the interest spreads coming down? The takeover infused 1 Billion in each company but shareholder value dropped by 36 Billion? Seems way too convenient to point a finger at a company that has a government gag on.

Paulson/Bernanke: $700 Billion at 'Hold to Maturity' Pricing

Your not factoring in the quality of the mortgages the banks will be selling. Everyone knows they will do what they can to dump the trash and hang on to the performing loans.

Also not factoring in the Fannie, Freddie, FHA mortgage dump that's going to happen in conjuction with the buyouts. FHA has been refinanciing trash loans at a fevorish pace. New rules.... No minimum FICO, 3% down, OK if your behind on your current loan. All they are doing is cleaning up the banks books while kicking the forclosures down the road a few months.

Hank and Ben made it pretty clear, they want to pay near full face value for what they buy with no stipulations on the banks. There's no money to be made on this deal.

Don't Blame Fannie and Freddie

Good article. I would also point out that the GSE's had a rapidly increasing unsecured debt portfolio and a lot of off the books accounting... Seems to me someone was using Fannie and Freddie as a slush fund (can someone say Iran Contra). As forced shareholders, we all need to demand full disclosure and transparency.

The Greatest Short Sale in History

All consiquences of the short sighted plans of Hank and Ben over the last 6 months. Backstop plan did nothing for market confidence and only set our course for where we are today.

The takeover of the GSE's will also cost the taxpayers Trillions as we move forward. The two lost 36 Billion in shareholder value alone for Hanks efforts. That's 11 Billion more than he told congress it would cost to fix them and they haven't even started.

Letting LEH fail and backstopping AIG really did a number on market confidence. Putting an 80% warrant on AIG's shareholders as well as payday loan rates on the short term loan also did nothing to calm investors.

Now Hank and Ben are proposing the ultimate plan, mortgages and credit swaps at a reverse auction garage sale. Guess which part of the portfolio will be offered up by the banks? What they can't buy they will stuff into Fannie, Freddie and FHA for full face value, just so they can clear the books of their banking buddies before they return to Wall St in February.

To add insult to injury, they want absolute power to do whatever they want without possibility of intervention or question from the American people. Something like Ceasar, Napoleon and Hitler did. This is what should be referred to as Moral Hazard and without question considered constitutionally illegal.