madasiwannabe

The Fed - A True Haven for Capitalism?

Because Bill Gross said so? PIMCO makes a ton of money off the increasing spreads. They are heavily vested in the GSE's and Treasuries. An explicit guarantee just means Bill now has nothing to worry about. Actually the Asian's are spot on when they say the treasury has put too much junk on their balance sheets so dump T-Bill's. The increased treasury spreads means even more money for Bill.

The Government takeover just cost the taxpayers $30 Billion just in yesterday's lost shareholder book value alone and we haven't even got warmed up. Any gains in other sectors will be gone by next week and we the american tax payers will be stuck with rediculous credit rates to pay for Bill's Ponzi scheme.

Maybe Greenspan would be a better guy to quote. No wait, he works for Bill too.

Sell-Side Analyst on Fannie: A History of Being Wrong

Most of these guys are highly successful bulls trying to survive in a bear market. It's a whole different way of looking at rallies and dips.

Analysis of yesterday is always much more accurate than the analysis of tomorrow.

Fannie/Freddie Bailout 'Disastrous Fiasco'

Daytrader - Check the list of who the bond holders are and you'll get your answer. Isn't Goldman Sachs on that list? Where did Hank work before he came to the Treasury?

Fannie/Freddie Bailout Sparks Market Rally: Is This the Bottom?

Bond rates up means money is moving out and that isn't a good sign.

Uncle Sam just cosigned for Fannie and Freddie, so it threw his debt to income ratio into the toilet. It's going to be tough to get anyone to loan Uncle Sam any money now. The only thing that drove the rates back down was the collapse of the financial rally. Looks like it's either low rates or strong financials, but not both. It's de ja vu all over again.

Tell me again what the takeover of the GSE's fixed?

Will Securitized Mortgages Rise Again?

Great comments. This was staged and had nothing to do with the health of the GSE's. How many CEO's of seized company's do you know that got a $10 Million severance package and got to stick around as an advisor? Hank had a plan all along. He will use the housing bill (which takes effect 1 Oct) to refi the investment bank's CDO and have Fannie and Freddie buy them off their books. They will toss the qualification rules out the window and write as many loans as they can before January 21st. Can't do that without congressional approval, unless they are in conservitorship that is.

What a scam.

Bond Expert: Historic Day Wraps

Today's bond and T-bill action was not in line with the global sentiment. Everyone else around the globe understands, now that Uncle Sam is in the mortgage business, America is floating paper it will be hard pressed to cover if the housing market and economy don't start looking up fast. USA has a very bad debt to income ratio...

The effect of the strengthing dollar is a big economic negative right now. Our only economic bright spot (exports) is getting killed. I wonder who's running up the American peso.

Seems kind of strange the Chinese markets are falling while the rest of the globe is going up. Dollar up and Chinese goods down helps their products dominate the global stage though. Could it be they are manipulating the markets like they did the yen? Couldn't be, Hank just gave them insider info so they could pull out of the GSE's before the big investor mugging.

Could Frannie Have Prevented the Housing Bubble?

Fannie and Freddie were not alone in this. How about the friends of Anthony that got incentives for keeping the backdoor at Fannie open. It amazes me how the ones responsible for guarding the hen house (i.e OFEHO, treasury, Congress...) get a pass on taking responsibility. Mr. Syron told the world he understood the risk and ignored the Risk Officer because he has many more masters than the shareholders. Who do you think they are? Probably the same people that had the GSE's take on more risk so the banks could write more toxic loans. Someon other than the CEO's lowered the GSE's congressionally mandated capital requirements from 30 to 15%. To figure out how they got so big, one only needs to look at FHA right now. They are growing very quickly to keep the market moving.

Plain and simple... Fannie and Freddie got thrown under the bus to keep the spotlight off the administration.

Stunning Reversals: Is This a Market or a Casino?

This is an " I told you so" day. The market realized the bailout was BS and nothing really changed (except GSE investors got scalped and the taxpayers got the bill). The banks still have $7 Trillion worth of toxic CDO's that are not covered by the GSE bailout, LEH & WM are still in denial, Uncle Sam has maxed out the credit cards and no one is buying treasuries, the rising dollar is killing exports (which was the only economy strength) and dismal financial quarterlies are still coming out this week.

Welcome back to reality.

Ten Banks That Will Be Hurt by the Takeover of Fannie and Freddie

The government has warrants, not stocks. The treasury has said they have no plan to exercise the warrants. What is the real book value? Exactly... no one knows. Until that's figured out, everyone is just speculating what will happen to both the common and preferred stocks.

Mortgage rates are tied to the 10 year T-bill. Current rate plus 2.5%. With the fed just maxing out the credit cards, the T-bill rate is going up not down. No good news for the markets here.

GSEs Into Conservatorship: Can Housing Stabilize Now?

Your comments would be right in a perfect world Mr. Carniol. The credit spreads should narrow, but they won't. The 30 year mortgage rate is linked to the 10 year T bill +2.5%, so if the T bill goes up, so does the mortgage rates. T bills usually follow the vix (too much risk in the market drives everyone to stable T bills), but funny thing is they are on their own. There is no confidence in the treasury around the world so no one is buying T bills. Today's actions did exactly what I said it would, T bills rates jumped .2% in asia on the news. That means mortgage rates are back up .2% from Friday's close. Asians are saying the treasury took on too much risk this time. I agree with them. So much for the drop in rates.

What do we do next?

Nationalizing Fannie and Freddie: Latest Move in the Housing Crisis

The thing he seemed to overlook is halting the stock. There's $40 Billion locked up right now that will be free to leave come 7AM tomorrow. That means shareholders will have the opportunity to cash out what they can before the stock goes to zero. It also means, with Common and Preferred drained, the companies will be $40 Billion in the hole. Sounds like $2 Billion is not quite enough to break even from where the companies are today. Who is going to buy into what is surely going to be many quarters of increasing losses when they know Hank has it set to drain the common and preferred to make up the losses? Not me. That bill is going to have to be passed on to the taxpayers now.

How is this going to put confidence back in the GSE's and add liquidity to the failing financial market? The GSE's are hamstrung so don't look to them to take on loans anytime soon. No money, no hope for banks, no hope for a drop in rates, no hope for the housing market, no hope for recovery.

Way to think this through Hank. I can't believe GS has continued to function while you've been away?

GSEs Into Conservatorship: Can Housing Stabilize Now?

Are you referring to the same smart Hank Paulson that told the world he had no intention of using the backstop because the GSE's have plenty of capital last week? Also the same guy that told the Chinese to pull out before he intervened and told the world today the GSE MBS's are in big trouble? Seems like a genious to me....

Who in the world is going to hold their stock, preferred or common now? That's an immediate $36 Billion dollar loss in comany value my friend. How much is it really going to take for the GSE's to break even after all of the double talk out of Washington?

What Hank really said today is that our mortgage backed securities we said are worth $5 Trillion are not really worth it, but trust me, they are now that the fed, who is also $12 Trillion in the hole, stepped in and is now backing this debt with monopoly money... The government is one heck of a co-signer. If the government and the dollar is so great, why are foreign banks dumping dollars and converting to Euro's?

Where is this liquidity going to come from to lower rates? Ben lowered rates and mortgage rates went up. why? Banks don't have it to loan. Supply and demand... Hank just said the GSE's would shrink by 10% a year. That doesn't sound like the GSE's are going to add liquidity either. Game over. Thanks for the stupid feedback.

Paulson Rolls The Dice At Taxpayer Expense

Finally have an opportunity to agree with some of your post. The plan is total crap that adds zero value to the financial market. The only way it would help is if the GSE's bought up distressed CDO's at full market price. The housing bill does cover refi's, so maybe that's the real plan... refi delinquent, high risk loans, zero out the toxic paper and sell it to the GSE's so the taxpayers can eat it. Must be MS's contribution to the plan.

There's more questions than answers... If the GSE's are reducing their portfolio's by 10% a year, where is the liquidity going to come from? Banks are already crushed by bad debt. If the GSE's are insolvent, why would adding money do anything but offset the losses? Who is going to hang on to their stock? Hank just gave them a way to write down the stock and get off the hook, so why would they hold it?

Not one thing about this plan has a positive spin for anyone. The financials still have negative equity to deal with, the GSE's are still exactly in the same boat they were on Friday and the taxpayers are on the hook for not only bad home loans, but also indirectly bank stock losses and the damage $5 Trillion worth of worthless debt on the feds books will do to ratings.

GSEs Into Conservatorship: Can Housing Stabilize Now?

So investorslive, how do you explain the spread between the fed rate and mortgage rates? The fed lowered rates and the mortgage rates went up. What makes you think having the government explicitly back $5 Trillion in bad debt will help the credit market or improve the spreads. Hank just affirmed to the world that the GSE's paper is toxic and virtually worthless. Just because it's government backed doesn't make it good and taking on this much debt doesn't make the treasury's sheets any better either. Your post might excite day traders, but it is just wishfull thinking.

A Closer Look at the Treasury's GSE Preferred Stock Purchase Plan

There's a web site that shows which institutions owns what and how much they traded each day, but I can't remember what it is.

The banks and mutual funds hold large portions of both preferred and common both. They bought it up as a safe investment because of the implicit guarantee and high divi's, even with losses. Sovereign Bank holds $600 Million worth which will wipe them out if they lose it. Lots of mutuals bought in as a stable investment for their retired investors. Many of them have been hit hard.

Common and preferred shareholders are going to bail at open which will further wipe out any value left in the GSE's. It's going to take $40 billion just to get back to Friday's levels, so don't look for any liquidity for the banks.

Another great move by the Bush administration.