madasiwannabe

Vultures Covet Infrastructure in Financial Wreckage

You nailed it... The GSE's were not in danger of failing. Paulson admitted they were suffering from loss of market confidence, not liquidity issues, and that's why he stepped in. He felt the GSE's were dragging the entire sector down. He planned all along to gain control of them and use them to absorb the toxic sludge from the financial market. He needed the capital guarantee from Congress to pull it off.

If Fannie and Freddie were actually financially upside down, why hasn't Paulson used one nickle of the money authorized by congress in the Housing bill? Why would he order them to buy more mortgages? No one is asking any of these questions.

The bigger question is how can he get away with taking over solvent companies just to financially implode them? Conservitorship laws say they must preserve assets and return the companies to profitability. What has been done is called eminent domain, without any compensation that is. This is a violation of shareholders 5th amendment rights.

I hope congress starts figuring out they have been duped. They need to dig into what's happened and hold those responsible for this fraud accountable. If this is allowed to continue, we the taxpayers will end up doubling our national debt before it's over.

Can the Banking System Handle Huge New Write-Downs?

What about my loan. I put 40% down and have a debt ratio below 20%. Sure I screwed up by living well within my means and paying my bills on time, but my property value has dropped 15% too. That drop is before all of my neighbors get their mortgages slashed and their new deals become my comps. Under the bailout deal it seems like I get to pay twice; first through my tax dollars and then again with the further depreciation of my property value.

What gets me is if we let them default, I lose anyways. The banks will auction off the properties at a huge discount and once again their sales become my comps. Where's the bill that offset my losses when the irresponsible borrowers and lenders get done destroying my future?

Paulson in a State of Panic

AMEN!!! Conservatorship doesn't give Paulson the right to wipe out the GSE's to save the other mortgage holders. The laws are very specific about the charter of a conservator, and unless there's more to the purchases that secures the current company value, this goes against that charter.

We all know the takeover had nothing to do with the solvency of the GSE's. If it did, why haven't they used any of the 200 Billion to stabilize the GSE's. Paulson knew all along that at some point he would use the GSE's to buy up toxic assets to clean the books of his buddies. I find it interesting that every time Goldman Sachs or Morgan Stanley stocks take a dive, Paulson comes up with another plan. Time to get the FBI and supreme court involved to stop this madness.

Moody's, Fitch, S&P, SEC Are All Useless

The credit rating agencies are all masters of the obvious. Downgrading a company after it falls says it all. Where were they 6 months ago when the market figured it out.

SEC is very good at sitting on their hands. Naked shorts are not killing stocks, bad policy and greedy companys are. As you alluded to, LEH was a victim of long selling, not short. Also include Paulson's confidence building backstop scheme. All it really did was make everyone question the real health of the market. You know it's time to worry when everyone tells you not to.

Could Lehman's Failure Cause a Systemic Meltdown?

To blame Lehmans mess on the short sellers is like blaming your account balance on your bank. Fuld had plenty of opportunities to clean up the mess, but didn't take them. The Koreans came out and said Fuld wanted twice the book value for a 50% stake. When you factor out the losses, a $10 p/s offer from the Koreans was actually very realistic.

SpinCo is nothing more than spin. How does Dick plan to capitalize this new company? Stock offerings? Who would buy into a business that everyone knows is losing a billion a month? Not me. Use the money they get for selling a stake in Neuberger Berman? Lets say they get 5 Billion for a 50% stake, that wouldn't cover 6 months of losses, and they would be giving up 50% of what they have as profits now.

The dogs are now on MER, WB, and WM because they have exactly the same issues with bad paper. Once again not a short sale problem, it's a risk and greed issue created by management.