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.

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.

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.

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.

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.

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.

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.

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.

ARS Buybacks: Wachovia Follows the Herd

If the GSE's are sneezing, the banks have pneumonia. Billions worth of ARS buybacks added to the loss column of their balance sheets can't be a good thing. Many are already struggling with subprime bloated portfolio's and because the property values have fallen against an originated 125% LTV combined mortgage, the housing bill is not going to help. Rolling deliquency filings from 3 months to 12 only prolongs the inevitable.

Soon to add to the problem is the news that most are looking at the house of creditcards coming down. If I was going to pick a winning horse in the financials I would go with Freddie and Fannie. They seem like they are high risk, but truth is, if they collapse, a black hole will form and suck the rest down anyways.

Paulson Tops Gross, Greenspan and Ackman in the Mortgage Battle

The more I thought about this article, the more I think we are not giving paulson enough credit. If FHA refi's 300B of the GSE's high risk portfolio, it would pull the heat off and the GSE's could start to recover. There's no direct capital investment in the GSE's and no value added to the share holders. Why do you think they are the GSE's putting incentives out there to get these mortgages converted? Most of the new mortgages last month were refi's so it sounds like it's already working. Question now is will the refi's end up defaulting. If they do, FHA might need a bailout, but I feel better knowing the bottom feeders in this article won't get fat on my tax dollars.

Paulson Tops Gross, Greenspan and Ackman in the Mortgage Battle

As we all know, the housing bill authorized the government to buy stocks and infuse capital as necessary to shore up the GSE's. If the Fed buys stocks to shore up the GSE's, how will those stocks hold that value if there is a constant downward pressure due to growing loss of confidence? The purchase may push stocks up, but inevitably that value would fall(shorts would pull the value back out). Any infusion of capital will ultimately be offset by the loss of income from the downgrades in the GSE's securities (Brokers will make higher profits on "high risk" government backed securities). The question is not why would the banks let it happen; the question is how would the banks be able to stop it? Their money would go to the same place as the governments.

Today S&P downgraded the preferred stocks and some of Freddies securities. Freddie also reported they had trouble attracting buyers to today's $2 billion securities auction. This will cut into the GSE's ability to generate income and therefore accelerate their decline. This is a death spiral and without a major course change, I believe the US taxpayers will have to pay for it, directly and indirectly.

There are only 2 winners in this game.... Securities brokers like PIMCO and hedge funds like Persing Square (using them because they are referenced in this article). The only way for the taxpayer's to win is to change the rules of the game. The only way I can see is for investors to jump in and shore up the GSE's. As the stock gains strength, the GSE's will recover and be able to clean their portfolio's and absorb their own debt.

Paulson Tops Gross, Greenspan and Ackman in the Mortgage Battle

I think the assumptions in this article are wrong. Both Ackman and Gross stand to make billions at the demise of the GSE's. As the GSE's slip, so does their security ratings, and up goes the rate of return to attract investors. Brokers such as PIMCO will make higher rates of return and as the GSE's fall, so will the short sellers.

The housing bill has done nothing but enable a zero risk, taxpayer backed assult on the GSE's. If the GSE's are taken over, the Fed will have to assume the debt. A $5 trillion dollar, high risk portfolio added to strained US instruments will most likely cause all US backed securities to fall to junk status and make companies like PIMCO enormously rich.

If the Fed infuses capital into the GSE's people like Ackman will simply bleed it back out. It sounds to me like we the taxpayers are caught between a rock and a hard place. Thank you Alan Greenspan. You are smarter than we thought.