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Fannie & Freddie Bailout? - Fast Money Recap (9/5/08)

The biggest mistake of Corporate America will be to wipe out common shareholder value. Investors and not financial institution are the real markets.

Once people who are the ultimate investors lose confidence in the capitalist system we can kiss good buy to solving the financial crisis, mortgage crisis, and the US dollars.

It is amazing how this basic understanding eludes even Alan Greenspan and the presidential candidates. They have this false illusion that the FED plan may benefit shareholders. In fact, shareholders are the ones that could potential protect the taxpayers from monumental losses.

All I can say is good luck to corporate America if there is even the slightest whiff that the plan would entail shareholders losing close to everything.

Why I Finally Bought Fannie Mae

I dread to here the phrase 'Taxpayers losing' as if it will affect them directly and as if they owe the tax paid. In reality the whole plan is to sucker investors at the expense of frivolous taxpayers who evade and over consume beyond their savings buying houses, TVs, cars, and everything they cannot afford.

Politics aside, and inspite of what Alan Greenspan and Warren Buffett have said, the initial FED's fannie and freddie bailout plan is indeed to essentially safeguard taxpayers and private equity(gamblers and greedy individuals) rather then genuine long term investors. Those who say it is sell out do not understand the real maths. Taxpayers stand to loose much much more if Freddie and Fannie are nationalize and not to mention the cascading fallout to mortgage/insurance markets and the trust people have in the administration to honor its GSE institutions. The markets(genuine investors) know this and therefore want more assurances from the govt that they will let the markets find the equilibrium rather then nationalize and leave investors with nothing. If the markets do not participant, the taxpayers stand to loose big time as GSE loans are clearly sovereign loans. The govt will have to come out with much more and with no assurance of getting back anything in return.

The other alternative of selling out to private equity with zero value to current investors will also be a fatal error. They will strip the companies take their profits and sell it. The markets and global investers will also loose faith in all the assurances the govt and Freddie and Fannie have given to invest more in these companies just a few weeks ago. The
trust once lost will take a long time to gain back. There is also no gaurantee that private equities have national or broader social concerns. Their priority is going to be their own stockholders, who essentially are again the markets.

The market is looking for firm and decisive actions to show that the govt is prepared to invest in Freddie and Fannie in the short term to shore confidence against the poor negative sentiments. Freddie and Fannie are not yet bankrupt and their business models are still relevant albeit in certain rough patches. with some short term help They have enough cash returns and expenses to roll over and navigate from the current crisis.

Time is of essence. The FED need to act fast and decisively.

Fannie, Freddie: What Paulson Learned From the Pentagon

I dread to here the phrase 'Taxpayers losing' as if it will affect them directly and as if they owe the tax paid. In reality the whole plan is to sucker investors at the expense of frivolous taxpayers who evade and over consume beyond their savings buying houses, TVs, cars, and everything they cannot afford.

Politics aside, and inspite of what Alan Greenspan and Warren Buffett have said, the initial FED's fannie and freddie bailout plan is indeed to essentially safeguard taxpayers and private equity(gamblers and greedy individuals) rather then genuine long term investors. Those who say it is sell out do not understand the real maths. Taxpayers stand to loose much much more if Freddie and Fannie are nationalize and not to mention the cascading fallout to mortgage/insurance markets and the trust people have in the administration to honor its GSE institutions. The markets(genuine investors) know this and therefore want more assurances from the govt that they will let the markets find the equilibrium rather then nationalize and leave investors with nothing. If the markets do not participant, the taxpayers stand to loose big time as GSE loans are clearly sovereign loans. The govt will have to come out with much more and with no assurance of getting back anything in return.

The other alternative of selling out to private equity with zero value to current investors will also be a fatal error. They will strip the companies take their profits and sell it. The markets and global investers will also loose faith in all the assurances the govt and Freddie and Fannie have given to invest more in these companies just a few weeks ago. The
trust once lost will take a long time to gain back. There is also no gaurantee that private equities have national or broader social concerns. Their priority is going to be their own stockholders, who essentially are again the markets.

The market is looking for firm and decisive actions to show that the govt is prepared to invest in Freddie and Fannie in the short term to shore confidence against the poor negative sentiments. Freddie and Fannie are not yet bankrupt and their business models are still relevant albeit in certain rough patches. with some short term help They have enough cash returns and expenses to roll over and navigate from the current crisis.

Time is of essence. The FED need to act fast and decisively.

Fannie, Freddie: Beyond the Balance Sheets

Politics aside, and inspite of what Alan Greenspan and Warren Buffett have said, the initial FED's fannie and freddie bailout plan is indeed to essentially safeguard taxpayers rather then investors. Those who say it is sell out do not understand the real maths. Taxpayers stand to loose much much more if Freddie and Fannie are nationalize and not to mention the cascading fallout to mortgage/insurance markets and the trust people have in the administration to honor its GSE institutions. The markets know this and therefore want more assurances from the govt that they will let the markets find the equilibrium rather then nationalize and leave investors with nothing. If the markets do not participant, the taxpayers stand to loose the most as GSE loans are clearly sovereign loans. The govt will have to come out with much more and with no assurance of getting back anything in return.

The other alternative of selling out to private equity with zero value to current investors will also be a fatal error. People will loose faith in all the assurances the govt and Freddie and Fannie have given to invest more in these companies just a few weeks ago. The trust once lost will take a long time to gain back. There is no gaurantee that private equities have national or broader social concerns. Their priority is going to be their own stockholders, who essential are again the masses.

The market is looking for firm and decisive actions to show that the govt is prepared to invest in Freddie and Fannis in the short term to shore confidence against the poor negative sentiments. Freddie and Fannie are not yet bankrupt and their business models are still relevant albiet in certain rough patches. with some short term help They have enough cash returns and expenses to roll over and navigate from the current crisis.

Time is of essence. The FED need to act fast and decisively.