User 250718

Bond Expert: Monday Wrap

An easy way out of the current mess

1.Fed call all of the hundreds of banks on FDIC's watching list
(should 90% of them be taken control by FDIC under normal
circumstance?), and lend these banks money in discount rates.

2.These banks buy FRE, FNM common and preferred stocks. FRE,FNM
would easily go back to $30 level. Banks now with paper gains to
offset their mortgage loses can go and raise capitals again.

3. FRE,FNM are saved. 80% of the banks on the watch list before
now have sufficient capitals to operate. Fed and Department of
finances merge FRE,FNM(maybe market evalute them around $50 each)
and do whatever they suppose to do a year later.


Both the financial world and the western civilization are saved. And
this is the cheapest rescue plan for tax payers.