SilverLeaf's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/251474/comments http://seekingalpha.com/article/95127-nationalization-of-the-u-s-mortgage-problem?source=feed#comment-252303 252303
(1) Is there any other solution? That's a fair question. Like you, I choose to be critical, but respectfully so, of Hank Paulson and Congress. It is much easier to criticize them, than it is to propose a better plan, i.e. do a better job than they are.
(2) Contrary to what you indicated, shareholders were effectively wiped out. Theoretically, we were not. Ask any shareholder (me), and they would agree with me. I believe the 'moral hazard' problem would've been less imperfect if shareholders were diluted 50%, which is actually what Bill Ackman suggested. There was a precedent for something like this, in the Chrysler bailout, which ended up benefiting shareholders AND the government alike. Your comments on bondholders is dead on correct.
(3) Something that I've been itching to know (would appreciate it if you did know)...All articles about Fannie/Freddie conspicuously leave out their history in the 1980s and early 1990s...As I recall, Fannie was considered insolvent in the 1980s, and the stock price was well below $1.00..the government did not takeover, however. Fannie did recover, I'm not sure how, and you and I know where the stock price went (up). ]]> Fri, 12 Sep 2008 03:48:10 -0400
(1) Is there any other solution? That's a fair question. Like you, I choose to be critical, but respectfully so, of Hank Paulson and Congress. It is much easier to criticize them, than it is to propose a better plan, i.e. do a better job than they are.
(2) Contrary to what you indicated, shareholders were effectively wiped out. Theoretically, we were not. Ask any shareholder (me), and they would agree with me. I believe the 'moral hazard' problem would've been less imperfect if shareholders were diluted 50%, which is actually what Bill Ackman suggested. There was a precedent for something like this, in the Chrysler bailout, which ended up benefiting shareholders AND the government alike. Your comments on bondholders is dead on correct.
(3) Something that I've been itching to know (would appreciate it if you did know)...All articles about Fannie/Freddie conspicuously leave out their history in the 1980s and early 1990s...As I recall, Fannie was considered insolvent in the 1980s, and the stock price was well below $1.00..the government did not takeover, however. Fannie did recover, I'm not sure how, and you and I know where the stock price went (up). ]]> http://seekingalpha.com/article/94198-bill-ackman-s-letter-to-paulson-on-restructuring-plan?source=feed#comment-251172 251172 Thu, 11 Sep 2008 00:20:11 -0400 http://seekingalpha.com/article/94725-fannie-freddie-just-the-tip-of-the-iceberg?source=feed#comment-250025 250025 Wed, 10 Sep 2008 04:08:39 -0400 http://seekingalpha.com/article/94472-fannie-freddie-bailout-disastrous-fiasco?source=feed#comment-248831 248831 Mon, 08 Sep 2008 19:08:49 -0400 http://seekingalpha.com/article/94468-could-frannie-have-prevented-the-housing-bubble?source=feed#comment-248819 248819 Mon, 08 Sep 2008 18:53:24 -0400 http://seekingalpha.com/article/94440-sell-side-analyst-on-fannie-a-history-of-being-wrong?source=feed#comment-248585 248585 Mon, 08 Sep 2008 13:48:45 -0400 http://seekingalpha.com/article/94407-the-us-treasury-gave-10bn-and-maybe-more-to-china?source=feed#comment-248349 248349 Mon, 08 Sep 2008 11:23:50 -0400 http://seekingalpha.com/article/94405-gse-bailout-likely-marks-a-bottom-in-financials?source=feed#comment-248346 248346 Mon, 08 Sep 2008 11:21:37 -0400 http://seekingalpha.com/article/94333-frannie-s-future?source=feed#comment-248342 248342 Mon, 08 Sep 2008 11:15:58 -0400 http://seekingalpha.com/article/94328-frannie-bailout-private-profit-socialized-risk?source=feed#comment-248331 248331 Mon, 08 Sep 2008 11:09:27 -0400 http://seekingalpha.com/article/94419-subordinated-debt-holders-missed-by-the-bus?source=feed#comment-248282 248282 ]]> Mon, 08 Sep 2008 10:35:54 -0400 ]]> http://seekingalpha.com/article/94328-frannie-bailout-private-profit-socialized-risk?source=feed#comment-248186 248186 Mon, 08 Sep 2008 09:21:57 -0400 http://seekingalpha.com/article/94328-frannie-bailout-private-profit-socialized-risk?source=feed#comment-248019 248019 Mon, 08 Sep 2008 04:20:36 -0400 http://seekingalpha.com/article/94333-frannie-s-future?source=feed#comment-248004 248004
2) If the market thinks they will go private (via merging, splitting into several entities, etc.), the market will believe that current shareholders will benefit - big time.
3) If it thinks that the GSEs are nationalized, then the stocks will tank.

So perhaps there will be some classic George Soros-esque reflexivity action going on where, the stock prices may impact perception of what will happen, and speculation on what will happen will impact stock prices...This drama is nowhere near over!

Make your bets accordingly. ]]> Mon, 08 Sep 2008 02:50:03 -0400
2) If the market thinks they will go private (via merging, splitting into several entities, etc.), the market will believe that current shareholders will benefit - big time.
3) If it thinks that the GSEs are nationalized, then the stocks will tank.

So perhaps there will be some classic George Soros-esque reflexivity action going on where, the stock prices may impact perception of what will happen, and speculation on what will happen will impact stock prices...This drama is nowhere near over!

Make your bets accordingly. ]]> http://seekingalpha.com/article/94328-frannie-bailout-private-profit-socialized-risk?source=feed#comment-248001 248001 (1) Taxpayers have benefited for decades via (a) potentially lower mortgage rates (b) an entity that served as more or less "NYSE" for mortgages (I know it's more complicated than this) and insurer. (c) someone who actually furthers social justice, via encouraging homeownership for all races, creeds, etc.
(2) Common shareholders have benefited via dividends, but capital appreciation? shareholders have been screwed. At least those with a 1, 3, 5, 10, etc. year time horizon
(3) Preferred investors have been shafted, while subordinate debtholders have not.
(4) Foreign banks have benefited - whether this is public or private is debatable.
(5) Politicians have benefited - Are politicians private or public? I'm not sure.

What I'm trying to get at is, I fail to see how "Private Profit, Socialized Risk", at best is a nice-sounding headline or campaign slogun for Barack Obama, and at worst....totally false, and actually criminalizes the victimizes, and victimizes the criminals...

I'm confused.]]> Mon, 08 Sep 2008 02:37:38 -0400 (1) Taxpayers have benefited for decades via (a) potentially lower mortgage rates (b) an entity that served as more or less "NYSE" for mortgages (I know it's more complicated than this) and insurer. (c) someone who actually furthers social justice, via encouraging homeownership for all races, creeds, etc.
(2) Common shareholders have benefited via dividends, but capital appreciation? shareholders have been screwed. At least those with a 1, 3, 5, 10, etc. year time horizon
(3) Preferred investors have been shafted, while subordinate debtholders have not.
(4) Foreign banks have benefited - whether this is public or private is debatable.
(5) Politicians have benefited - Are politicians private or public? I'm not sure.

What I'm trying to get at is, I fail to see how "Private Profit, Socialized Risk", at best is a nice-sounding headline or campaign slogun for Barack Obama, and at worst....totally false, and actually criminalizes the victimizes, and victimizes the criminals...

I'm confused.]]> http://seekingalpha.com/article/94304-a-first-look-inside-the-fannie-freddie-bailout-plan?source=feed#comment-247575 247575 (1) The exercise price of the warrants - The Treasury left this information conspicuously unknown at this time. This can be very good or bad, depending on the exercise price.
(2) The initial $1 billion preferred stock infusion is part of a $100 billion capacity which the Treasury is ready to inject. So the warrants with a 79.9% claim of the equity, is actually part of a potential $100 billion capital injection, not $1 bilion...which leaves the value of common equity in even greater question. Again, this can be good or bad for common stock.
(3) the government has explicitly guaranteed that Freddie/Fannie cannot go bankrupt. In fact, the price being paid - the 79.9% warrant claim on equity, the 10% preferred interest, and complete control of the companies - does give one bone to equity holders...that is, the common will exist even in the event of insolvency.

Source: www.ustreas.gov/news/i...]]> Sun, 07 Sep 2008 13:23:10 -0400 (1) The exercise price of the warrants - The Treasury left this information conspicuously unknown at this time. This can be very good or bad, depending on the exercise price.
(2) The initial $1 billion preferred stock infusion is part of a $100 billion capacity which the Treasury is ready to inject. So the warrants with a 79.9% claim of the equity, is actually part of a potential $100 billion capital injection, not $1 bilion...which leaves the value of common equity in even greater question. Again, this can be good or bad for common stock.
(3) the government has explicitly guaranteed that Freddie/Fannie cannot go bankrupt. In fact, the price being paid - the 79.9% warrant claim on equity, the 10% preferred interest, and complete control of the companies - does give one bone to equity holders...that is, the common will exist even in the event of insolvency.

Source: www.ustreas.gov/news/i...]]> http://seekingalpha.com/article/94304-a-first-look-inside-the-fannie-freddie-bailout-plan?source=feed#comment-247494 247494 Sun, 07 Sep 2008 12:10:02 -0400 http://seekingalpha.com/article/92713-the-investment-world-public-policy?source=feed#comment-239681 239681 Tue, 26 Aug 2008 20:07:15 -0400