BillCust

Fannie Mae's Decline Is Disheartening

Eddy, you there?
You see what I mean?

Lots to learn, friend.

Fannie Mae's Decline Is Disheartening

Eddy, think outside the box just for a little while. The dumbass running the book in Fannie Mae has 45 basis points capital on credit portfolio heading into a COLLAPSE in the housing markets of CA, FL, NV, AZ. To top that off , the spread of FNM debt to the mortgages are shrinking and that's GONNA CRIPM Q4 numbers in REAL TERM, not just unrealized Fair value crap.

The damage IS already in. It's just waiting to be reported. You wait and see FRE report tomorrow which will show an utter collapse.

Fannie Mae's Decline Is Disheartening

What you said is very ignorant of the fact that Fannie Mae LEVERAGED 250x on credit and 40x on interest rate. Credit itself is leveraged 10-20x to house prices assuming 5%-10% down.

There are already talks in the Bush gov't about "Conservatorship". Now you go ahead and dig what it means cuz I sure as hell know you just don't have a skin enough in this game, Jr.

Thanks to people like you I will continue to make big money. Comparing $ earnings to stock price? You are funny sir.

Proposal to Correct Resource Misallocation in the Housing/Lending Sector

Gibberish aside, the difficulty on its implementation, as Malkiel failed to explain, would be on preventing fraud. In other words, how can all the parties (bank/lender, borrower, marginal home buyers, gov't) somehow not further distort reality - so how would you get their interest aligned?

The borrower wants the highest possible selling price, ok. The banks too. The government is neutralized in your scheme by legislation. And the rest of the power balance is the marginal home buyer, who wants the lowest possible price. It could theoretically work if this balance holds. Chances are, they don't - or they still take more than one year, as you said, to balance themselves out. Plenty of risk in your strategy but I trust your logic.