Barney Frank's Gone To The Dark Side - Democrats Back Bailout

[MannyGoldstein]

Sorry to interrupt the important matter of whether The New Yorker's cover actually claims that the Obamas are a sleeper cell of terrorists...

Looks like the Congressional Democrats, led by my own Rep. Barney Frank, are welcoming the charity-for-the-rich bailout plan for Fannie and Freddie: http://www.bloomberg.com/apps/news?pid=20601087&sid=arW8ZEOeg_gI&refer=home

Of course, the right thing to do would be for our government to take them over - then we'd foot the bill but at least we'd also own the assets. The Bush/Paulson/Frank plan gives us little-people taxpayers all of the risk with non of the upside. I guess it' our own fault for not being rich.

[DJ13]

1. Jim Rogers (famous trader, ex-Soros partner) on this plan

The U.S. economy is in a recession, possibly the worst since World War II, Rogers said.

``They're ruining what has been one of the greatest economies in the world,'' Rogers said. Bernanke and Paulson ``are bailing out their friends on Wall Street but there are 300 million Americans that are going to have to pay for this.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=ana3QllbJTkY&refer=home

[aspergris]

2. Rogers is brilliant

One day I would hope to be the trader he is.

He called the commodities bubble a few years before it happened. a GREAT call

And his book, Investment Biker is great. Guy traveled the world on a motorcycle. Brave and interesting

[Breeze54]

3. This is pretty scary! These loans are spread out across the world and are half the US mortgages!

They better do something about it!!

US tries to rescue mortgage giants

http://www.boston.com/realestate/news/articles/2008/07/14/us_tries_to_rescue_mortgage_giants/?page=2

snip-->

The failure of just one of the companies could be catastrophic for economies around the world. :scared:

The companies, known as government-sponsored enterprises, touch nearly half of the nation's mortgages
by owning or guaranteeing them, and the debt securities they issue to finance their operations are
widely owned by foreign governments, pension funds, mutual funds, big companies, and other large
institutional investors.

"GSE debt is held by financial institutions around the world," Paulson said in a statement. "Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets. Therefore we must take steps to address the current situation as we move to a stronger regulatory structure."

snip->

Each company now has a $2.25 billion credit line, set nearly 40 years ago by Congress. At the time, Fannie had about $15 billion in outstanding debt.

It now has debt of about $800 billion, while Freddie has about $740 billion. Today the two companies also hold or guarantee mortgages valued at more than $5 trillion, roughly half of the nation's mortgages.

snip-->

Initial reaction to the plan by some congressional Democrats was positive.

An early endorsement came from Senator Charles E. Schumer, Democrat of New York, who is also a senior member of the banking committee.

"The Treasury's plan is surgical and carefully thought out and will maximize confidence in Fannie and Freddie while minimizing potential costs to US taxpayers," Schumer said. "While Fannie and Freddie still have solid fundamentals, it will be reassuring to investors, bondholders, and mortgage-holders that the federal government will be behind these agencies should it be needed."

Representative Barney Frank, Democrat of Massachusetts and one of the authors of the housing legislation, said he supported the Treasury proposal. He said he expected the plan would be included in the housing bill, which he said would be approved, sent back to the Senate, and probably land on the president's desk by the end of the week.

"The general thrust of what they're doing is right," said Frank, chairman of the House Financial Services Committee.

Senator Barack Obama of Illinois, the presumptive Democratic presidential nominee, told reporters in San Diego yesterday that any government action to rescue the two mortgage companies should be done from the perspective of homeowners, "not just shareholders and investors and CEOs of companies."

..........

[marmar]

4. Barney's a progressive on many subjects, but not finance.....

n/t

[MannyGoldstein]

5. What's Frank Progressive On These Days?

He screamed at a friend of mine (in front of a large crowd) for mentioning impeachment - that sure isn't progressive. I'm guessing that he's for gay rights, but beyond that, I'm not seeing much.

[Stinky The Clown]

6. Fannie and her cousins Ginnie and Freddie - and Sallie - are GSEs, not regular corporations

Look it up.

This is not the same as the big bailout of Bear Stearns.

[MannyGoldstein]

7. It's Worse Than Bear Stearns In Some Ways

There was no attempt to prop up Bear Sterns' stock price - the owners of Bear stock took an awful hit for their misjudgement. In the case of Fannie et al, the Bush/Paulson/Frank plan is to spend our money to purchase their publicly-traded stock, thus propping up its price - stock owners are being bailed out.