"Investors" love the Fannie Mae/Freddie Mac deal?? Excuuuuuse me?

[SoCalDem]

PUBLIC dollars are being shoveled into those beasts, as fast as they can do it, and INVESTORS will still be "making money" ..PRIVATE MONEY???

Do I understand that correctly???

If that is true, then where is MY "kickback" from all the subsidies from MY tax dollars?? am I now, not an "investor" too???

Private sector is private sector.. investors gamble and they win or lose....but it seems that now they will be gambling with MY money, and keeping profits for themselves..

Another newsflash.. the average homebuyer will see NADA, ZIP, ZILCH, ZIPPO, ZERO, when it comes to any "help".. The ones who got fired from these two ponzi schemes, DID walk away with their "financial packages", so they did just fine... steered that ship into the rocks, and got a lovely parting gift for their trouble..:puke:

The "new guys" will lie low for a while, and mouth all the correct platitudes, but we will be bailing these two behemoths out for decades to come..

There is still a shitload of stuff we do not even know about yet. Watch for round-two, once *²'s administration leaves, and it oozes to the top..

There is ONE fact we cannot escape.. NOT EVERYONE CAN "OWN" A HOME..

There are some people who just do not make enough money, or whose credit is so bad that they should not be buying a home.

It would be nice, and in a perfect world, everyone should have a place of their own, but it's just not possible, and every passing day make it less likely.

If we all had secure, union jobs, with regular pay raises that kept up with inflation, home-ownership would be something that most of us could aspire to..(modest homes for most of us, to be sure), but with the ailing economy we have, and the rampant job INsecurity, only a fool or a cockeyed optimist takes on a 30 year commitment of funds that may or may not be there every month as the house payment comes due..

None of us "own" our homes...until we actually OWN our homes. As long as we write a check every month, we are RENTING that house, and either hope that we stay employed long enough and live long enough to pay the thing off, or that we are ready to accept constant strategizing and planning, so we can sell for enough to make a profit, move and keep doing this until we have amassed enough to buy a house outright for cash, but for many, the exact time we NEED to sell & move , is also the time that millions of others are doing the same, or the economy tanks, and no one wants to buy..at any price..and we are stuck selling for a loss, or losing the damned thing.

We need a whole new outlook on housing. A house should SHELTER you..not strangle you, bleed you dry, and finally push you out onto the streets..

[liberal N proud]

1. We the tax payer get to feed the investment in a private company

The investor gets to keep the profit. Makes the stock market happy and we the tax payer are just pawns in this game anyway.

[mediaman007]

2. This is socialism that is appealing to the Right Wing!

This move should "tide them over" until they get their hands on the Social Security money.

[liberal N proud]

3. This is a good way to put it

Government programs that benefit the rich are good.
Government programs that benefit the poor are bad.

It think I get it! Still couldn't be a republican.

[SoCalDem]

4. They are gonna get the 401-k money first

then the SS money :(

pensions were first
then health care expenses
then house values
then 401-ks
and finally SS..

then they will have a truly impoverished populace who will be eager to do whatever's necessary, at any price..just to stay alive..

welcome to the 3rd world..

[mediaman007]

31. You're right! They have 3 out of 5 already.

[Indenturedebtor]

5. I think that "pawns in the game" is putting it lightly

We are indentured debtors, destined from birth to serve our "betters". They've decided that we are going to take on more debt so that their delicate hands won't be burdened with real work. After all, what would we do with ourselves if they weren't there to graciously provide work for us to do?

[PetrusMonsFormicarum]

6. They love it as much as

we hate it.

As conscious, considerate borrowers who did not borrow beyond their means (and have the less-than-ideal house to prove it), this is another grand swath-type bandage that favors those who irresponsibly overextended themselves on mcmansions and extra condos. Already makes a responsible mortgage holder feel like a heel, and on top of it, we have to pay for the fuckwits, just so they can stay in their suburban castles.

Bullshit, I say.

[Bob Dobbs]

7. Dictated by China, Japan and Korea that owned the mortgage securities.

The real people who owned the stock get royally screwed.

Economist Michael Hudson explains it all here: http://www.counterpunch.org/

" The Treasury emphasized that it was under a Sunday afternoon deadline to finalize the takeover details before the Asian markets opened for trading. This concern reflects the balance-of-payments and hence military dimension to the bailout. The central banks of China, Japan and Korea are major holders of these securities. . . Fannie and Freddie have been loading up on risky mortgages for ages, under-stating the risks largely to increase their stock price so that their CEOs can pay themselves tens of millions of dollars in salary and stock options. . . The CEOs claimed to pay themselves for “innovation.” In today’s Orwellian vocabulary financial “innovation” means the creation of special rent-extracting privilege. The privilege was being able to get the proverbial “free ride” (that is, economic rent) by borrowing at low-interest government rates to buy and repackage mortgages to sell at a high-interest markup. Their “innovation” lies in the ambiguity that enabled them to pose as public-sector borrowers when they wanted to borrow at low rates, and private-sector arbitrageurs when they wanted to get a rake-off from higher margins.

The government’s auditors are now finding out that their other innovation was to cook the accounting books, Enron-style. As mortgage arrears and defaults mounted up, Fannie and Freddie did not mark down their mortgage holdings to realistic prices. They said they would do this in a year or so – by 2009, after the Bush Administration’s deregulators have left office. The idea was to blame it all on Obama when they finally failed."

Much more about this and the corporofascist tax scam at the link.

[SoCalDem]

8. I have NO sympathy for them.. If they willingly bought

pretty packages all wrapped in shiny paper..but containing shit..they THEY should eat the losses..

When I choose to gamble in Vags, they do not take up a collection on the casino floor, and give me my money back..

[Bob Dobbs]

9. But the fascists in China GOT BAILED OUT!

The FM&FM execs stole hundreds of millions from the company and get away, the fascist central banks of China, Japan and Korea GET PAID with US tax money.

Yeah, screw the suckers who bought the stock, but why are we paying off CHINA? Ask yourself that.

[Thothmes]

10. Screw the suckers who bought the stock

How many millions of shares of FM & FM are held by the pension funds of Teamsters, Teachers, State & Local employees, autoworkers, steel workers, andservice employees unions. Ya go ahead and screw the suckers.

[Bob Dobbs]

13. That's how the stock market rolls.

If your money is in there, you are a sucker.

The stock owners get screwed twice by losing their investment and by having to pay off the central bankers with their tax money.

[SoCalDem]

11. Why? Because China "owns" us..

and because people now can only afford $5 jeans & $2 plastic flipflops from walmart :cry:

[Psst_Im_Not_Here]

14. You got it!

When you spend, spend, spend, eventually the bill comes due, and China is calling in a chip.

[Bob Dobbs]

19. New link. Counterpunch has moved the article.

http://www.counterpunch.org/whitney09082008.html

[B Calm]

12. Fucking republicans deregulating the banking industry got us into this mess!

[The Backlash Cometh]

15. We now know that the end result of free market, is...wait for it...

socialism. That's what happens when a country goes bankrupt and other countries are holding your debt.

What ass-hats Republican capitalists turned out to be. They thought that "greed" was a never-ending, self-propelling motivator. Eventually, you know, someone has to be sober and responsible to make sure the bus doesn't run off the road.

[unblock]

16. to be fair, fnma/fhlmc are government sponsored entities

and always had the implicit support of the federal government. this in and of itself is problematic and is probably not the ideal structure, but i just wanted to point out that this bailout is distinguished from other bailouts (e.g., bear stearns) in that other bailouts had no such guarantee, implicit or otherwise.

in this case, investors, homeowners, and taxpayers all knew that such a bailout was implicitly promised.

the real problem happened when taxpayers, bureaucrats, economists, and others warned of the potential problems and sought regulation and were completely brushed off by the combination of the anti-regulation bushies and major lobbying loot from the gse's.

so the regulation that should have gone hand-in-hand with the implicit promise of bailout never happened, and we all know the result.

[Hydra]

20. That's ignoring the central problem

If something is implicitly state sponsored and backed-up, it has no business being a private entity and a for-profit enterprise.

If we pay the bill, then they answer and serve US.

[unblock]

23. i generally agree, but i have a more nuanced view

i don't have a problem, in principal, with a private company having some specific relationship with the government, as long as that relationship is carefully defined and appropriately paid for.

the government had no business making something available to fnma/fhlmc that they didn't charge for or make available to other private entities. other companies should have been offered the chance to earn money tax-free with government guarantee.

or more directly, they should have been made to pay a premium for that guarantee. in effect, the government was guaranteeing fnma/fhlmc (as we've seen) and not collecting a premium for it. so we very neatly had socialized risk but private profit.

[Hydra]

27. That's more or less my POV

If we are subsidizing them, we need to be deriving an equal benefit from that arrangement.

I favor the "owned by the people, benefits the people" way of fixing this because of the number of DUer's claiming that we MUST have Fannie and Freddie for people to own homes.

If it's that critical, it can be owned by us and not for profit. Same with the energy industry and the health care system.

[Romulox]

21. No, wrong. Freddie and Fanny were entirely private entities.

They were initially chartered by the US government, but have long since been privatized.

The "implicit support of the federal government" is only based on the fact that the rich and powerful know they can bend the government to their will. There is no Federal guarantee of Freddie or Fannie codified anywhere in US law...

[unblock]

22. almost, but not entirely

the conservatorship itself was made possible by the special relationship.

the government can't just take any entirely private company into conservatorship.


you are correct that there was no specifically codified guarantee in us law. however, there are regulations that require/authorize the government to step in in various vague circumstances. presumably they claimed such a circumstance in this case.

[Romulox]

24. Nope. The conservatorships were voluntary agreements, not forced on FM/FM

"the government can't just take any entirely private company into conservatorship."

I'm not sure what you're basing this on. Of course the government could agree to pay off the debts of any private business in exchange for control.

http://www.treas.gov/press/releases/reports/pspa_factsheet_090708%20hp1128.pdf

[unblock]

28. the gse's only entered into that agreement after the fhfa took control

this is the specific law that they invoked to take control:

http://en.wikipedia.org/wiki/Housing_and_Economic_Recovery_Act_of_2008


think about it, why would management of fnma/fhlmc agree to lose their jobs and have their equity crushed?

[Romulox]

29. That's simply incorrect. FHFA took control today.

At any rate, this entire discussion is academic, as any business may be forced into either involuntary bankruptcy or receivership, given the correct conditions--in other words, the bailout of foreign governments is not necessary, required, and was never promised by anyone. Foreign governments demanded a taxpayer bailout, and they got it.

To address our responsibility to support GSE debt and mortgage backed securities holders, Treasury
entered into a Senior Preferred Stock Purchase Agreement with each GSE which ensures that each
enterprise maintains a positive net worth. This measure adds to market stability by providing additional
security to GSE debt holders – senior and subordinated-- and adds to mortgage affordability by
providing additional confidence to investors in GSE mortgage-backed securities. This commitment also
eliminates any mandatory triggering of receivership.

...

Terms of the Agreements:

• The agreements are contracts between the Department of the Treasury and each GSE. They are
indefinite in duration and have a capacity of $100 billion each, an amount chosen to demonstrate
a strong commitment to the GSEs’ creditors and mortgage backed security holders. This number
is unrelated to the Treasury’s analysis of the current financial conditions of the GSEs.

http://www.treas.gov/press/releases/reports/pspa_factsheet_090708%20hp1128.pdf

[pampango]

17. I thought the stock holders were losing their entire investment. n/t

[Romulox]

25. The bailout is for foreign governments who own the debt, not the shareholders of FM/FM. nt

[pampango]

26. Thanks. That's what I thought. My definition of "investors" from the OP doesn't

include bondholders. They are more like debt holders than investors.

[slackmaster]

18. It remains to be seen how much money is going to be "shoveled" their way

What's really going to matter is how many of the loans they back turn out to be sound.

Taking a rough guess based on the figure released within the last day or so that 9% of mortgagees are behind in their payments, figure that 91% of the notes that are pooled into Fannie or Freddie securities are actually OK.

None of us "own" our homes...until we actually OWN our homes. As long as we write a check every month, we are RENTING that house, and either hope that we stay employed long enough and live long enough to pay the thing off....

I have nine years and nine months to go. Must... not... become... disabled...

[csziggy]

30. Smart investors bailed out of Fannie Mae & Freddie Mac years ago

It is at least 3-4 years since my broker recommended dumping my Fannie Mae shares. Share value last Friday was way down - pennies per share if I remember correctly. A share was worth over $70 back when I sold; today a share is worth $1.16 and that is up from where it was Friday.

If the government bought out the shareholders at today's prices, the shareholders would have huge losses (great for offsetting their earnings from their oil shares), the gov. would get the corps at a cut rate and could turn the two companies back into the government agencies that they used to be, before they were sold to finance the Vietnam War...

http://www.nytimes.com/2008/09/09/business/09future.html?pagewanted=1&WT.mc_id=BI-S-E-GG-NA-S-fannie_mae_bailout&WT.mc_ev=click&ei=5087&en=f99fd5ae77e3f251&ex=1236571200&WT.srch=1&excamp=GGBUfanniemaebailout">Reinventing Mortgage Giants: A Big Rebuild or a Teardown?

[KoKo]

32. Kikkety Kick! Thanks!