Comments on: Freddie. Fannie. Foofa.

By: John M.

John M. — Mon, 08 Sep 2008 15:25:15 +0000

guys -

Thanks for all the kind words

I’m (fortunately!) tied up in post-retirement 1st year college courses and stuff Sunday to Wednesday until December so will only be dropping in occasionally.

Any links to stories here or via e-mail to me or twist much appreciated — our time to look for stuff is going to be pretty short.

By: h.pylori2

h.pylori2 — Mon, 08 Sep 2008 14:13:37 +0000

Twist #9

John M needn’t brag…when you remain rational and analytical during the go-go periods (something I did not); you are laughing all the way to the bank! Well done John M…

Anti-spam word…TRICKERY!!!

By: twist

twist — Mon, 08 Sep 2008 05:27:48 +0000

Idaho Spud-

You have no idea how proud we at Doom are of John’s insight- also his modesty. John’s maturity and wisdom kept him from using the headline I would have picked for his post today, “Ha Ha! Told Ya!“

By: Idaho_Spud

Idaho_Spud — Mon, 08 Sep 2008 05:18:25 +0000

John M,

Let me be among the first to congratulate you on your prescience regarding Fannie and Freddie.

If I recall correctly, shortly after you were asked to co-blog here, you asserted (with proof) that these entities were a systemic risk and would either be nationalized or require some form of government assistance.

You took a lot of “tinfoil hat” type grief from commenters who apparently only like smiley faces in their lives, notably one Old Mike. Looks like you get the last laugh on this one, although its also a sad, preventable event.

John, you da MAN!

By: agnostic

agnostic — Mon, 08 Sep 2008 03:23:58 +0000

John -

Lotsa Merrill/Lehman/Goldman etc. lawyers reading the fine print on those CDS contracts tonight, fo sho.

By: brucewho

brucewho — Mon, 08 Sep 2008 02:29:19 +0000

This thing is going to be engineered right to the bottom. The engineering being cover for the fraudsters and banksters to exit with their bonuses and golden whatevers. I love how y’all groove on the techincal aspects. For me it’s quite amusing to watch the death spiral except we’re all on board. Even the Chineese think they can out smart these sharks. We’ll see who gets the last laugh. It sure won’t be me and you. I’m still looking for my cave.

By: twist

twist — Mon, 08 Sep 2008 02:05:16 +0000

John- [#2]

“There is no reason to expect taxpayer losses from this program, and it could produce gains”

I thought that was the funniest comment all day today.

By: John M.

John M. — Sun, 07 Sep 2008 22:51:48 +0000

I was wondering how long it would be before this angle started coming up. The GSEs' hedging efforts made them huge counterparties in all manner of derivatives, not to mention side-bets. "Watershed event for $8 trillion in MBS, agencies unfolds", by Al Yoon, Reuters, September 7, 2008.

Subordinated debt yield spread premiums ballooned by more than 2 percentage points in a single day in mid-August to about 6 percentage points after Barron's asserted a government intervention was near and would not spare the bonds.

But the Treasury's conservatorship may trigger financial insurance contracts on subordinated debt, prompting holders of the "credit default swaps" to demand payment, one investor said. Subordinated debt values will depend on analyses of how protected it will be in the future, he said.

By: dale

dale — Sun, 07 Sep 2008 19:36:46 +0000

Sad outcome for something that should have been resolved many years ago.
We have been warned for at least 5 years by Doom, Wall Street Journal, Forbes and many others about the shabby accounting and lack of adult supervision of these outfits.
If this was Enron, lots of Fan & Fred officers and their political cheerleaders would be going to jail.
Officers, past & present, should be forced to give back the bonuses they received because of their creative accounting.
Every politician who accepted donations (bribes) from these companies should return the money at once and resign. They certainly have violated their public trust. Barney Frank & Chuck Shumer should go first if they have any honor left. It is an amazing neglect of duty to have been warned for so many years and failed to act; worse even to support the criminal neglect of Fan & Fred. Lets at least get their names and vote them out of office.

By: John M.

John M. — Sun, 07 Sep 2008 17:54:57 +0000

"There is no reason to expect taxpayer losses from this program, and it could produce gains"

"Paulson Engineers U.S. Takeover of Fannie, Freddie", by Rebecca Christie and Dawn Kopecki, Bloomberg, September 7, 2008.

By: John M.

John M. — Sun, 07 Sep 2008 17:28:20 +0000

I suddenly had this image of Hank walking up and down Main Street with a bell crying: "Bring out your Dead!" "FDIC to help small banks with Fannie, Freddie exposure", by Michael R. Crittenden, MarketWatch, September 7, 2008.

"Any negative impact will be narrowly focused only on a few smaller institutions. Regulators will be working closely with those few banks to develop capital plans to assist their recovery," Federal Deposit Insurance Corp. Chairwoman Sheila Bair said in a statement.
...

"The agencies encourage depository institutions to contact their primary federal regulator if they believe that losses on their holdings of Fannie Mae or Freddie Mac...are likely to reduce their regulatory capital below 'well capitalized'," Paulson said. "The banking agencies are prepared to work with the affected institutions to develop capital restoration plans consistent with the capital regulations."

(that wasn't nice, Igor, "bankrun" indeed ...)