What the govt would do is hold them in receivership. We really don't want that to happen. The GSE's have sold MBS (sorry that is industry lingo people might not know) =Mortgage Backed Securites) to the tune of 5.4 Trillion. Say again Trillion. Do we really want the govt. on the hook for associated losses that could occur on a book of assets up to 5.4 Trillion dollars. NOT!
And Fannie and Freddie currently need 75 Billion in captial to cover proposed reserve requirements. They have 1.4 Trillion in offsheet assets.
It is clearly very serious. and NO I dont want the government to back it.
here is the problem. the government CAUSED it with creating law that REQUIRED lending money to people who really didnt have the ability to PAY the loan back in the first place.
now on the back end, we are stuck.
__________________ If I do something stupid blame the Lortab!
It is clearly very serious. and NO I dont want the government to back it.
here is the problem. the government CAUSED it with creating law that REQUIRED lending money to people who really didnt have the ability to PAY the loan back in the first place.
now on the back end, we are stuck.
Exactly. HUD rules instituted during the 90's (and WHO was president then? Mmmm?) effectively created a quota system where people who should never have received a home loan, suddenly got one. Of course this was the beginning of the housing bubble because home sales started taking off for the short term, thus over inflating prices until we are where we are now. And once the sales/appreciation entered its full swing, the banks themselves took it from there as they tried to capitalize on an easy short term buck, not realizing it would HAVE to end soon.
Exactly. HUD rules instituted during the 90's (and WHO was president then? Mmmm?) effectively created a quota system where people who should never have received a home loan, suddenly got one. Of course this was the beginning of the housing bubble because home sales started taking off for the short term, thus over inflating prices until we are where we are now. And once the sales/appreciation entered its full swing, the banks themselves took it from there as they tried to capitalize on an easy short term buck, not realizing it would HAVE to end soon.
I am not quite as cynical as you are in your last sentence, it is much more complicated than that. But you are mostly correct.
Government is on the hook to back the GSE. However, the extent of the backing is not clearly defined. Ultimately, Fannie and Freddie are so important to our economy/USA and World that Govt will have to stand fully behind them. If they fall there will be almost no mortgages. Home ownership will fall levels below the Great Depression. Mortgage rates have risen almost 2 pts. today alone on the GSE troubles.
If we had a hundred grand, we'd be putting it in GM right now!
Dude, I am so wishing I was in a position to really watch the financials and do something!
if a guy could fined a company that was not too over exposed to bad paper but who's stock is taking a beating with the rest of the market, they could be printing their own $$$$$$
I hit on J C Penny's a few years ago when they are at $10 I sold at 50 and they went above that.
right now I have a baby so I don't have cash to do something.
__________________ If I do something stupid blame the Lortab!
a buddy of mine bought American Airlines stock right after their stock took that nose dive and either filed bankruptsy or nearly did after 9/11. he did quite well.
__________________ If I do something stupid blame the Lortab!
a buddy of mine bought American Airlines stock right after their stock took that nose dive and either filed bankruptsy or nearly did after 9/11. he did quite well.
You all are missing the option to buy short. You would profit if the stock went down. Financials are a perfect buy for that. BoA, Chase, Wells Fargo, all will tumble if Fannie and Freddie are nationalized. Home builders are no doubt going down more. Anything oil connected, can someone say....Airlines. Even trucking co.
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