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The government takes over Fannie Mae and Freddie Mac
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Author:  Krem [ Sun Sep 07, 2008 7:09 pm ]
Post subject:  The government takes over Fannie Mae and Freddie Mac
http://money.cnn.com/2008/09/07/news/co ... 2008090711

Quote:
NEW YORK (CNNMoney.com) -- Federal officials on Sunday unveiled an extraordinary takeover of Fannie Mae and Freddie Mac, putting the government in charge of the twin mortgage giants and the $5 trillion in home loans they back.

The move, which extends as much as $200 billion in Treasury support to the two companies, marks Washington's most dramatic attempt yet to shore up the nation's housing market, which is suffering from record foreclosures and falling prices.


Awful move by the government. Even if this measure succeeds in preventing the two mortgage firms from collapsing (which of course we will never know now), the message that it sends to the industry is ridiculous.

"Go ahead, invest in risky ventures, mismanage your analysis, the government will always come to your rescue. We've got trillions of taxpayer dollars to burn." Blegh.
Author:  Beeblebrox [ Sun Sep 07, 2008 8:23 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
I agree. Ditto the airline industry bailout five years ago.
Author:  Eagle [ Sun Sep 07, 2008 9:03 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Not a good sign for the current status of the housing market.
Author:  FILMO [ Mon Sep 08, 2008 6:14 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Though I guess there is no other way. I mean half of the US mortage market is directly involved with those two companies.
But I agree the meassage is bad: "Go ahead make debts and dont care for your finacial stuff".
Author:  Mr. Reynolds [ Mon Sep 08, 2008 6:15 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
What's more important though? Worrying about what the message it sends or helping out Americans in need? SOMEONE has to do something.
Author:  Groucho [ Mon Sep 08, 2008 6:22 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Republicans have no problem whatsoever having government help businesses that are going under.

Wait, isn't that socialism?
Author:  A. G. [ Mon Sep 08, 2008 6:36 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Sarah Palin on this issue:

Saturday in Colorado Springs, Colo., Alaska Gov. Sarah Palin said, "The fact is that Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help."

"Too expensive to the taxpayers?"

They're private entities.

Though they're private entities ultimately backed up by the taxpayers.

But the only way Fannie and Freddie are "too expensive to the taxpayers" is if you're talking about the bailout announced over the weekend.

Is that what she meant?

So, does "too expensive" mean that Palin opposes the bailout?

Or did she misstate how these entities function?

http://blogs.abcnews.com/politicalpunch ... g-com.html
Author:  Eagle [ Mon Sep 08, 2008 7:36 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
I assume by too expensive she is referring to the issue that you can't get a mortgage anymore without a 10% down payment and great credit ... the continuing slump and increasing backlog of the housing market is directly tied to how tight the mortgage lenders have tightened their belts.

I read a few interesting articles today that talked about the fact that the government could actually make a good deal of money off this takeover. And a lot of the fears mentioned above are irrelevant since the government is essentially turning a shoulder to stock holders, eliminating dividends, and making this as cheap a take over as possible.

I actually don't mind the plan, from what I've read about it.
Author:  A. G. [ Mon Sep 08, 2008 7:45 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
I think she simply made a gaffe. Which all politicians do now and then so on it's own it's nothing to crucify her over.

Except in her case, she has to get up to speed on like 1000 issues over a few weeks time, it'll be like cramming for a graduate level exam in a short period. So she might make more gaffes, it'll be interesting to see.
Author:  Krem [ Mon Sep 08, 2008 8:07 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Sam wrote:
What's more important though? Worrying about what the message it sends or helping out Americans in need? SOMEONE has to do something.

How is this helping Americans in need? Unless by Americans in need you mean shareholders of FNMA and FRE. Then yeah, good job, government.
Author:  Krem [ Mon Sep 08, 2008 8:09 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Eagle wrote:
I read a few interesting articles today that talked about the fact that the government could actually make a good deal of money off this takeover.

And if you believe that, then I have a great bridge with a view of Manhattan to sell you.
Author:  Krem [ Mon Sep 08, 2008 8:16 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Krem wrote:
Sam wrote:
What's more important though? Worrying about what the message it sends or helping out Americans in need? SOMEONE has to do something.

How is this helping Americans in need? Unless by Americans in need you mean shareholders of FNMA and FRE. Then yeah, good job, government.

Oops, just looked at the stock prices - the stockholders took the worst it!
Author:  Eagle [ Mon Sep 08, 2008 8:24 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Yeah, I'm not sure why you think stockholders are going to get anything out of this, quite the opposite really. You should take a look at the details of the plan, it's really not as bad it could have been.
Author:  Krem [ Mon Sep 08, 2008 8:29 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Eagle wrote:
Yeah, I'm not sure why you think stockholders are going to get anything out of this, quite the opposite really. You should take a look at the details of the plan, it's really not as bad it could have been.

The government is betting $200 billion of taxpayers' money on belief that it can recover the businesses and there will be no further losses.

What if it's wrong?
Author:  Eagle [ Mon Sep 08, 2008 8:36 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Then we foot a hefty bill!
Author:  Krem [ Mon Sep 08, 2008 8:41 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Eagle wrote:
Then we foot a hefty bill!

I'm glad you're excited about it.

How much are you willing to pay when Citi fails?
Author:  Eagle [ Mon Sep 08, 2008 8:47 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
I'm not at all excited about it, but the government has set a precedent, if the market continued down the slope it was on, there was no recourse other than a government takeover and a very detrimental effect on the economy.

As is, they immediately raise 2 Billion by cutting dividends, and they stabilize fears that the two largest mortgage brokers can't pay their bills. If the market can stabilize in the next year, the government will make money, if not, they get out paying less than they would have anyways.

It's ridiculous that things got to the point they did, the mortgage industry needs a lot of reform and oversight, but you can't live in the past, only learn from it. We make changes so it doesn't happen again and we do everything we can to limit the impact our lack of oversight caused.

No one is excited about this.
Author:  Krem [ Mon Sep 08, 2008 8:56 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Eagle wrote:
I'm not at all excited about it, but the government has set a precedent, if the market continued down the slope it was on, there was no recourse other than a government takeover and a very detrimental effect on the economy.

As is, they immediately raise 2 Billion by cutting dividends, and they stabilize fears that the two largest mortgage brokers can't pay their bills. If the market can stabilize in the next year, the government will make money, if not, they get out paying less than they would have anyways.

It's ridiculous that things got to the point they did, the mortgage industry needs a lot of reform and oversight, but you can't live in the past, only learn from it. We make changes so it doesn't happen again and we do everything we can to limit the impact our lack of oversight caused.

No one is excited about this.

It's not the lack of oversight that's the problem. The problem is in the fact that the industry expects the government to take over in case there are any problems. This leads them to make risky choices. This is the definition of "moral hazard". The taxpayers would pay for this one way or the other, but with this decision, they will pay many times over for all the future bad decisions of the finance industry.
Author:  Eagle [ Mon Sep 08, 2008 9:11 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
The negative effect on the economy is simply too devastating for the government not to get involved, what would you have them do? Sit back and watch the collapse of the entire mortgage industry, all the while wagging their finger saying you should have been more responsible! That'd be like a lifeguard who chides someone for never learning to swim while watching them drown.
Author:  nghtvsn [ Mon Sep 08, 2008 9:13 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
I think the problem is the government not letting things run their course normally. Instead, they dissolve an investment firm that was crumbling due to mortgage backed loans and started handing out Tens of Billions in loans every month at "special" interest rates to keep other lenders going. Now, things come to a head and they bail out FNMA and FMAC. I can understand that they technically couldn't let these two "private" entities collapse but by taking control of them it has sent a signal to lenders to start lending again and those holding junk loans that they are now covered by our junk credit. Lovely. I guess the effects of all this aren't going to be seen by average people but the end responsibility is that us taxpayers are footing the bill for this move that our government helped instigate in the first place. What a whammy that is.
Author:  Eagle [ Mon Sep 08, 2008 9:34 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
I don't think the government is going to be nearly as nice as you are making it out to be. These companies certainly aren't going to be making money, nor are their stock holders. The takeovers are happening to shield taxpayers from the effects of a weakened economy, to stabilize the economy, and to make sure that the government doesn't have to pay billions more than they will under this deal.
Author:  Beeblebrox [ Mon Sep 08, 2008 10:19 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Eagle wrote:
The negative effect on the economy is simply too devastating for the government not to get involved, what would you have them do? Sit back and watch the collapse of the entire mortgage industry, all the while wagging their finger saying you should have been more responsible!


Only if one were a principled small government conservative. ;)

Quote:
That'd be like a lifeguard who chides someone for never learning to swim while watching them drown.


So the government is the lifeguard for us? How very liberal of you. ;)

I hope then that you opposed the new draconian Republican standards that make it harder for average citizens to declare bankruptcy.
Author:  Krem [ Mon Sep 08, 2008 10:22 pm ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Eagle wrote:
The negative effect on the economy is simply too devastating for the government not to get involved, what would you have them do? Sit back and watch the collapse of the entire mortgage industry, all the while wagging their finger saying you should have been more responsible! That'd be like a lifeguard who chides someone for never learning to swim while watching them drown.

You're making way too many assumptions about the situation. Collapse of the entire mortgage industry? Highly unlikely. End of the silly notion that anyone, regardless of the level of income and financial responsibility is entitled to own a house. Hell yeah!
Author:  FILMO [ Tue Sep 09, 2008 7:44 am ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
Krem wrote:
End of the silly notion that anyone, regardless of the level of income and financial responsibility is entitled to own a house. Hell yeah!



You know.....thats exactly the point where I fear that in the long run the lesson will not be learned.
North Americans do way too much making debts with credits and in this case with house credits.
Author:  Snrub [ Tue Sep 09, 2008 10:22 am ]
Post subject:  Re: The government takes over Fannie Mae and Freddie Mac
I'm confused. Doesn't fannie mean bum in America?
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