Government takes control of Fannie, Freddie

Source: MSNBC

WASHINGTON - The U.S. government announced on Sunday that it was taking control of troubled mortgage finance giants Fannie Mae and Freddie Mac, effectively wiping out shareholders' interest in the publicly traded companies.

The regulator of the two companies, the Federal Housing Finance Agency (FHFA) will manage the two companies on a temporary basis.

The takeover is the second rescue bid engineered by the U.S. Treasury Department in little more than six weeks. It came as confidence in the firms' ability to keep operating amid a deepening housing crisis continued to erode.

Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart, regulator for the so-called GSEs or government-sponsored enterprises, called a Sunday-morning news conference to spell out the latest rescue effort.

The announcement followed an intense round of meetings on Friday and Saturday with directors and top leaders of the GSEs, who are expected to be dismissed after having come under stiff criticism for their high pay and management shortcomings.

Read more: http://www.msnbc.msn.com/id/26591359/

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The best quote on this comes from The Big Picture blog:

Right.

The Treasury will purchase up to $100 billion of senior-preferred stock in each company as needed to maintain a positive net worth. It will also provide secured short-term funding to Fannie, Freddie and 12 federal home-loan banks, and purchase mortgage-backed debt in the open market.

...

The Treasury is also today it will purchase the mortgage- backed securities of Fannie and Freddie in the open market, seeking ``to broaden access to mortgage funding for current and prospective homeowners.''

/... http://www.bloomberg.com/apps/news?pid=20601103&sid=a711fNFelvEw&refer=us


"Under the terms of the agreement, common and preferred shareholders bear losses ahead of the new government senior preferred shares," Paulson said.

Treasury also set up a program under which it would buy mortgage-backed securities currently held by Fannie Mae and Freddie Mac to pump fresh funds into the mortgage market. It said it would begin buying MBS later this month, and it would have authority to make such purchases through December 31, 2009.

/... http://www.reuters.com/article/topNews/idUSN0527106320080907?pageNumber=2&virtualBrandChannel=0&sp=true


Analyst View: "It's not going to address declining house prices";

--> Reuters.com front page /... http://www.reuters.com/

... McCain had to go ask someone to help him make sense of it:



Barack Obama... ready to lead RIGHT NOW. John McCain? Uh, can he get back to ya on that later?

and helping themselves to our tax money in order to rescue private investors from a grievous loss.

If only they would recognize a HUMAN emergency, like healthcare, or energy price gouging and rush to rescue the citizens!

British Tories were acting all outraged when the building society Northern Rock was nationalized for similar reasons over here.

there's a bumper sticker for me in the near future....

bit ironic. And they are going to have to say it is good for america to do so. oh the irony.

And the beneficiaries be in denial that it actually is socialism, for that is a disreputable term that couldn't possibly apply here. This is just the way that the system works.


Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.
-John Maynard Keynes

Isn't that, in just 5 words, a perfect description of the Republican mantra?

to prop up carlyle. What I don't get is how can the gov't do this today, when that big housing bill doesn't give them the authority to act until Oct 1? (I thought) And how do you get two boards and two CEOs to AGREE to be ousted? Threats? Bribes? Both?

http://money.cnn.com/2008/09/07/news/companies/fannie_freddie/

David Moffett, who served as vice chairman and chief financial officer of U.S. Bancorp until early 2007 and then joined the Carlyle Group private-equity firm as a senior advisor, will take over Freddie Mac.

Funny how his Bancorp tie is mentioned, when that's over.

Now Carlyle has the inside track on the biggest financial institution in the world. Heckuva job, Paulson.

but even more corrupt?

Micro$oft?

We are in deep, deep shit.

any time taxpayers have to come to the rescue of un-regulated capitalism, the casino parties like it's 1999.

:eyes:

http://www.msnbc.msn.com/id/26577811/

"Any action we take must be focused not on the whims of lobbyists and special interests worried about their bonuses and hourly fees, but on whether it will strengthen our economy and help struggling homeowners," Obama told reporters after a campaign stop in Indiana.

He stopped short of making detailed proposals (emphasis mine), saying "we need to carefully address" the possible impact on community and regional banks. "But we must not allow government intervention to protect investors and speculators who relied on the government to reap massive profits," he said.

McCain said in an interview for CBS "Face The Nation" to be aired Sunday that the mortgage giants need to be restructured. His running mate, Alaska Gov. Sarah Palin, said a "McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need them." Palin, speaking in Colorado Springs, Colo, where the candidates were campaigning, did not elaborate."

Oh, COME THE FUCK ON Obama! McCain is probably just thrilled with this, I'm sure a lot of repukes are finding tidy ways to profit from this, but OBAMA! PLEASE we need LEADERSHIP on these issues. Fuck Palin, these are the issues that are really affecting America.

nt

We're all going to pay the tax for it. Higher inflation.

Apparently the initial market consensus is positive.

Source: By Greg Robb & Greg Morcroft, MarketWatch

Under a sweeping plan, the two companies will be run by the government indefinitely, with the two current chief executives to be replaced and the government investing up to $100 billion in each firm to keep them solvent.

The Treasury said that stock in the company will continue to trade, although powers of stockholders will be suspended until government control ends.

In order to improve the availability of mortgages, Treasury will start buying Freddie and Fannie's mortgaged-backed debt in the open market. The companies will also end all lobbying of the government and eliminate dividends.
Together, Fannie Mae and Freddie Mac form the cornerstones of the U.S. mortgage market and own or guarantee almost half the home loans in the country's roughly $12 trillion mortgage market. Over the past year, the companies have recorded combined losses of around $14 billion.

The move puts the U.S. government at risk to lose tens of billions of dollars.

Read more: http://www.marketwatch.com/News/Story/Story.aspx?guid={C99D796B-CB3C-47A8-8A56-284A9A4D5C85}

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Gee, I wonder whose idea it was to privatize these in the first place?

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Every one of the people who have been running these outfits for the last twenty years should be in jail.

These companies were a good idea - a way government could work. But only with oversight and - god forbid - corporate governance that did not try to squeeze every penny out of the conssumer.

Why in the hell were they ever allowed to lobby? We don't allow the CIA or Transporatation Dept. to hire lobbyists to send congressmen on golf trips - yet we allowed these crooks to do it.

Crooks, all of them. I want them in irons.

Protect the rich at all costs. Fuck everyone else.

My butt hurts.