As the single largest mortgage companies in the world are on the brink of collapse, with the only saving grace truly possible is a government (a.k.a. American taxpayer) bailout - what is the answer to prevent this from occurring again?

washingtonpost.com

hey, bend over grab your sox and pull. This will make the saving and loan bailout adjsuted for inflation etc. seem like a dropped piggy bank...with good old barney in charge this will become de riguer....

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No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

It will cost too much, and should not be done.

Lenders who made unwise loans should suffer the consequences. If they go belly up, fuck 'em.

Buyers who took out unwise loans should suffer the consequences. If they lose their homes and have to live in their car, fuck 'em...

Treasury timed this to perfection, releasing it on a Sunday night, there has been little discussion or noise about this anywhere.

Ironically, threads to do with the economy and business like the one you started about Bud going to Brussels and Jviehe's about Iphones seem to be getting more attention than this.

Honestly I'm not surprised about the development, I have been reading about the risks for Fannie and Freddie for years.

By the way could the worst case be, that it will cost the taxpayer more than $5 trillion the twins have in liabilities??

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"Homo Homini Lupus"
Thomas Hobbes

Worst case it'll cost the taxpayers whatever the loans are that are granted to them if they go under, because then the loans would have to be written off.

I'm not sure the debt gets passed on though that they hold as far as folks mortgages go.

But the treasury department has made it clear that no matter what, at all costs they will keep the two companies going.

So did the government bail them out yet? I haven't seen anything.

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"I think—tide turning—see, as I remember—I was raised in the desert, but tides kind of—it's easy to see a tide turn—did I say those words?"—Washington, D.C., June 14, 2006

"[T]he illiteracy level of our children are appalling."—Washington, D.C., Jan. 23, 2004

I believe we may find that answer in about 6 minutes...as the President has scheduled a press conference at 10:20am.

He has offered the loans to the two companies, and Congress have said they support the idea.

Whether they take it or not is a different matter.

In another thread I figured up if you took the first $500bn bailout and instead gave it to households that actually PAID taxes, and only those making $1m or less - and it was something like $13,000 each!
Well if you take the total expected bailout that will be closer to $1 trillion - and instead of bailing out Freddie and Fannies stockholders - give it straight to the above - each household would get close to $26,000 in cash - now THAT would reverse the economy!

Isn't that about what Iraq has cost so far?

Then again this is only our own citizens, not people that hate and kill us for our trouble, fuck 'em

barney?
Are you saying that Bush's dog has been calling the shots all along?
Suddenly so much of the last 7 years makes perfect sense..........

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“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

This really shouldn't be that bad, these are all conforming mortgages, no sub prime stuff.
There is a house behind every mortgage, and the valuations should be far more reasonable than the sub prime crap.
This is where the best credit went to get the best rate, so it should be a pretty high quality portfolio.

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

House valuations can easily crash in a big downturn. Neither banks nor the government have a use for thousands of houses beyond their market value.

Since the total book value is between 5-6 trillion, a 1% loss would cost taxpayers 50-60 billion. 10% would be 500-600 billion.

It's true that it's uncertain how large the losses will be. On the flip side,
if the market thought the loans were good, then the companies could issue stock and allow new investors to buy in to solve the liquidity crisis. The statement that they can't sell stock is equivalent to saying the market believes they'll take a beating, eg. their loan portfolio is quite risky.

A good article from Market Oracle........

Fed Asks for Blank Check for Fannie and Freddie in Flawed Rescue Plan :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

PAULSON'S POWER GRAB

What Paulson is really wants is for congress to allow the Fed to regulate the financial system without congressional oversight. Paulson's so-called blueprint for financial regulation is a blatant power-grab meant to expand the authority of the banking oligarchy giving them unlimited power over the markets. Journalist Barry Grey sums it up like this in his article on "US Bailout of Mortgage Giants: The politics of plutocracy":

"The plan outlined by Treasury Secretary Henry Paulson would give him virtually unlimited and unilateral authority to pump tens of billions of dollars of public funds into the mortgage finance companies. At the same time, the Federal Reserve Board announced that it would allow the companies to directly borrow Fed funds... The Democrats...now march in lockstep with the minority party to rush through laws demanded by Wall Street... The buying of legislators and their votes by corporate interests is carried out openly and shamelessly. Members of Frank's House Financial Services Committee received over $18 million from financial services, insurance and real estate firms this year. Frank himself raised over $1.2 million, almost half of which came from finance and related industries...Senator Dodd's top contributor in the 2003-2008 election cycle was Citigroup, followed by SAC Capital Partners. He raised $4.25 million from securities and investment firms.
Senator Schumer's top contributor was likewise Citigroup. He raised $1.4 million from securities and investment firms, his most lucrative corporate sector."

The smell of political corruption is overpowering, and yet, the plan is moving forward regardless. Even if Paulson's plan worked in the short term, the damage would be enormous. It would place the country's regulatory powers and purse-strings in the hands of the same amoral banksters who created this mess to begin with. It is the fast-track to corporate feudalism on a nationwide scale.


Wow, let the foxes guard the hen house.

That's just ..................flipping brilliant.

Truly a good article.

What really amazes me is how few people seem concerned.

Oh well, they will be in for a very, rude awakening pretty soon.