Bail this out! – Piggington's Econo-Almanac

This topic has 5 replies, 2 voices, and was last updated 16 years, 3 months ago by Coronita.

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August 28, 2008 at 10:02 AM #13680

FoamFinger1
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From Mr.Mortgage…
http://mrmortgage.ml-implode.com/

Fannie/Freddie Bailout – Who Gets Thrown Under the Bus? (Posted on August 22nd, 2008)

The smell of ‘bailout’ is in the air. Like Pavlov’s dog, stocks are keying off the potential collapse of the nation’s two largest mortgage players who control about 75% of the market currently, looking for a bailout and subsequent rally. At any other time in history, this sort of event would have caused ripples through the financial markets. But in this new age of ‘moral hazard’ brought about by Heli-Ben’s easy checkbook in which bailouts are great for stocks, anything goes and is a buying opportunity.

What will Paulson do? That is the question. Does he throw the US Government, tax payer and Treasury Bond yields under the bus with an open-ended, retroactive bailout? A bailout designed to save the debt holders and/or the MBS holders such as China, Russia, Bill Gross and other rich investors who knew what they were buying? Does he throw the investors under the bus in favor of the US Government’s and tax payer’s balance sheets? Or, does he do a combination of both?

The I read this…

From HousingWire (August 27, 2008)
http://www.housingwire.com/2008/08/27/pimco-looks-towards-rmbs-rubble-report/

The wreckage that is much of the private-party residential mortgage-backed securities market is bound at some point to become a “high yield” playground for distressed debt investors; and a published report on Wednesday suggests that PIMCO, the biggest manager of bond funds, is moving now to make sure it doesn’t miss out on the party.

Bloomberg News reported that PIMCO is looking to raise $5 billion for the Distressed Senior Credit Opportunities Fund — dubbed “Disco” by market insiders — which will invest in senior and super senior positions in residential and commercial mortgage securities.

The way I am reading this info is PIMCO will be covered on one side of their deals by the Gov’ bailout. Then, any damage or pieces that fall to the floor (distressed) will be purchased for pennies on the dollar. This covers the other side. They win either way!

On a related note,

When B of A picked up Country Wide many people said why? With all that bad paper on their books, Why? Then I came to the conclusion that B of A is probably cherry picking CW with this drawn out process. If the Gov’ does the bailout as mentioned above, B of A will be covered on the front side. With all this time to examine what is actually in these MBS’ they will in effect be guaranteed, or at a minimum, able to “self-insure” their new position with the wide margin having purchase select pools at pennies on the dollar.

August 28, 2008 at 3:58 PM #262796

Coronita
Participant

Meanwhile…..

Bank of China flees Fannie-Freddie
By Saskia Scholtes in New York and James Politi in Washington
Thursday Aug 28 2008 17:35

Bank of China has cut its portfolio of securities issued or guaranteed by troubled US mortgage financiers Fannie Mae (NYSE:FNM) and Freddie Mac by a quarter since the end of June.

The sale by China’s fourth largest commercial bank, which reduced its holdings of so-called agency debt by $4.6bn, is a sign of nervousness among foreign buyers of Fannie and Freddie’s bonds and guaranteed securities.

Foreign investors have been a mainstay of the market for such debt, but uncertainty over the mortgage financiers’ capital positions and the timing and structure ofa potential government rescue has made some investors reassess their exposures. Asian investors in particular have become net sellers of agency debt, said analysts.

August 28, 2008 at 3:58 PM #263003

Coronita
Participant

Meanwhile…..

Bank of China flees Fannie-Freddie
By Saskia Scholtes in New York and James Politi in Washington
Thursday Aug 28 2008 17:35

Bank of China has cut its portfolio of securities issued or guaranteed by troubled US mortgage financiers Fannie Mae (NYSE:FNM) and Freddie Mac by a quarter since the end of June.

The sale by China’s fourth largest commercial bank, which reduced its holdings of so-called agency debt by $4.6bn, is a sign of nervousness among foreign buyers of Fannie and Freddie’s bonds and guaranteed securities.

Foreign investors have been a mainstay of the market for such debt, but uncertainty over the mortgage financiers’ capital positions and the timing and structure ofa potential government rescue has made some investors reassess their exposures. Asian investors in particular have become net sellers of agency debt, said analysts.

August 28, 2008 at 3:58 PM #263009

Coronita
Participant

Meanwhile…..

Bank of China flees Fannie-Freddie
By Saskia Scholtes in New York and James Politi in Washington
Thursday Aug 28 2008 17:35

Bank of China has cut its portfolio of securities issued or guaranteed by troubled US mortgage financiers Fannie Mae (NYSE:FNM) and Freddie Mac by a quarter since the end of June.

The sale by China’s fourth largest commercial bank, which reduced its holdings of so-called agency debt by $4.6bn, is a sign of nervousness among foreign buyers of Fannie and Freddie’s bonds and guaranteed securities.

Foreign investors have been a mainstay of the market for such debt, but uncertainty over the mortgage financiers’ capital positions and the timing and structure ofa potential government rescue has made some investors reassess their exposures. Asian investors in particular have become net sellers of agency debt, said analysts.

August 28, 2008 at 3:58 PM #263060

Coronita
Participant

Meanwhile…..

Bank of China flees Fannie-Freddie
By Saskia Scholtes in New York and James Politi in Washington
Thursday Aug 28 2008 17:35

Bank of China has cut its portfolio of securities issued or guaranteed by troubled US mortgage financiers Fannie Mae (NYSE:FNM) and Freddie Mac by a quarter since the end of June.

The sale by China’s fourth largest commercial bank, which reduced its holdings of so-called agency debt by $4.6bn, is a sign of nervousness among foreign buyers of Fannie and Freddie’s bonds and guaranteed securities.

Foreign investors have been a mainstay of the market for such debt, but uncertainty over the mortgage financiers’ capital positions and the timing and structure ofa potential government rescue has made some investors reassess their exposures. Asian investors in particular have become net sellers of agency debt, said analysts.

August 28, 2008 at 3:58 PM #263099

Coronita
Participant

Meanwhile…..

Bank of China flees Fannie-Freddie
By Saskia Scholtes in New York and James Politi in Washington
Thursday Aug 28 2008 17:35

Bank of China has cut its portfolio of securities issued or guaranteed by troubled US mortgage financiers Fannie Mae (NYSE:FNM) and Freddie Mac by a quarter since the end of June.

The sale by China’s fourth largest commercial bank, which reduced its holdings of so-called agency debt by $4.6bn, is a sign of nervousness among foreign buyers of Fannie and Freddie’s bonds and guaranteed securities.

Foreign investors have been a mainstay of the market for such debt, but uncertainty over the mortgage financiers’ capital positions and the timing and structure ofa potential government rescue has made some investors reassess their exposures. Asian investors in particular have become net sellers of agency debt, said analysts.
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