WSJ on Fannie and Freddie

[4plexowner]

Very good article from WSJ online

http://online.wsj.com/article/SB119556248413999149.html

It talks about how Treasury Sec. Paulson and Senator Schumer want to expand the GSEs to alleviate the current housing downturn. As Sen. Charles Schumer says, “The whole reason Fannie and Freddie exist is to help in times like these”.

The article then talks about the financial challenges being faced by Fannie and Freddie.

I find it interesting that Freddie is about to issue $5 billion in preferred stock – who would buy it?

[TheBreeze]

That was an eye-opening article. I didn’t realize that Fannie and Freddie own or guarantee $4.8 trillion in mortgages (40% of the total outstanding). I wish the government would get the hell out of the mortgage business. Our own government through Fannie and Freddie is a huge reason we are in this mess.

I almost LOLed when I saw that Freddie had $34 billion in capital. Assuming they own or are guaranteeing half that $4.8 trillion total, then that’s $34 billion in capital backing $2.4 trillion in mortgages. That’s a capital reserve of 1.4% of what they are backing. Ridiculous.

Freddie is also counting on only a 5% decline in housing values from the peak. I would characterize that as willful denial. Freddie and Fannie have to be two of the worst-run organizations in the world.

[TheBreeze]

That was an eye-opening article. I didn’t realize that Fannie and Freddie own or guarantee $4.8 trillion in mortgages (40% of the total outstanding). I wish the government would get the hell out of the mortgage business. Our own government through Fannie and Freddie is a huge reason we are in this mess.

I almost LOLed when I saw that Freddie had $34 billion in capital. Assuming they own or are guaranteeing half that $4.8 trillion total, then that’s $34 billion in capital backing $2.4 trillion in mortgages. That’s a capital reserve of 1.4% of what they are backing. Ridiculous.

Freddie is also counting on only a 5% decline in housing values from the peak. I would characterize that as willful denial. Freddie and Fannie have to be two of the worst-run organizations in the world.

[TheBreeze]

That was an eye-opening article. I didn’t realize that Fannie and Freddie own or guarantee $4.8 trillion in mortgages (40% of the total outstanding). I wish the government would get the hell out of the mortgage business. Our own government through Fannie and Freddie is a huge reason we are in this mess.

I almost LOLed when I saw that Freddie had $34 billion in capital. Assuming they own or are guaranteeing half that $4.8 trillion total, then that’s $34 billion in capital backing $2.4 trillion in mortgages. That’s a capital reserve of 1.4% of what they are backing. Ridiculous.

Freddie is also counting on only a 5% decline in housing values from the peak. I would characterize that as willful denial. Freddie and Fannie have to be two of the worst-run organizations in the world.

[TheBreeze]

That was an eye-opening article. I didn’t realize that Fannie and Freddie own or guarantee $4.8 trillion in mortgages (40% of the total outstanding). I wish the government would get the hell out of the mortgage business. Our own government through Fannie and Freddie is a huge reason we are in this mess.

I almost LOLed when I saw that Freddie had $34 billion in capital. Assuming they own or are guaranteeing half that $4.8 trillion total, then that’s $34 billion in capital backing $2.4 trillion in mortgages. That’s a capital reserve of 1.4% of what they are backing. Ridiculous.

Freddie is also counting on only a 5% decline in housing values from the peak. I would characterize that as willful denial. Freddie and Fannie have to be two of the worst-run organizations in the world.

[TheBreeze]

That was an eye-opening article. I didn’t realize that Fannie and Freddie own or guarantee $4.8 trillion in mortgages (40% of the total outstanding). I wish the government would get the hell out of the mortgage business. Our own government through Fannie and Freddie is a huge reason we are in this mess.

I almost LOLed when I saw that Freddie had $34 billion in capital. Assuming they own or are guaranteeing half that $4.8 trillion total, then that’s $34 billion in capital backing $2.4 trillion in mortgages. That’s a capital reserve of 1.4% of what they are backing. Ridiculous.

Freddie is also counting on only a 5% decline in housing values from the peak. I would characterize that as willful denial. Freddie and Fannie have to be two of the worst-run organizations in the world.

[kev374]

is it possible for the government to use taxpayer money to bail out a GSE? I thought GSEs are self-supporting enterprises but just managed by the government. They don’t use taxpayer money for costs.

[kev374]

is it possible for the government to use taxpayer money to bail out a GSE? I thought GSEs are self-supporting enterprises but just managed by the government. They don’t use taxpayer money for costs.

[kev374]

is it possible for the government to use taxpayer money to bail out a GSE? I thought GSEs are self-supporting enterprises but just managed by the government. They don’t use taxpayer money for costs.

[kev374]

is it possible for the government to use taxpayer money to bail out a GSE? I thought GSEs are self-supporting enterprises but just managed by the government. They don’t use taxpayer money for costs.

[kev374]

is it possible for the government to use taxpayer money to bail out a GSE? I thought GSEs are self-supporting enterprises but just managed by the government. They don’t use taxpayer money for costs.

[bsrsharma]

"counting on only a 5% decline"

I suspect that is the trigger that will initiate the chain reaction that will eventually meltdown Fannie & Freddie. Any moron can see that there will be much more than 5% decline. When Fannie & Freddie fail, the catastrophic consequences will make the current problems seem minor. If the treasury tries to intervene and help, the virus can easily jump to treasuries, causing a $ collapse. 2008 will be one scary year.

[bsrsharma]

"counting on only a 5% decline"

I suspect that is the trigger that will initiate the chain reaction that will eventually meltdown Fannie & Freddie. Any moron can see that there will be much more than 5% decline. When Fannie & Freddie fail, the catastrophic consequences will make the current problems seem minor. If the treasury tries to intervene and help, the virus can easily jump to treasuries, causing a $ collapse. 2008 will be one scary year.

[bsrsharma]

"counting on only a 5% decline"

I suspect that is the trigger that will initiate the chain reaction that will eventually meltdown Fannie & Freddie. Any moron can see that there will be much more than 5% decline. When Fannie & Freddie fail, the catastrophic consequences will make the current problems seem minor. If the treasury tries to intervene and help, the virus can easily jump to treasuries, causing a $ collapse. 2008 will be one scary year.

[bsrsharma]

"counting on only a 5% decline"

I suspect that is the trigger that will initiate the chain reaction that will eventually meltdown Fannie & Freddie. Any moron can see that there will be much more than 5% decline. When Fannie & Freddie fail, the catastrophic consequences will make the current problems seem minor. If the treasury tries to intervene and help, the virus can easily jump to treasuries, causing a $ collapse. 2008 will be one scary year.

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