Feds move to back up Fannie Mae / Freddie Mac (Full Version)

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wing2000 -> Feds move to back up Fannie Mae / Freddie Mac (7/13/2008 6:44:03 PM)

I think this is a prudent move...



The U.S. Treasury and Federal Reserve, capping a weekend of high-stakes maneuvering, attempted to shore up confidence in Fannie Mae and Freddie Mac by announcing a plan that placed the federal government firmly behind the battered mortgage giants.

In a statement timed to precede the opening of markets Monday, as well as a closely watched auction of debt by Freddie, the Treasury said it plans to seek approval from Congress for a temporary increase in a long-standing Treasury line of credit for the two companies.

The Treasury also said it would seek temporary authority so that it could buy equity in either company "if needed" to ensure they have "sufficient capital to continue to serve their mission" of providing a steady flow of money into home mortgages. The plan, which requires Congressional approval, also calls for a provision to give the Federal Reserve a "consultative role" in the process of setting capital requirements and other "prudential standards" for Fannie and Freddie.

...Fannie and Freddie were chartered by Congress to ensure a steady flow of money into home mortgages, but they are owned by private-sector shareholders and have their shares listed on the New York Stock Exchange. The two companies own or guarantee about $5.2 trillion of U.S. home mortgages, or nearly half of those outstanding.

http://online.wsj.com/article/SB121597057216549037.html?mod=hpp_us_whats_news



Leon_Figg3 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/14/2008 1:30:25 PM)

As I've stated in another thread I am not too up on national economics dispite having a grandfather who usually talked about little else other than politics and the economy.

Until the issue of he Fannie Maes/ Freddie Maes came up I was fairly optimistic about the national economy. I did not believe it was very clear exacty what has been going on. The numbers and assessments were inconclusive and made little sense. When the Fannie / Freddie Maes issue arose I found myself thinking about the 1920s and 1930s, I wasn't alive then but I have studied history enough to know that even though the economy was already on the down turn, at the time, it wasn't until the collopase of Wall Street that it became clear that our economy had collapsed. I think the collapse and federal attempts to bail them out may be signalling the fact that our economy is in free fall and we are about to hit bottom.

I do not feel that government bailout of this and that may be a good idea.

I am aware that it very well may work, I feel that it may be too risky.



cow451 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/14/2008 1:38:18 PM)

quote:

ORIGINAL: Leon_Figg3

As I've stated in another thread I am not too up on national economics dispite having a grandfather who usually talked about little else other than politics and the economy.

Until the issue of he Fannie Maes/ Freddie Maes came up I was fairly optimistic about the national economy. I did not believe it was very clear exacty what has been going on. The numbers and assessments were inconclusive and made little sense. When the Fannie / Freddie Maes issue arose I found myself thinking about the 1920s and 1930s, I wasn't alive then but I have studied history enough to know that even though the economy was already on the down turn, at the time, it wasn't until the collopase of Wall Street that it became clear that our economy had collapsed. I think the collapse and federal attempts to bail them out may be signalling the fact that our economy is in free fall and we are about to hit bottom.

I do not feel that government bailout of this and that may be a good idea.

I am aware that it very well may work, I feel that it may be too risky.

The alternative to doing nothing? If we use the example of the Great Depression, the feds ultimately had to intervene in the economy and some of the reforms have kept us from repeating. I think it is a good move and will pay off over time.



Leon_Figg3 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/14/2008 1:56:05 PM)

cow451,
I did not mean to indicate that we should do nothing. I am not really sure what we should do, but I am also concerned about this rush for government bail out of a government creation, from what I have heard, whose collapse has been evident, in some circles, for some time.

We need to take care that we do not slap another band aid on something that needs change and become another government program that can not be financed and will result in the government, politicians and lawyers having more power and influence over the average American who is already over burdened by the government.



Apparition -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/14/2008 2:30:57 PM)

Why should We the People prop up an insolvent business?
It's not the people's fault that these entities engaged in bad mortgage practices.. and yet we foot the bill?

Meanwhile, Indymac goes under while other banks are likely to follow suit... our government is already in bad shape financially, but don't worry we can print more money (and further debase the currency).

Then you wonder why the cost of living is going up.... ?

Let the dead weight be allowed to die.. for us to get better we have to let the market correct itself.



rlj -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/14/2008 6:28:18 PM)

quote:

Then you wonder why the cost of living is going up.... ?


I dont wonder that but I do wonder how many of the intelligent people who post on Crosswalk can continually support and praise this administration and most of its policies. [8|]

Yay! Dubya is printing more money for my stimulus check!

Yay! Dubya is printing more money to make a mess in Iraq!

Yay! Dubya is printing more money to bail out these banks!

Boo to the zillions of average working stiffs who hoodwinked these banks in the first place!

Yay! For those great bank CEO's and all the money they make capitalism at it's finest!


In seriousness Wing I hate this but it's probably neccessary. : /



Leon_Figg3 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/14/2008 7:06:29 PM)

quote:

ORIGINAL: rlj

quote:

Then you wonder why the cost of living is going up.... ?


I dont wonder that but I do wonder how many of the intelligent people who post on Crosswalk can continually support and praise this administration and most of its policies. [8|]

Yay! Dubya is printing more money for my stimulus check!

Yay! Dubya is printing more money to make a mess in Iraq!

Yay! Dubya is printing more money to bail out these banks!

Boo to the zillions of average working stiffs who hoodwinked these banks in the first place!

Yay! For those great bank CEO's and all the money they make capitalism at it's finest!


In seriousness Wing I hate this but it's probably neccessary. : /

Do you actually believe that "He who walks on water" wouldn't do pretty much the same thing-bail out the banks?

The government has pretty much gotten itself in a tight spot in whuich they have no choice. I heard something the other day that indicated that the government has known for a long time that its creation was being miss-managed, and they have done little to nothing about it.

The president of the United States, according to the Constitution, does not control the "purse strings" of the federal government. He is not responsible for ensuring big business is operating in accord with federal regulations. Congress does, at the very least they have over sight responsibilities.. If there is anyone to blame it is our elected leaders in Congress who seem to have made themselves so busy either being critical of the president, our military, big business and the like, and running either to get elected to a higher office, or re-elected, to actually do anything resembling what they are suppose to be doing.



GroupW -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/14/2008 7:08:54 PM)

quote:

ORIGINAL: rlj
In seriousness Wing I hate this but it's probably neccessary. : /


I think that's a common-sense way to feel about it. Obviously it's not good, but the alternatives are worse.

BT



rlj -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/14/2008 7:53:40 PM)

quote:

The president of the United States, according to the Constitution, does not control the "purse strings" of the federal government. He is not responsible for ensuring big business is operating in accord with federal regulations. Congress does, at the very least they have over sight responsibilities.. If there is anyone to blame it is our elected leaders in Congress who seem to have made themselves so busy either being critical of the president, our military, big business and the like, and running either to get elected to a higher office, or re-elected, to actually do anything resembling what they are suppose to be doing.


Then why 30 years later do I listen to a never ending run of criticism against Jimmy Carter?



Leon_Figg3 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 12:11:44 AM)

rij,
You've lost me.

I have a feeling I have a response for you, but I am unsure what exactly your issue is.

There are a number of reasons why Jimmy Carter hss been seen as one of our least effective presidents.



rlj -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 7:54:54 AM)

I'm confused to. After 8 years of Dubya's budgets 6 of those with a Republican Congress this mess isn't his fault. :/ Yes people still complain constantly about the economy under Carter who had to deal with recovering after the end of Comrade Nixon's wage and price controls.

So is the president actually responsible for anything or does the buck stop with whoever his supporters decide on at the time?



Leon_Figg3 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 9:07:42 AM)

I take it that you are on the opposite side of the political aisle that I am. Fortuneately, in this discussion, I do not think that will be a big issue.

From my reading of history our fore fathers created a very unique form of government A government in which our head of state is both one of the most powerful leaders in the world, but he is also one of the least powerful. His power comes from the fact that our system of government depends on the people and as a result we tend to elect, or re-elect, presidents based on how we see our country. Our presidents have tended to be people who have not only reflected the mood of the country, at a particular time, but they have been individuals who have reflected the direction the country was going in and aspired to go in at the time.

The president reflects the mood of the country and sets in motion/ sets the stage for the direction that the country will go in in the future. By this I mean that there are aspects/ issues of our government, just as there are aspects of family life that the head of the family has direct influence on, but there are also matters outside of his direct control. To a large extent, one of these matters for the family, and our government involves finances/ the economy.

The economy of a family, or a country is going to fluctuate no matter who is responsible for it because the economy exists on its own. It can not be controlled, it can only be reacted to and, to some degree, managed. The president has the power to react to the economy in emergencies. He also has the power to set in motion programs he feels can help manage the economy, but he is not ultimately responsible as to whether or not his ideas/ his programs get implimented. For that to happen he has to deal with the legislature-Congress. Congress is responsible for the direction that the country goes into because it is they who decide were our taxes are spent, and it is they who decide the laws through which the various aspects of our lives and the life of the country are ultimately regulated.

Jimmy Carter's main problem was that he was a maverick who failed to get the kind of support within the political system (his own party), and government (people who may have agreed with him) that he needed to get things done.



mapachito13 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 9:55:30 AM)

On a parallel note:

Wholesale inflation is worst in 27 years

Reagan was just beginning to clean up after Jimmie's mess. I don't know about you guys but neither McCain nor Obama could even be remotely in the same league with RR.

Until the government gets the energy and financial sectors under control I feel that this mess will be with us for the rest of the year. And until Dubya turns more of his attentions to what happens in the United States than his and daddy's New World Order nothing will be done except to slap band aids on our problems!

Lame duck President or just lame? My vote is for the latter!



rlj -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 10:06:32 AM)

quote:

I take it that you are on the opposite side of the political aisle that I am.


I never moved, the aisle and all of the seats moved to the left. ; ) Constitutionally you're correct. However I do find it funny that the Republican Congress under Bill Clinton sent 4 that were balanced. The Republican Congress under Dubya sent record high budgets for money spent and earmarks. When I look at that I see only one difference and that is the President. The Dem signed balanced ones the Republicans signed astronomically unbalanced ones. So who is to blame for that? 535 guys send a balanced budget to a Dem and it passes. Same 535 guys send a budget with outrageous deficits and spending increase to a Republican and it passes. I'm missing something here.



mapachito13 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 10:36:27 AM)

quote:

ORIGINAL: rlj

quote:

I take it that you are on the opposite side of the political aisle that I am.


I never moved, the aisle and all of the seats moved to the left. ; ) Constitutionally you're correct. However I do find it funny that the Republican Congress under Bill Clinton sent 4 that were balanced. The Republican Congress under Dubya sent record high budgets for money spent and earmarks. When I look at that I see only one difference and that is the President. The Dem signed balanced ones the Republicans signed astronomically unbalanced ones. So who is to blame for that? 535 guys send a balanced budget to a Dem and it passes. Same 535 guys send a budget with outrageous deficits and spending increase to a Republican and it passes. I'm missing something here.


But since the man had no moral character AND was pro-abortion it makes everything he did in office suspect just like our PRO-LIFE President is beyond reproach! [;)] Of course we might have to count the 4000+ POST-BIRTH abortions he performed in Iraq! But why care about the sanctity of life after their born!



Leon_Figg3 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 10:37:29 AM)

quote:

ORIGINAL: rlj

quote:

I take it that you are on the opposite side of the political aisle that I am.


I never moved, the aisle and all of the seats moved to the left. ; ) Constitutionally you're correct. However I do find it funny that the Republican Congress under Bill Clinton sent 4 that were balanced. The Republican Congress under Dubya sent record high budgets for money spent and earmarks. When I look at that I see only one difference and that is the President. The Dem signed balanced ones the Republicans signed astronomically unbalanced ones. So who is to blame for that? 535 guys send a balanced budget to a Dem and it passes. Same 535 guys send a budget with outrageous deficits and spending increase to a Republican and it passes. I'm missing something here.

Granted, people see the only difference being the President. I tend to see the difference being the course of history and a change in the mood of the country.

Under Clinton the public was repeatedly told that the government had a surplus of money. In time many people got to believing it not fully understanding how that came to be, if in effect it really did happen. People got greedy. Politicians saw dollar signs and an opportunity to fund 535+ pet projects on top of all the government programs already in place and in need of financing. Then, of course, 911 happened and all the seemingly related issues, questions, and threats that arose out it, both real and highly possible. With those issues, questions and threats came programs and initiatives that also needed financing. Then the country realized that we had immigration problems and how that was adding to the financial burden that the country was experiencing.

Where were all the Congressional politicians and what were they doing as our problems and our awareness of problems of all kinds (business mis-managements, and scandals) grew and grew?

Where has the media been directing our attention?



bob97 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 10:49:54 AM)

I think everyone is missing the point about the economy. What is wrong with our economy is the oil imports. We currently import $1,400,000,000 of oil each day into this country. That’s 42 Billion dollar per month or 500 Billion per year, leaving this country without any return. Now tell me what’s wrong with the economy?

In comparison the Iraq war has cost 600 billion in 6 years and much of that cost is returned to the US because the products come from this nation.

Bob



cow451 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 11:22:45 AM)

quote:

ORIGINAL: bob97

In comparison the Iraq war has cost 600 billion in 6 years and much of that cost is returned to the US because the products come from this nation.

Bob


Please explain. Never mind, it's off topic. Can you jump over top the Iraq War thread and clarify?



NoShow -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 11:26:03 AM)

quote:

ORIGINAL: rlj

quote:

I take it that you are on the opposite side of the political aisle that I am.


I never moved, the aisle and all of the seats moved to the left. ; ) Constitutionally you're correct. However I do find it funny that the Republican Congress under Bill Clinton sent 4 that were balanced. The Republican Congress under Dubya sent record high budgets for money spent and earmarks. When I look at that I see only one difference and that is the President. The Dem signed balanced ones the Republicans signed astronomically unbalanced ones. So who is to blame for that? 535 guys send a balanced budget to a Dem and it passes. Same 535 guys send a budget with outrageous deficits and spending increase to a Republican and it passes. I'm missing something here.


Sure, whether you agree with it or not, Dubya's budgets included financing a war.



NoShow -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 11:34:52 AM)

quote:

ORIGINAL: Leon_Figg3

I do not feel that government bailout of this and that may be a good idea.

I am aware that it very well may work, I feel that it may be too risky.


But not doing anything will pretty much ensure failure.

Though the entities are merely congressionally chartered, most felt that implied they were "backed" by the U.S. government. Even without a collapse of either or both, I would imagine that they'll take a major credit hit. Which means, the securities they've been issuing will be downgraded. Which will be at the expense of those that are holding them. And if you look at a lot of retirement accounts and funds (all of them: pensions, 401(k)s, IRAs...) this thing's going to trickle down to probably a lot of people you personally know.



Leon_Figg3 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 11:38:08 AM)

The whole oil import/export issue/ question is only part of the problem with the economy. This is why the whole matter of our economy is so complex and the solution so elusive. This is why the responsibilty for our economy rests more with Congress than it does with the President.

The economy of one country is affected by the economy of all of the other countries in the world. Our economy is affected by what is going on in Africa, in the Middle East, in India, in China, etc., etc. We trade and carry on business in all parts of the world. If, for some reason, we are unable to carry on business with a country or a part of the world, our economy suffers. If we can not help Third World countries grow and develop, our economy suffers. Even when we do help other countries grow and develop (ie India, China) our economy may suffer because they grow out of that stage where they are no longer depenedent on us to that stage whereby they are now a competitor.

We have succeeded and are succeeding in creating a world of economically competing countries and discovering that a world of economically competing countries has its own problems that many may not have forseen.



rlj -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 8:00:32 PM)

quote:

Sure, whether you agree with it or not, Dubya's budgets included financing a war.


That is incorrect. All war funding has been done outside of the normal budget process.



wing2000 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 8:21:32 PM)

quote:



ORIGINAL: rlj
In seriousness Wing I hate this but it's probably neccessary. : /



I think that's a common-sense way to feel about it. Obviously it's not good, but the alternatives are worse.


I agree. And apparently the fed action had the desired affect...the banks did buy on Monday.

However, their (freddy/fannie) stocks continue to decline - lack of investor confidence in the housing market (?).

And as long as the housing market continues in a free-fall, we're going to see more and more banks go out of business (i.e. those who relied real estate secured assets). I think it's going to get a lot uglier before it starts to get better.



NoShow -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 8:40:10 PM)

quote:

ORIGINAL: rlj

quote:

Sure, whether you agree with it or not, Dubya's budgets included financing a war.


That is incorrect. All war funding has been done outside of the normal budget process.


Can you show me, provide a link, to what you're referring to. Everything I've seen has Department of Defense and Global War on Terror included.

Thanks.



wing2000 -> RE: Feds move to back up Fannie Mae / Freddie Mac (7/15/2008 8:42:14 PM)

...can we take the Iraq war funding over to another thread?



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