Overstepping their authority, again

[Gonz]

September 8, 2008

In its most dramatic market intervention in years, the U.S. government seized two of the nation's largest financial companies, taking direct responsibility for firms that provide funding for around three-quarters of new home mortgages.

Treasury Secretary Henry Paulson announced plans Sunday to take control of troubled mortgage giants Fannie Mae and Freddie Mac, replace the companies' chief executives and provide up to $200 billion in capital to restore the firms to financial health. The Treasury's plan puts the two companies under a conservatorship, giving management control to their regulator, the Federal Housing Finance Agency, or FHFA. In return for agreeing to provide as much equity capital as needed later to cover losses stemming from mortgage defaults, the Treasury gets $1 billion of preferred stock in each company without providing any immediate cash.

So, next it'll be GM? Ford? ExxonMobil? AT&T?

It'll hurt like hell but the system only works when failures are allowed to collapse. Weakening the gene pool...

Wall St Journal

 

[chcr]

Interesting that it isn't only the democrats with socialistic tendencies, huh?

 

[MrBishop]

With 5.6 TRILLION in assets, it won't hurt like hell...it's HURT LIKE HELL if those two go down. Welcome to Social democracy...have a nice day, eh!

 

[Gonz]

Interesting that it isn't only the democrats with socialistic tendencies, huh?

Search as you will. I've never called GW a conservative.

I wonder, since the Amnerican people are breing forced to bail out two government/private sector experiment companies, will they, as part of the bailout, be required to go completely private sector?

Who am I kidding?

 

[chcr]

Search as you will. I've never called GW a conservative.

What does that have to do with what I said?

 

[Gato_Solo]

Interesting that it isn't only the democrats with socialistic tendencies, huh?

F.D.I.C.

BTW...I think the government should let them go TU. This would've never happened had the banking regulations not been changed a few years back...

 

[chcr]

F.D.I.C.

BTW...I think the government should let them go TU. This would've never happened had the banking regulations not been changed a few years back...

My sentiments exactly.

 

[MrBishop]

Moot - but letting them fail wouldn't have been pretty at all, and can still affect the entire country's credit-worthiness via the world bank. Here's hoping that the GVT replaces officers and stops the dividend outlay/CEO bonuses for a while.

 

[chcr]

Moot - but letting them fail wouldn't have been pretty at all, and can still affect the entire country's credit-worthiness via the world bank. Here's hoping that the GVT replaces officers and stops the dividend outlay/CEO bonuses for a while.

That's pretty naive, IMO.

 

[MrBishop]

Which part?

 

[chcr]

Which part?

The gvt. stopping the dividends/bonuses. They should, but it'll never happen.

 

[Professur]

Anyone looked into investing in Rhodesia recently?

 

[MrBishop]

The gvt. stopping the dividends/bonuses. They should, but it'll never happen.

Dividends are based on profit, as are profits. Companies in bankruptcy protection are free to not give out either. The backstop is provided by the GVT in this case...tehy can always make it mandatory to the bailout/backstop.

 

[chcr]

Dividends are based on profit, as are profits. Companies in bankruptcy protection are free to not give out either. The backstop is provided by the GVT in this case...tehy can always make it mandatory to the bailout/backstop.

You're familiar with the current administration, right?

 

[catocom]

hmm, I wonder if I quit paying my mortgage, then negotiate for 13 cents on the dollar?.

edit: I mean shit...., if they want to change the rules by which I've tried to build on,
I gotta roll with the new way to get ahead.

 

[Gonz]

Why did Ken Lay go to jail for half a billion while these folks are getting out for losing half a TRILLION...

You're familiar with the current administration, right?

The insider trading among politicians with these groups is horrendous. (Franklin Raines ring a bell?) Add to that the Congress basically forcing mortgage companies to give loans to people who couldn't afford them, with little or no money down). Can you think of a home that's actually WORTH $300,000 for 2000 SF? I've yet to see one.

 

[JTP]

Crappy staple-gunned particle-board McMansions- so is my double-wide trailer, but at least I know it...and can afford it!

 

[Gato_Solo]

Moot - but letting them fail wouldn't have been pretty at all, and can still affect the entire country's credit-worthiness via the world bank. Here's hoping that the GVT replaces officers and stops the dividend outlay/CEO bonuses for a while.

Who said it had to be pretty? It should be ugly, and it should be painful. That way, it won't be likely to happen again. Now, I'm sure it will.

 

[MrBishop]

c'ept it'd be the Economy and the mortgagers that'd be standing in front of the fan when the shit started flying, and not the Execs from Fanny et al.

 

[Gato_Solo]

c'ept it'd be the Economy and the mortgagers that'd be standing in front of the fan when the shit started flying, and not the Execs from Fanny et al.

And who was responsible for this mess? The mortgagers. Why should I, living in a one-bedroom apartment, help bail out the Jones' who bought too much house? As for the economy, I think it needs just this kind of shake-up in order to correct this whole mess. What this is, is rewarding bad behavior and worse decisions.