Fannie Mae CEO answers hard questions

Fannie Mae CEO answers hard questions

Shifting gears into the Nation’s Biggest rENTING cORPORATIONS only means about 5 to seven years of adjustment for the stockholders, i.e., no dividends and low value stock, while the market stabilizes and rents climb to a breakeven point with the corporate bonuses! (FOR THE GOOD JOB OF SURVIVING)

re:senator lugar

Senator Lugar has the answer to this one, they don’t have enough of them for the future? Lugar knows nothing? Nothing,
they ain’t saying.............

If they survive Alan Greenspan.

bondholders not mortga holder bailout.

` ~galljdaj+;97969:
Shifting gears into the Nation’s Biggest rENTING cORPORATIONS only means about 5 to seven years of adjustment for the stockholders, i.e., no dividends and low value stock, while the market stabilizes and rents climb to a breakeven point with the corporate bonuses! (FOR THE GOOD JOB OF SURVIVING)

Share values of capital as stock price are are a fictitous value based on multiplying future income ,as in a P/e ratio.
The shares in freddie and fannie are now being revalued by the market based on more realistic future expected profit incomes.
E.G. now little or non.
As the bad AAA bonds issued ,that were based on getting high incomes from mortgage debts have to backed up ,or topped up by the issuer when too many mortgages go bad.
the US government is forcing the investors in the freddie and fannie shares to lose all of their capital before the full bailout proceeds.This will double the (unofficial) national government debt. Topping up the interest payments for the bondholders can only be paid out of future tax incomes of the government and as the US government is already into huge deficit spending for militaristic wars, these bailout for profits payments to the bondholders can only be funded by even more deficit funded spending .
Thus the bondholders are creating a claim on all future government tax incomes.They therefore will “own ' the government and its revenues.
Otherwise the government must default on its obligations.the only alternative is to devalue the value of the “fiat"paper dollar so that with inflation the debt can be paid down with inflated currency -in dollars that are worth less as more toilet paper is issued

Henry sweatin' it out...
:p
Paulson’s Fannie-Freddie fix
August 22, 2008: Investors fear the Treasury chief will maul shareholders, a la Bear Stearns. But he may be less heavy-handed this time.

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The market is betting Henry Paulson is about to put on his black hat again. But the Treasury secretary may not be so easily typecast in the saga of the government-sponsored mortgage finance companies. Shares in Fannie Mae and Freddie Mac hit new lows this week on speculation that the government will be forced to support the companies. With the shares down more than 90% over the past year, analysts such as Paul Miller at Friedman Billings Ramsey say the only way the companies can raise enough money to soothe the markets is to lean on the government.

“They’re going to need some help here," says Miller, who has written that Fannie and Freddie need to raise $15 billion each to see them through the housing bust. Fannie and Freddie are shareholder-owned, though they have been able to borrow at below-market rates thanks to an implicit government backing for their debt. Paulson said last month he wants to keep the companies, which buy and guarantee around half of all U.S. home mortgages, in their current form to help ease the pain of the housing bust.

But with investors fretting over possible changes in the companies' capital structure - while Paulson has essentially stood behind the companies' senior debt, he hasn’t said what would happen in any restructuring to other securities - the companies' low-cost funding advantage has eroded, pushing mortgage rates up and adding to the pressure on house prices. So Paulson may soon have to act. The big question is whether he’ll reprise his villainous role in the Bear Stearns rescue. For now, there are reasons to think he might not.

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The risk side of investing...
;)
Fannie, Freddie stock in nose dive
September 8, 2008: Common shares of both twin mortgage buyers plummet in first trading session after government enacts rescue plan.

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Investors in Fannie Mae and Freddie Mac common stock saw their stakes in the mortgage giants plummet in value Monday, a day after the government announced a dramatic rescue of the two companies. On Sunday, the U.S. government assumed control of the twin mortgage buyers to help shore up the ailing U.S. housing market.

That sent shares of the two companies, which had fallen more than 80% so far this year ahead of Sunday’s announcement, into a tailspin just after the opening bell Monday. Fannie (FNM, Fortune 500) shares plunged 80%, while Freddie (FRE, Fortune 500) stock was down 75% in morning trading on the New York Stock Exchange. The exchange had suspended pre-market trading of both common and preferred stock of the two institutions Monday to allow investors to digest the actions taken by the government over the weekend.

The NYSE would not comment on whether Freddie or Fannie was at risk of being delisted from the NYSE, but said it was monitoring all the rules that apply to companies that have seen the value of their stock evaporate overnight. Despite the big dip at the open, shareholders may not be wiped out altogether. The way the takeover was structured allows for Fannie and Freddie stock to recover in value once the two companies are no longer under the government’s control.

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Why Wall Street loves the bailout
September 8, 2008: The takeover of Fannie and Freddie removes a huge cloud over the markets and could be a sign that the economic pain is closer to the end than beginning.

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Wall Street has been holding its breath since mid-July due to fears about the fate of Fannie Mae and Freddie Mac. Today, investors finally exhaled and started buying. The government’s stunning takeover of Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) this weekend may be a sign that the market has bottomed and that the economy could be ready to begin a long-awaited recovery.

Overseas stock markets surged Monday and the Dow and S&P 500 both skyrocketed more than 2%. It’s now worth asking: Was the Dow’s low point of 10,962.54 on July 15 the bottom?

“Hopefully, this bailout will be the last thing we’ll need for the markets to move forward. This is a huge step in the right direction," said Ted Parrish, co-manager of the Henssler Equity fund. And if you subscribe to the notion that the economic woes are largely due to the housing mess and credit crunch, it’s hard to not be encouraged by the end of the Fannie-Freddie deathwatch.

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