Say Hello to “Frannie”
A merger of incompetents:
“U.S. regulators seized Fannie Mae and Freddie Mac in September amid a rise in mortgage delinquencies that led to a combined loss of $108.8 billion last year. The U.S. Treasury has injected $59.8 billion in emergency funds into the companies.
Executives at Washington-based Fannie, the larger of the two, have discussed internally the possibility of taking over McLean, Virginia-based Freddie’s operations, according to people familiar with the matter. A formal approach isn’t imminent, said the people, who asked not to be named because the discussions are private.
A merger would be the quickest way for regulators to cut costs by reducing Fannie and Freddie’s combined 11,000-person workforce, shedding underperforming mortgage assets and reducing the bureaucracy of running two companies with identical functions, said Christopher Whalen, co-founder of Institutional Risk Analytics in Torrance, California . . .”
“It’s got to happen; we’re not going to put them back the way they were,” Whalen said of a merger. “The only way we’re going to be able to manage them is if we squeeze every last ounce of savings out of the administrative side and just focus on trying to keep the loss number under control.”
Great! I can just hear the new TV commercials: “Say Good-Bye to Fannie, Freddie — and say hello to Frannie!” Look for it sometime in mid-2010…
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Source:
Say Good-Bye to Fannie, Freddie as Housing Woes Wreck Status
Dawn Kopecki
Bloomberg, April 15 2009
http://www.bloomberg.com/apps/news?pid=20601109&sid=abdBONxO8dMA&
April 15th, 2009 at 7:01 am
Amongst their free enterprise brethren..Money for nothing (do the chicks come free?)
http://www.nytimes.com/2009/04/15/business/economy/15bank.html?th&emc=th
April 15th, 2009 at 7:04 am
http://www.debtdeflation.com/blogs/2009/04/13/talk-to-the-fabian-forum-the-global-financial-crisis-how-bad-will-it-get/
Talk to the Fabian Forum: The Global Financial Crisis: How bad will it get?
Another lost soul, not Keynes or one of his acolytes….
April 15th, 2009 at 7:11 am
“In a dark room all cats are grey”, he have completed a stress test that avoids measuringtruly stressful scenarios or identifying those at risk, we have accomplished nothing, “BRILLIANT”
http://www.nytimes.com/2009/04/15/business/economy/15bank.html?th&emc=th
April 15th, 2009 at 7:14 am
Kind of like a dumbed down Lake Wobegone but instead of being above average all 19 banks are not failures, very reassuring, can’t have those corporate accounts leaving CITI, whoops, not supposed to use names
April 15th, 2009 at 2:52 pm
Bruce, first of all, although it’s clear The World Is Not Ending, you were right that the economy is simply stuck in park. There is no velocity. So for now there will be no inflation, score one for you and Mish and Steve Keen. But note that the seeds of future inflation have already been sown.
I picked out this Steve Keen quote as an example of what many of us have been saying:
Steve Keen: “In fact what I think we’re going to have to wait on is basically the current set of policy makers abandoning all hope and certainly the political leaders abandoning hope in them before we’re going to see any sort of change around out of this crisis.”
In other words, phase 1 will be the acknowledgement of failure and the subsequent replacement of the Paulson-Geithner-Summers transitional axis. Anyone who studied Japan knows that they got through legions of politicians and economic wizards during their decade down the rabbit hole.
Team One has applied the band-aids and set up an IV, then issued a large bill for treatment, and soon will be replaced by the cardiac crash cart.
April 15th, 2009 at 3:32 pm
Lefty:
I agree that when the economy turns around, it will be time to get the popcorn and watch Gentle Ben on the boob tube ride the bull of severe inflation…it should be funnier than Paulson on one knee…
…just when it starts is the (what used to be) 64,ooo dollar question…
April 15th, 2009 at 3:36 pm
Taxes.
The tax structure has been simplified this year on the advice of Treasury secretary “Tiny Tim” Geithner, and the avuncular former secretary “Hanky Panky” Paulson.
Line 1: How much did you earn last year?
Line 2: Send it all to 85 Broad Street, attn: Mr. Blankfein.
If you live in Manhattan of course it is simpler, you can just place a stuffed envelope outside a GS partner’s apartment door, marked “BONUS – 2008″.
Regarding taxes, does anyone think it reasonable that the top rate for Bruce in Tennessee, working hard at his Salt Mine, is the same as that paid by Mr Blankfein and friends (what’s left outside their Offshore Accts…)
http://www.nytimes.com/2009/04/12/magazine/12wwln-lede-t.html?ref=magazine
We need tax simplification, fewer loopholes and we need progressive taxation. That should not mean let’s soak everyone who makes $250-350K. They should tax the >$1M/yr bankers and hedgies and the Chief Finagling Officers of corporations. Why? Because that’s where the money is…..
April 15th, 2009 at 3:39 pm
Nice reply to Leftback, Bruce… the best points in the Steve Keen post were either common sense, that no formal education can teach, or Minsky’s. I found it to be such a hypnotizing downer that I quickly had to close my eyes to see again… Good of you to attempt to keep us all exposed and well-rounded, I guess… : )
April 15th, 2009 at 3:43 pm
I don’t have aproblem with a combined company in the “short term”- however- the combined company needs to be brought back to some modicum of health so it can be sold- in pieces- so no entity by itself is too big to fail.
April 15th, 2009 at 3:47 pm
To Bruce it’s going to be a real long one…
$1.14 quadrillion get a load of this!
No, that’s not a made up word. A quadrillion is one thousand trillion dollars. Not $4 trillion, but $1000 trillion – and change.
Here’s the breakdown, according to the International Bank of Settlements, which acts as banker for the world’s central banks:
1) Listed credit derivatives stood at USD 548 trillion;
2. The Over-The-Counter (OTC) derivatives stood in notional or face value at USD 596 trillion and included:
a. Interest Rate Derivatives at about USD 393 + Trillion;
b. Credit Default Swaps at about USD 58 + trillion
c. Foreign exchange derivatives at about USD 56 + trillion;
d. Commodity Derivatives at about USD 9 trillion;
e. Equity Linked Derivatives at about USD 8.5 trillion; and
f. Unallocated Derivatives at about USD 71+ trillion.
World derivative debt is $1.14 Quadrillion USD. For the US banks share of that see Table 1, page 22 of 33 at
http://bluelori.blogspot.com/2009/04/all-hail-government-sachs.html
April 15th, 2009 at 4:01 pm
what was the last hour rally all about? People want in on tomorrows earnings reports?
April 15th, 2009 at 4:02 pm
To lay people off while sending out stimulus bucks is contradictory. Government and government-ralated jobs are often a direct stimulus.
April 15th, 2009 at 4:04 pm
PPT.
April 15th, 2009 at 4:04 pm
Another pounding for those getting too frisky with the financials and REITs on the short side…
April 15th, 2009 at 4:05 pm
“what was the last hour rally all about? People want in on tomorrows earnings reports?”
I think everyone is gaming the JPM earnings rumor here. Wait until the subsequent rally is over and the XLF becomes exhausted – it should be a great entry point for the SRS and the SKF/FAZ etc…
Buy Dimon, sell Pandit. There isn’t enough lipstick in the world for Citi. I smell bacon.
April 15th, 2009 at 4:06 pm
http://market-ticker.org/archives/921-GM-Bankrupt,-UNLESS…..html
Read em and weep, boys. Cuz, in here this game it’s tails I win, heads you lose, and I am going to eff yer horse jes for good measure.
April 15th, 2009 at 4:07 pm
@ Super-Anon Says:
yeah- but what is everyone wetting themselves about- where is the good news? Don’t tell me the beige report- that’s a joke- a bunch of hand wringing girly men
April 15th, 2009 at 4:12 pm
yeah- but what is everyone wetting themselves about- where is the good news? Don’t tell me the beige report- that’s a joke- a bunch of hand wringing girly men
Well… when XLF and IYR have some of the highest short interest on the NYSE you don’t need that much good news – just the threat of it.
Also I wouldn’t be surprised if some of the government $$$ that’s being handed out to the banks isn’t finding it’s way into some of these stocks in a roundabout way.
April 15th, 2009 at 4:13 pm
“To lay people off while sending out stimulus bucks is contradictory. Government and government-ralated jobs are often a direct stimulus.”
wally,
it depends on your point-of-view..
LSS: more Fear and Headlines are generated by Layoffs, and, as we’ve seen, even ’subsidized’ employees remain uppity..
and, in a more ‘Historical’ perspective: if the ‘cained peep1.0 hadn’t seen ‘Bankrupt’, ‘Failed’, and ‘Unemployed’ the Billions of times, collectively, that they had, “The New Deal” would have been Stillborn..
April 15th, 2009 at 4:18 pm
in my opinion the market is running on vapors and is way overbought- there is simply nothing to be excited about- will have to take a beating before long
April 15th, 2009 at 4:19 pm
It was a good day for Schadenfreude Asset Management. Longs up and stops on the shorts saved the day.
Some of our materials stocks (GMO, UEC, AA) have had a tremendous run up of late.
It occurs to us that a JPM beat might spur the SPX all the way to 875. Smack into big-time resistance.
Sell ‘em there – add C and GE earnings and retire to a safe distance to enjoy the show.
April 15th, 2009 at 4:22 pm
May be away a couple of days at home…my IT girl (er, woman) is removing a virus from my cpu and laptop….probably the Cornfrisky virus…oh, well…thought I had already gotten the patch from Windows update, but she says…nope…
April 15th, 2009 at 4:29 pm
Bruce, switch to an apple, problem solved : )
April 15th, 2009 at 4:32 pm
@Bruce: Get a Mac and you’ll never go back. Take it from Lefty.
I have to do the 4868 thang. Too f***ing complicated by far, and the AMT is an absolute joke.
April 15th, 2009 at 4:36 pm
I’m spoiled. It’s good to have a brother who’s a tax accountant & financial planner. I feel very fortunate about that.
I’m tempted to get a MAC and an I-Phone but I’m too cheap. Not sure it’s worth the added cost. They are a bit pricey, no?
April 15th, 2009 at 4:40 pm
@ Karen, we actually agreed on something other than gold and reflation….
MW, does your brother complain when you drop your trading book on his toe?
BTW, Jeff mate, I have saved a pile this week by using STOPS on those short ETFs….
The time will come for these pups soon, but in the mean time I am preserving capital where I can.
April 15th, 2009 at 4:47 pm
This is interesting. Opposition is growing to bank bailouts on the left, Barry:
http://www.marketwatch.com/news/story/Building-a-loyal-opposition-Bailout/story.aspx?guid=%7BEF1D9D24%2DD734%2D436F%2D9ACA%2D943D82C03E7F%7D
April 15th, 2009 at 4:53 pm
Jeff, the new macbooks are worth it in price… although the screen size is 13″ at largest… and i need 15″ so i’ll probably end up with another macbook pro which is overpowered for my needs. i had the 17″ before and it was cumbersome when traveling… i have the iphone… it’s definitely fun and was my first “not free” phone so i justified it. a phone with actual keys on it might be easier to use however… i have total and automatic sync though with mobile me… my calendar, my contacts, my email… either device i use it instantly updates the other..
and your iphone is your ipod as well : )
April 15th, 2009 at 4:53 pm
lb,
that why you’re seeing stuff like this, from DHS, now, about “Left-wing Extremists”
http://www.foxnews.com/projects/pdf/Leftwing_Extremist_Threat.pdf
April 15th, 2009 at 4:59 pm
Jeff,
think twice about everyone’s favorite (sp)iPhone, also, the G1, running on GOOG’s Android platform may fit your needs, and, soon enough, Android will be running on “Laptops”..
http://venturebeat.com/2009/01/02/an-faq-about-those-android-netbooks/
http://owstarr.com/2008/08/13/just-in-from-the-more-apple-bullshit-dept-your-iphone-has-a-kill-switch/
April 15th, 2009 at 5:08 pm
leftback @ 4:47
Doesn’t matter how much opposition there is. Most politicians just can’t get enough of these bank bailouts.
Robert Kuttner may be correct though in saying that “the bank bailout risks are becoming Obama’s Vietnam”.
Anyway, Obama can just fund everything through the Fed and the FDIC.
April 15th, 2009 at 7:33 pm
MReagon see his latest lol
Richard Posner: Bite Me
http://market-ticker.denninger.net/
and sure the left will do something lmao
The Crisis That Could Bring Down Obama
http://www.progressive.org/mag/rc041509.html
http://globaleconomicanalysis.blogspot.com/2009/04/obama-bets-it-all-on-failed-banksters.html
April 15th, 2009 at 8:53 pm
There’s a lot not to like by both left and right in the bank bailout schemes designed by Paulson and carried out by Tiny Tim. The big banks get perpetual life and the taxpayers get a generation of debt.
April 15th, 2009 at 9:03 pm
since they’re brother and sister, the kid will probably be retarded
April 15th, 2009 at 11:42 pm
Jeff – RE the Macs
Get yer self a MacBook for daily travel out and about and when ya come home, plug it into yer big ‘ol flat screen desktop monitor with a wireless keyboard and wireless mouse and yer set. Works for me.
April 16th, 2009 at 5:18 pm
So based upon the origins, I’m guessing that Frannie is a tranny. Which is probably an apt analogy. Don’t peek under her (financial) skirt, you might get a bit of a shock.
April 16th, 2009 at 7:47 pm
This is, of course, exactly backwards, which is probably why it has been proposed.
Freddie is a far better run organization than Fannie (not saying much, I know – but still) and if one takes over the other, it ought to be Freddie taking over Fannie, not vice versa. I have good friends in both organizations, so I have the means to know.
Fannie Mae has a uniquely poisonous, unproductive culture. Freddie Mac is a mess, too, but there is at least an order of magnitude of difference in just how messed up the two are.
So I’m not surprised at all that “Executives at Washington-based Fannie” want to subsume the competition, whose relatively well-run organization is probably a source of extreme embarrassment. Anyone who has managed to climb the Fannie ladder high enough to be an executive is extremely likely to be a scoundrel and a crook. This is the Fannie cover-your-ass culture to the extreme – they plan to cover their own asses by making the other guy just as bad off as they are.