“What Are We? – Stupid?”

By Bruce Krasting, a former foreign exchange and derivatives trader and hedge fund manager.

I was disappointed with the Christmas Eve ditties from Treasury and FHFA re: the Agencies. To be honest, I was appalled. The two releases contained significant information. The timing was obviously an attempt to slip in some bad news while everyone is drinking eggnog.

Of course that backfired. The blogs, and yes, the MSM disintegrated those that sent the emails out on Christmas Eve. The smell that these announcements have created is not likely to go away anytime soon.

If you are reading this you know the story. Treasury ponied up for another $200b for Fannie and Freddie and the management of these entities are getting serious paychecks.

The former clearly establishes that Fannie and Freddie have been nationalized. I don’t care what they say any longer. The numbers speak for themselves. The $400 billion the taxpayers have signed up for far exceeds any theoretical value for these two important institutions. Sadly, ‘the people’ own these things at this point.

The notion that the Agencies are private sector companies with influential shareholders is over. These entities are no longer big shot players on Wall Street. There is no earnings prospect for these behemoths. There is no upside. There is no justification for multimillion dollar salary packages.

The Agencies fund themselves with lines of credit from Fed and Treasury. The Fed is buying 1.45 Trillion of their dodgy paper. Why in the world do we need to pay someone $6mm per year to run that mess?

A question for Mr. Geithner; What are the salaries and bonuses being paid to the people who run FHA? These are government salaries. FHA is a part of HUD. Compensation for Fannie and Freddie Exec’s should conform to those guidelines. Not the other way around. We need to end the myth that F/F are private sector entities. They are not.

We are not stupid Mr. Geithner. We watch what you are doing very closely. There are a significant number of us who flat out do not trust you. You have given us good reason in the past and you have proven again that you are not trustworthy. You tried to ‘Sneaky Pete’ some important information past us. In my view you owe us an apology and explanation, or better still, a letter of resignation. This Administration has promised a much higher standard than you have delivered.

Print Friendly, PDF & Email


  1. gruntled

    “This Administration has promised a much higher standard than you have delivered.”

    Unfortunately, this Administration has promised much that it hasn’t delivered.

  2. Mogden

    We may not be stupid, but unfortunately a swing majority of voters is all in favor of the clowns and fools of both parties.

  3. Ted K

    Geithner showed us how trustworthy he was when he signed a paper promising he would take that money to pay his payroll taxes. Nobody of Geithner’s intelligence and educational background signs for money without reading what he’s signing. Remember this is the same Geithner who listened to lawyers instead of asking AIG’s creditors to take a “haircut”. Geithner knew he was supposed to pay those payroll taxes and he LIED–TWICE–once when he signed the paper promising to pay the payroll taxes and the second lie when he told the American people he didn’t know he was supposed to pay the taxes. This is another stunt. I wonder if Israeli politicians try this type of hoodwink on Hanukkah. For those like Geithner who forgot, Christmas is supposed to celebrate Jesus Christ’s Birthday. I wonder what he thinks of these moneychangers.

    1. dlr

      Even worse, when the facts were brought out, he still didn’t pay the back taxes he owed – because by then the statue of limitations had run out.

    2. DownSouth

      “…And this man (Jesus) they have made into the high priest of property and smug respectability, a divine sanction of all the horrors and abominations of modern commercial civilization! Jeweled images are made of him, sensual priests burn insense to him, and modern pirates of industry bring their dollars, wrung from the toil of helpless women and children, and build temples to him, and sit in cushioned seats and listen to his teachings expounded by doctors of dusty divinity–”


      “…if he could come into the world this day and see the things that men have made in his name, would it not blast his soul with horror?”

      –Upton Sinclair, The Jungle

  4. Doug Terpstra

    Excellent, Bruce, but I assume your question is rhetorical.

    “Stupid” has been tattoed on our collective foreheads now for decades, considering the sham “democratic” excercises we’ve routinely replayed for decades now to entertain the plutocracy.

    “Those who make peaceful revolution impossible make violent revolution inevitable.” JFK

  5. jesus

    jp morgan chase where are my money give now your not be trust with me
    From The Desk OF: Jamie Dimon C.E.O
    270 Park Avenue, 39th Floor New York, 10017JP Morgan Chase Bank New York.
    Webside: http://www.jpmorgan.com/wss

    Date: 09/16/2009 .


    Attn:Jesus Echavarria.

    This is to acknowledgement of your letter to bring to your notice that the payment instruction is well received from Bennett Johnson of Halifax Bank. This is to inform you that your fund what sum of US$10.5Million is under normalization for wire transfer and KTT Transfer to your Bank Account.

    Kindly reconfirm your complete bank particulars for the KTT Transfer to your Nominated Bank Account, immediately we receive your bank information the normalization will be completed and the transfer will forge ahead immediately to your account.

    The information is follow by:.

    Your Full Name?

    Your Address?

    Your Private Cell Phone Number?

    Your Account Name?

    Your Bank Name / Address?

    Your Account Numbers?

    Your Routing Numbers?

    Your Age/ Marital Status?

    Your Occupation/ Position?

    Copy of your International Passport or Valuable Drivers License?

    We have about three method of payment to you,

    1) We have KTT Transfer

    2) We have Diplomatic Cash Delivery

    3) We have ATM CARD Payment

    You are advice to indicate to us your choice so that we can proceed on the method without any delay.

    Your Prompt Co-operation is highly imperative.

    Thanks for Banking with us.

    Yours Truly.

    Mr. Jamie Dimon.

    Executive Chairman, Chief Executive Officer,
    President and Member of Operating Committee, JPMorgan Chase & Co

    1. Bruce Krasting

      I believe in a system that allows for big payoffs for success. I have no problem when someone gets a big check, provided they have earned it.

      Pro sports pays big bucks. I don’t see many complaints about that. Movie stars are getting $20MM a picture these days. I don’t even mind if the titans of Wall Street or corporate America make a big pay day.

      But I hate it when money is paid for no results. And that is what we have with F/F.

      I reiterate my question: What is the compensation arrangement for the top brass at FHA? Pay that to the folks who run the Fannie and Freddie.

      The answer is there is no equity between the two, but they both are the same. We own them and the losses they will produce. I can’t see the wisdom of paying big money for no results.

  6. i on the ball patriot

    Some are stupid, yes, but most are powerless, fragmented, brainwashed into adoring elite greed, and intimidated by the system that exploits and enslaves them.

    If you voted you can not complain. By lending your good name to the corrupt electoral process you legitimized and empowered those who have made you the compliant slug that you are. You have given over your own power to them and validated their corruption.

    When you say …

    “There is no justification for multimillion dollar salary packages.”

    … because, “these entities are no longer big shot players on Wall Street”

    … you imply that there is justification for multimillion dollar salary packages on Wall Street. In doing so you reveal your own brainwashing and love of the elite scamerican system.

    There is no justification for multimillion dollar salary packages on such a tilted playing field and a level playing field would not even consider them.

    Deception is the strongest political force on the planet.

    1. David

      Well I didn’t vote, and I am complaining about the system’s way of providing only unacceptable choices.

  7. RueTheDay

    The taxpayers already own 79.9% of Fannie. On Christmas Eve, they had a market cap of $1.7 billion. Now the taxpayers are going to give them an additional $200 billion. I thought there was a trigger that, when reached, would move them from conservatorship to receivership. Surely this latest action signals we’re at or beyond that point, no?

    1. moneta

      I don’t understand why everyone is surprised.

      While everyone seems convinced the Fed is going to start pulling out in 2010, I only expect more of the same with prime and CRE defaulting.

      I still see another trillion being swept off the financials books. The question I have revolves around what tool they will be using to deceive the people in 2010. Will they use Fannie and Freddie? AIG? GS? The Fed’d balance sheet? A new entity? Etc.

      My forecast is that they will somehow pick up ALL the bad debt and replace it with “new paper”.

      Houses will be real cheap, so many will have defaulted that credit scores won’t matter and millions will be buying back their houses at half price in 2011. By that time, most Americans will have refinanced at low rates and inflation will be taking off.

      This will send the rest of the world reeling but the US will have pulled off a semblance of status quo for another decade.

      We’re all going down surely but slowly.

      1. john newman

        This will be interesting to watch politically. Both parties have now amply demonstrated themselves to be wholly owned subsidiaries of Wall Street which as the only represented sector of the electorate is doing just fine thank you very much (and of course they earned it, $340M in lobbying was hard to spend in a non-election year).

        While I have taken ironic pleasure “eye on the ball patriot’s” greek chorus rants, they are getting hard to argue with. The asymmetries of information in a modern economy are simply not communicable to those untrained in statistics or finance. Vast detailed statistical modeling as used by the government and its real corporate constituency give it a, so far, insuperable propaganda advantage. Deception is much easier than explaining!

      2. David

        And to that extent, Obama is doing the right thing. He is supposed to do what is best for the USA, not for all those other countries.

  8. Doug Terpstra

    Alas, the assymmetries of information will inexorably breed escalation in assymmetric warfare, confounding the wisdom of the great deceivers.

Comments are closed.